Putin has opened a new front. Europe has nothing to answer

It is no longer a secret to anyone that next winter will be very difficult for both Ukraine and the EU. Russia is reducing gas supplies to prevent EU countries from preparing sufficient stocks for the winter. The Kremlin hopes that this will make the EU more compliant to their demands. How realistic is Putin’s calculation? Will the EU make global concessions to Russia?

We wanted to get the answer to these questions from a European expert who is well aware of both the gas sector and the mood in Europe. That is why we asked these questions to Slovak energy expert Karol Hirman, who has advised both Slovak and Ukrainian governments.

Putin’s energy strategy

Putin’s strategy took shape already when he came to the Kremlin – even then he openly declared that the export of energy resources is an important part of the geopolitical strategy of the Russian Federation. Suffice it to recall 2006 and 2009 – two gas crises that affected both Ukraine and Europe.

We have been observing a decline in gas supplies to Europe since last summer, when on Catholic Christmas we saw that one of the key Yamal-Europe gas pipelines stopped and that Gazprom did not fill its gas storage facilities in Germany, Holland and Austria. This was already preparation for a special operation in Ukraine, but no one in Europe understood this yet. After February 24, we see how regularly Putin, through Gazprom, reduces gas supplies in order to put pressure on Europe and create chaos.

But we should not forget about the third gas pipeline – the Turkish Stream, which runs along the bottom of the Black Sea through Turkey to the Balkan countries and Hungary. This pipeline works without problems because it is part of Putin’s game with the European market, and Russia’s allies or “Trojan horses” in NATO and the EU are supplied through this pipeline: Recep Tayyip Erdogan in Turkey and Viktor Orban in Hungary.

By the way, Hungarian Foreign Minister Péter Szijjártó recently visited Moscow to negotiate additional gas supplies. Most likely, Orban will trade this gas with other countries, earning decent money for his position, which he has within the EU and within NATO, and in relation to Ukraine.

How will the energy embargo affect Russia?

So far, the Russian Federation has managed to avoid serious losses – although supplies are sharply reduced, prices are rising sharply at the same time. And on the basis of this, Gazprom has so far managed to compensate for its losses in terms of volume. However, this situation is not eternal, and sooner or later the problems will “catch up” with Gazprom.

When the European embargo gains strength, it will have a significant impact on the Russian Federation. But you need to understand and keep in mind that Putin is not an economist or a politician. He is a KGB officer, and in this his thinking differs even from the logic of the Soviet leaders. They were careful not to blackmail Europe with gas. Putin, on the other hand, wants to achieve his goal, and he is not very worried about losses.

Mechanism of marginal oil prices

“Collusion of buyers”, which is talked about a lot, is a working idea. It can affect oil prices and thus seriously hit the Russian economy. However, in order for this mechanism to work, it is necessary that the main non-Western clients of the Russian Federation, China and India, join it. Whether this is real, we don’t know yet.

The position of Saudi Arabia, the Arab Emirates and the Persian Gulf countries will also be important, since Russian oil creates competition for them in traditional markets in Asia.

Another important point: what condition the world economy will be in. We see that it has problems not only in the West, a sharp decline is also observed in China. All this is automatically reflected in the demand for oil and its prices.

Is the EU ready to impose an embargo on oil and oil products from the Russian Federation

All goes to the fact that the embargo will come into force. Of course, there will be an exception for the Druzhba oil pipeline. There is a very subtle detail here that is important for Ukraine to understand. The export of petroleum products from oil, which will be supplied through Druzhba, will go to Ukraine and support your country, including the army, on the move. It may not sound very pleasant, but there is simply no other way out.

Possible launch of Nord Stream 2

I would not say that now the goal of the Russian Federation is the launch of Nord Stream 2. The gas blackmail of the Russian Federation has other reasons: Putin wants to get the EU to reduce support for Ukraine, primarily in the supply of weapons.

On the other hand, Russian officials have recently begun to make statements that the launch of Nord Stream 2 is a way out of the current crisis and will increase Russian gas supplies to the EU. Most likely, this will lead to increased pressure from German big business on its government to meet Russia halfway with Nord Stream 2.

But here a question arises. If Nord Stream 1 is not working, and the explanations that this is due to problems with the turbines are fairy tales, and this is already directly stated by their manufacturer Siemens, then on the basis of which we conclude that the launch of Nord Stream 2 would solve this problem? Where is the guarantee that if Nord Stream 2 is launched, then in a couple of days or weeks it will also not fail?

Will Europe freeze?

The EU’s plan to save gas by 15% looks like a realistic target. Moreover, in many regions this goal was achieved even without an action plan from the European Commission. The current rise in gas prices in itself motivates us to save gas. Without any European regulations or orders. And this process will continue to gain momentum.

Another thing is that this is not capable of compensating for a complete halt in gas supplies from the Russian Federation. This stop is already a reality. And you need to be prepared for the fact that this and next winter in Europe will be very difficult. Of course, Europe will not freeze. Available reserves are already sufficient to provide gas supplies for households, hospitals and critical infrastructure.

But we must expect the regulation of supplies for certain groups of consumers, primarily large industrial consumers. At least – in some winter periods.

One way or another, the question of how much gas from the Russian Federation will go to Europe depends on how successful the Russian army will be or not successful in Ukraine. This is a factor that affects, in principle, everything. Including the energy sector of the EU, as well as the Russian economy and the stability of the Putin regime.

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