Russia’s gas war and the EU’s resilience test: three Russian goals and three European dilemmas
Analysis by Dionis Cenusa
The situation of the gas sector in the European Union (EU) is deteriorating with the proximity of the winter season and the increase in gas shortages due to interruptions in the supply process. The price of natural gas fluctuates around the amount of 2,800 – 3,500 euros (about 340 euros per MWh) per thousand cubic meters and could exceed 4,000 euros, if Russia decides to stop all supplies, including those transiting through Ukraine (with the exception of those made through Turkish Stream). Vladimir Putin has already announced that supplies via Nord Stream 1 will be suspended indefinitely until sanctions targeting the gas sector are lifted. European politicians realize that Russia is using natural gas as a weapon of economic warfare. Focused on stopping Russian military aggression against Ukraine, the EU went the sanctions route and forgot to give equal priority to preparing for an impending gas war, given that Russia has both the necessary technical leverage and a militaristic political motivation.
According to official positions, the EU, along with the rest of the West, is resorting to sanctions to hit the Russian economy and cause it to collapse, damaging its military capabilities. On the other hand, manipulating natural gas supplies is the only way Moscow believes it can create fragmentation and dissociation around sanctions against Russia at the European level. The ultimate aim is to break European unity in favor of Ukraine. The latter still needs military assistance in the form of high-performance weapons and training, financial aid (preferably in the form of grants), as well as attention to the millions of Ukrainian refugees scattered across Europe. West’s openness to allocating aid to Ukraine is largely influenced by its ability to regain the control over the territories occupied by Russian forces. Therefore, Russia is interested in exacerbating the energy crisis in the EU to forcibly divert the political attention of the elites of member states from the Ukrainian issue to the internal agenda and the prevention or management of anti-government protests.
The three main objectives of Russia
In a kind of war of economic attrition against the EU (IPN, August 2022), the Russian side seems to be pursuing other objectives besides the one related to the definitive or partial paralysis of sanctions and political dissociation in terms of the rationality of maintaining the sanctions.
Firstly, Russia is using the EU energy crisis to create psychological comfort among the Russian population, who are told that European consumers pay prices for natural gas that are more than 40 times higher than in Russia (Kommersant, September of 2022). Given that Russia’s military success is limited and that the annexation of the occupied Kherson and Zaporozhzhia regions could be complicated by the Ukrainian counter-offensive, the worsening socio-economic situation of the Europeans could represent an important incentive in anti-Western propaganda. The same economic logic also matches with the Russian government’s efforts to retain Western companies, which tolerate reputational costs in favor of financial benefits and have not left Russia (some 240 international companies).
Secondly, the very energy crisis or Russian gas war against the EU is a signal sent to other states that depend on Russian gas, bought at subsidized prices in exchange for political loyalty (Armenia, Serbia or Hungary). This is intended to deter defection from the Russian orbit of influence. However, the calculations are short-term, since Russia’s credibility as an exporter of energy resources is at stake. Moscow is convinced that energy decoupling from the EU can be offset by redirecting supplies to the south (China, India), which actually exploits Russo-Western animosities for access to cheaper energy resources.
Thirdly, the exorbitant prices of natural gas (not only Russian) feed the inflationary spiral in the EU, and with it mobilize the social frustration of the vulnerable segments against the political elites. In part, the anti-government protests that could multiply along the lines of the recent anti-sanctions protests in the Czech Republic (between 75,000 and 100,000 protesters) may alter the political landscape in several European states. This risk increases considerably when early elections are scheduled for September-October (Italy and Bulgaria). The massive protests in Europe could have as supporters not only groups sympathetic to Russia, but also anti-government movements without a clear geopolitical agenda, but which have been crystallized by Russian disinformation articulated around the pandemic (2020-2021). The spirit of protest unleashed for social reasons (access to food, energy poverty, etc.) can be used by Moscow to generate political crises in Europe. In Putin’s mind, this would open the door for negotiations to stop the war, under whatever conditions the Russian side wants to impose. Ukraine will not accept such an outcome, which is why Russia is trying to force the EU to capitulate politically in order to weaken Ukrainian resistance.
The three great dilemmas of the EU
Both Brussels and most European capitals have shown poor risk management stemming from Russian vulnerabilities before and during the war against Ukraine. Vulnerabilities were underestimated, ignored, or addressed with insufficient political commitment.
