With no end in sight to the war in Ukraine, the long-term consequences of defending Ukraine are coming into grim focus.
Over the last two decades, the Russian economy has been integrated with most EU nations. This is especially true when it comes to energy. Besides coal, the EU is energy-poor, while Russia is energy-rich. The synergy is inescapable, and for nations like Germany, Russian oil and natural gas have become the lifeblood of their economies.
The U.S. has warned the EU for decades of the national security risks of dependence on Russian energy. Now those warnings are becoming a reality, and the consequences could be devastating.
The EU’s immediate concern is its supply of natural gas from Russia. If Russia were to cut off that supply entirely, it would be very difficult for EU nations to maintain their economies. As it is, Russian President Vladimir Putin has initiated a slowdown of supplies of natural gas, leading the EU countries to begin planning for the day when Russian gas no longer flows to Western Europe.
European Commission President Ursula von der Leyen outlined a proposal for countries to cut gas demand by 15 percent from August until March next year to buffet the energy crisis on the continent.
Fears of more prices hikes and shortages leaving households cold next winter have grown as gas supplies from Russia slowed substantially. European officials accuse the Kremlin of retaliating to Western sanctions over the invasion of Ukraine.
“Russia is blackmailing us. Russia is using energy as a weapon. And therefore, in any event, whether it is partial, major cut off Russian, or total cut off Russian gas, Europe needs to be ready,” Von der Leyen told a news conference in Brussels.
“We have to prepare for a potential full disruption of Russian gas,” she added. “And this is a likely scenario.”
The European Gas Demand Reduction Plan asks governments to switch from gas to other fuels, makes it easier for industries to curb consumption, and lists ways for consumers to save on heating and cooling.
The plan would also allow the EU to regulate energy cuts. In other words, the EU is saying, “We’ll try the voluntary route, and if that doesn’t work, we’ll save the energy for you.”
Facing the risk of disruptions, Germany has been making contingency plans amid worries that Moscow may not reconnect the Nord Stream 1 pipeline at the end of scheduled maintenance on Thursday. Russian President Vladimir Putin suggested this week that gas supply through the pipeline would resume but at curbed capacity.
Reduced deliveries were already affecting almost half the countries in the bloc, according to Von der Leyen.
“Overall the flow of Russian gas is now less than one third what it used to be at the same time last year,” she said as she urged households, public offices, industries to start rationing.
What does Putin hope to gain by this slow-motion cutoff of natural gas? The Russian president is being smart about this. He knows he has the EU over a barrel — a barrel that their American friends can’t possibly move for them. But cutting off EU oil in one dramatic gesture would damage the Russian economy as well. Bloomberg reports that a Russian halt to natural gas exports would force the economies of EU nations to contract by 1.5%. Despite the harsh sanctions imposed on the Russian economy, the EU’s trade with Russia is still about 40% of what it was before the war. If the EU is unable to trade with Russia, Moscow’s already teetering economy would likely crash.
It’s one of the great ironies of the war that the ostensible enemies are still trading because of the symbiotic relationship they share. If the war starts going badly for Russia, all bets are off, and Putin may want to nail the EU to the cross and let them freeze next winter. But before it gets close to that, the EU will probably put maximum pressure on Ukraine to make a deal with Russia that will end the conflict.
