EU leaders say Putin’s gas power is waning

BERLIN – Not long after Russian forces invaded Ukraine, another mobilization began. European energy ministers and diplomats are starting to travel the world and sign energy deals – racing to prepare for a tough winter if Russia chooses to cut its cheap gas to pay chopsticks of Western sanctions.

Since then, Russian President Putin has continuously controlled the gas pipeline to Europe. Through Gazprom, the Kremlin-controlled gas monopoly, Russia has dramatically cut supplies or suspended them for days – until last week, when it announced that it was shutting down indefinitely. flows through the Nord Stream 1 pipeline supplying Germany and through it. , much of Europe.

When the final blow came, however, it caused more ridicule than outrage among European leaders, who said they would now expect nothing less from Mr. that they have accepted that the era of cheap Russian gas is over, unthinkable. seemingly just a few months ago.

In some respects, even as European leaders are scrambling to cushion the impact of lower gas supplies and higher prices, it is increasingly suggested that perhaps Russia’s arms Gasification of gas exports is a strategy that cuts profits – and that Mr. Putin may have gone too far. .

Robert Habeck, German Economy Minister, said this week in Russia’s announcement that Nord Stream 1 will remain closed. “The only thing from Russia that can be trusted are lies.”

Even the markets seem to have the latest breakout. After increasing 5% according to Gazprom’s announcement, prices are now lower than at the beginning of last week.

That’s not to say European nations don’t feel the pain, or avoid the risk that the energy crisis could cause social unrest, disrupting their solidarity against the Kremlin this winter. . But a lot of damage has been done, with gasoline prices many times higher than what is considered normal and putting pressure on consumers and businesses.

So the question remains how successful the Russian energy pullback really is – whether Europe has prepared enough new sources, whether its stockpiles can weather the winter or not. no, whether conservation efforts can make a difference and what governments can do to shield consumers from rising prices.

Russian officials are watching and waiting for what they believe is the inevitable collapse of European resolve as economic pain bites.

Russian Energy Minister Nikolai Shulginov said: “I think next winter will show how true their faith in Russia’s ability to deny gas really is,” Russian Energy Minister Nikolai Shulginov said in a statement. an interview with the Russian state news agency Tass. “This will be a whole new life for Europeans. I think, most likely, they won’t be able to refuse.”

Russia’s state news agencies are full of reports on the protests in Europe. Russian state media reported that Italians are being asked to boil their pasta for just two minutes before turning off the stove, while Germans are giving up the shower.

Message: Sooner or later, Europe’s solidarity against Russia will collapse under the weight of high gas prices, while Russia’s position has been enhanced.

“We have lost nothing and will lose nothing,” Putin said on Wednesday.

But increasingly, European leaders are signaling that, after months of preparation for this moment, they are ready for confrontation.

“Now our work is paying off!” The President of the European Commission, Ursula von der Leyen, said Wednesday in Brussels. “At the beginning of the war, gas from Russian pipelines accounted for 40% of total gas imports. Today, our gas imports are down to just 9%. “

That’s because European leaders – especially those from Italy and Germany, which depend most on Russian energy – have traveled the world. From Algeria to Qatar, Senegal, Congo and Canada, they are negotiating deals to replace Russian supplies.

Germany also relies heavily on Norway and the Netherlands, which have agreed to extend the life of their largest gas field to combat the energy crisis.

As a result, Germany’s reliance on cheap Russian gas – which once accounted for more than half of all gas imports – fell to less than 10% in August.

In Italy, consumption from Moscow has fallen from 40% to 23%.

Chancellor Olaf Scholz of Germany and other European leaders are defiantly declaring the era is over.

For decades, since Soviet times, Moscow has asserted to Germany and other countries that it is a reliable energy partner, regardless of political background. But now, European leaders say, Putin has broken that understanding.

“Something that was true during the Cold War no longer applies,” Mr. Scholz said late last week. “Russia is no longer a reliable energy supplier. It’s part of the new reality.”

That new reality, perhaps, should not have come as such a shock. Putin’s gas success dates back to 2004, when Gazprom cut deliveries to Belarus, in a battle for control of a transit pipeline into Western Europe.

In 2009, when Ukraine sought NATO membership under a pro-Western president, Mr. Putin ordered a drastic reduction in gas flows through the country; After Ukraine elected a pro-Russian president a year later, the Kremlin rewarded him with a 30 percent cut in the price of natural gas.

And even before Russia invaded Ukraine, the country reduced its exports in the summer of 2021 and did not replenish Gazprom-owned warehouses in Europe.

Sergey Vakulenko, an analyst in Bonn, Germany who has worked for many years in Russia’s energy industry, says that over the past two decades, Russian officials have seen the geopolitical power that the United States has. from its influence over the global financial system, and seeks to exploit Russia’s status as a major energy exporter in a similar way.

“As a superpower, there is a great desire to have something similar,” he said. “There’s a feeling that oil and gas is the answer.”

However, Russia has cut gas exports to Europe since it invaded Ukraine to varying degrees. Mikhail Krutikhin, a Russian energy analyst, said: “This is just an extortion case. “We’ve never seen it on this scale before.”

Going further, Mr. Putin has also taken on greater risks. An internal Russian government economic forecast described by Bloomberg News this week estimated that a complete cut of gas to Europe would cost up to $6.6 billion in lost tax revenue.

But with Gazprom posting a record $41.75 billion in profit in the first half of the year — $10 billion of which went to the Kremlin — that’s a cost Putin calculates to be acceptable.

For Russia, oil is the biggest source of revenue, and Putin may want to use gas as a political weapon while he can, said Thomas O’Donnell, an energy expert at the Hertie School, a public policy school in Berlin, said.

“This is where he has the greatest leverage to cause the most trouble in the European Union,” Mr. O’Donnell said. He added, “It’s a leverage he knows he’ll lose in a year – or maybe even after this winter.”

And a lot can depend on the severity of the winter.

Even as imports of liquid natural gas to Europe from other sources continue to be at record highs, a study published this week by the Bruegel research institute estimates that a complete shutdown of supply supply to Russia will cause the whole of Europe to cut consumption by 15%.

European nations formerly dependent on Russian gas imports for most of their domestic energy production have been racing to fill gas storage facilities. Germany’s capacity is now 86%, Italy’s is close to 84%.

In Germany, so far, the major players in the industry have managed to reduce their consumption by about 20%. According to models from the German Ministry of Economy and Energy, a similar amount will have to be removed from domestic use, if Russian gas continues to be shut down. If households do not cut back, Germany’s gas regulator has repeatedly warned, the choice could be allotted.

Europe is aiming to have enough liquid natural gas solutions by next year. Germany recently signed an agreement for a fifth floating LNG terminal, while terminals in Belgium, France and the Netherlands are already full.

The key to surviving this winter when Nord Stream is down will be how well European countries work together.

So far, only Hungary has signed an additional supply agreement with Gazprom.

By contrast, France and Germany agreed this week that Paris would send any excess gas to Germany, where it is desperately needed, and in return Berlin promised to send more electricity.

The thorny issue will be what happens if Germany’s more important industry has to be cut, and voters begin to insist supply must not be diverted to neighboring countries – like the Czech Republic, where 70,000 people took to the streets to protest the price hike. Annalena Baerbock, Germany’s foreign minister, warned that this is a challenge many European leaders may face this winter.

“That will be the central question that will really challenge us in the coming months,” Ms. Baerbock said. “Can we work together to secure an energy supply for all in Europe in solidarity?”

Gaia Pianigiani Contribution reports from Siena, Italy, and Matina Stevis-Gridneff from Brussels.

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