Two important issues that European officials and politicians needed to examine more seriously are (1) the unlearned lessons of the past and (2) the rather cursory focus on the early warning signs of a crystallizing energy crisis. Thus, on the one hand, a large number of European leaders ignored previous experiences, when Russia used gas supplies for political purposes; others have not committed to building coalitions to prioritize EU energy resilience as an immediate strategic objective. On the other hand, the rise in the price of natural gas already began in 2021. Thus, in October 2021 the price exceeded 1,000 euros/m3 or more than triple that in September 2022. The anomalies in the gas market occurred practically in parallel with the mobilization of Russian military forces on the borders with Ukraine in preparation for the launch of the invasion at the end of February 2022. Thus, both European officials and politicians in the member states had more than half a year before the beginning of the war to propose interventions on the market, starting with the monitoring of natural gas prices, the investigation of the cause of price increases and, respectively, their prevention. The disruptions in the energy market, unsustainably resolved by the EU, together with the fall of Belarus under the total influence of Moscow in the wake of the failed democratic protests of the summer of 2020 (IPN, September 2020), were one of the considerations that convinced Vladimir Putin to start the war against Ukraine specifically in 2022 (neither before nor after).
Currently, the EU needs to make a series of substantial efforts in a short period of time to manage the energy crisis and create a minimum semblance of resilience. There are at least five dilemmas in which European institutions and member states must show unity and resilience in performance in order not to become the losing side in the Russian gas war.
Firstly, the EU needs a strong energy diplomacy that is at least synchronized, if not convergent, with that of its member states. For now, European officials are signing memorandums of cooperation (with Azerbaijan) at the European level, and France, Germany and Italy are using their own politico-diplomatic connections to request increased liquefied gas export capabilities and pipelines from Africa, the Caspian Sea or the Middle East (Algeria, Nigeria, Azerbaijan, Qatar) for national consumption. However, the new arrangements cannot produce immediate effects, but only in the medium and long term, including the condition that exporting countries invest in production capacities.
The second subject of possible doubts from the EU is the proposal to limit the cost of Russian natural gas received through the gas pipeline. Member states will meet to discuss capping gas purchase prices on September 8. Moscow has warned that it will also react quickly by cutting off all gas supplies to Europe. Such a European intervention and, respectively, a Russian countermeasure will lead to a market deficit in the situation where some European states have already started using gas for current consumption from their gas deposits. This situation could be alleviated if the EU allies (Norway, USA) agreed to export gas at the maximum EU price against Russia and, at the same time, increase export volumes to compensate for the loss of Russian gas. It is equally possible that Hungary and other member states that want to keep the contracts with Russia will sabotage the capping initiative. The anti-government protests, which have already taken place in the Czech Republic and Germany, could serve as a scare for other governments at European level.
The third dilemma concerns ensuring the security of gas supply not only for member states, but also for neighbors with candidate country status. It is unclear whether the EU will be able to persuade member states with unused capacity to supply gas to Ukraine, Moldova and the Western Balkans if Russia stops supplies. Even if the reverse flow of gas is possible for Ukraine and Moldova, they need energy security guarantees from the EU and its member states. Brussels failed to convince member states to introduce an obligation to reduce energy consumption by 15% and redirect gas to European states in an emergency. This commitment was kept at the level of a voluntary measure, with most southern EU states convinced that the energy savings required by the EU are being made to help Germany. The mechanism for the joint purchase of natural gas, which the EU previously proposed (Reuters, March 2022), is not yet operational and energy nationalism makes it difficult for the EU to intervene in this sector. An annual purchase of strategic volumes of gas to ensure European energy solidarity (between member states and neighbors with a European perspective) would allow the EU to become a greater autonomous and resilient actor in the field of energy in relation to exporters of energy sources, especially with those governed by authoritarian regimes.
In lieu of conclusions…
The gas war launched by Russia against the EU is directly related to the events on the battlefield in Ukraine. While Moscow does not register any significant military progress, the Ukrainian army has initiated the first attempts to liberate the occupied territories. The energy crisis exacerbated by Russian manipulations in the gas market is intended to weaken the legitimacy of European governments. Consequently, Moscow’s immediate goal is to divert unity’s attention from the sanctions and provoke the withdrawal of the Ukrainian government, which relies heavily on strong political, military and financial support from the West.
The EU faces several dilemmas, the overcoming of which will determine the degree of European resilience in the energy field in the immediate period from the winter of 2022-23. Socio-political destabilization in the member states represents the main risk for European unity and solidarity within the EU and in its neighborhood against Russia. It is well known that the effectiveness of Russian influence abroad increases if there is instability there. For this reason, the EU must prioritize the identification of supranational solutions to support member states facing socio-economic crises. It could be useful to review the scope of post-pandemic financial assistance or to ensure convergence of EU and Member State energy diplomacy.
Russia has turned the energy crisis into a gas war against the EU. This crisis may become a unique opportunity for the EU and its member states to break the Russian energy monopoly, but this implies alternative imports of energy resources, an urgent green transition of the business environment and a behavioral revolution in European energy consumption.
Source: https://www.ipn.md
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