It is widely seen as a major escalation in the conflict with Russia. On Wednesday, the Kremlin did what EU countries had feared for weeks: it deployed its ‘gas weapon’ and cut off gas supplies to Poland and Bulgaria. The question now is whether more EU countries will soon be pinched off. And how Europe will respond. Five questions.
1Why does Russia decide to take this step?
According to Russia, the issue is strictly “business” and warned about this a month ago. President Putin then ordered that from now on European countries could only pay for Russian gas in rubles, instead of euros as usual. On Tuesday, the deadlines for the monthly invoices for Poland and Bulgaria expired. However, both countries are refusing to comply with the Russian demand, so Russia is now doing what it says.
At the same time, the timing of the move could hardly be more spicy from a diplomatic point of view. Since the invasion two months ago, EU countries have been hesitating about punishing Russia for its war aggression with an oil boycott – with Germany as the main obstructionist. But since Tuesday, that drastic sanction seems within reach. The German Minister of Economic Affairs, Robert Habeck, suddenly announced that it was only a matter of “to dawn” Germany can do without Russian oil completely – thanks possibly to Poland, of all places, which could supply alternative oil via the port of Gdansk and then inland vessels.
Seen from this point of view, the Russian step also seems to be a flight forward, with Moscow not shying away from intervening where Europe does not dare to do so itself: a gas boycott is even more sensitive for European countries than an oil boycott, because of the great dependence on Russian gas.
2Should other countries now worry about being next?
That is to be feared. Several payment deadlines for European countries are expected to expire in the coming days and weeks. Although no one knows exactly when, because that information usually remains secret in the gas world. But if those countries also refuse to pay in rubles, the same fate awaits them, Putin’s spokesman threatened Wednesday afternoon.
In addition, the Russian pipeline to Poland continues into Germany. Although Germany has recently stopped obtaining gas from Russia via this pipeline (it now has its ‘own’ supply route, Nord Stream 1), now and then it still does. a little through. Those supplies may also be at risk. Gazprom said on Wednesday that it will continue to supply gas destined for other European countries via Poland and Bulgaria, but it is warned Warsaw and Sofia immediately said that they should stay away from that so-called transit gas. Otherwise, those deliveries will also be discontinued.
Bulgarian Prime Minister Petkov said on Wednesday that his country may stop funneling gas to Serbia and Hungary, which have so far been very lenient on Russia. The Bulgarian energy minister denied that again. In 2009 there was exactly the same dynamic, when Russia squeezed Ukraine from gas and nothing came out of the pipelines further down the road. It caused uproar and discord in Europe.
Also read: In Germany, the call for a complete energy embargo is getting louder
3What are the consequences for Poland and Bulgaria?
It probably won’t be blue-eyed for the Poles and Bulgarians – if only because the winter season is almost over. The Polish Minister of Climate and Environment, Anna Moskwa, immediately tried on Tuesday to reassure† The storage depots are three quarters full and a lot of work has been done recently on arranging alternative suppliers.
The situation is probably different for Bulgaria. That country is considerably less advanced in tapping alternative sources. But the Bulgarian gas market is a lot smaller and the country can therefore probably be helped more easily by other EU countries. Greece already offered on Wednesday help to†
At the same time, the Russian measure will hurt a lot financially. Energy prices were already sky high. The gas price shot up further on Tuesday in response to the news and rose further on Wednesday morning further†
Inflation is already very high in Poland, a problem that affects all of Europe. Due Tuesday warned the European Commission before the potentially disruptive effects of rising energy prices, especially for next winter. Germany previously warned that it may have to ration energy in the event of an acute supply stop.
4What is Europe doing?
The President of the European Commission, Ursula von der Leyen, immediately released a letter on Wednesday morning declaration in which she called the Russian measure “unjustified and unacceptable” and accused Moscow of “blackmail”. She went on to say that the EU was prepared for such emergencies and Member States would help each other should shortages arise. An emergency meeting was held in Brussels on Wednesday morning.
At the same time, there is now a risk of further cracks in the European front. The key question in the coming weeks will be how other member states will deal with the Russian ruble requirement. Do they also refuse, or do they choose eggs for their money? Hungary and Slovenia said at the beginning of this month that they had already signed a deal with Moscow to be able to pay de facto in rubles. Bloomberg financial news agency reported Wednesday, based on anonymous sources that four European gas companies have already made ruble payments. Germany’s largest gas purchasing company, Uniper, suggested on Monday that it also finds that this should be possible.
Poland sees that as capitulation. And more importantly, a violation of its own European sanctions against Russia. The European Commission is still grappling with the issue. Analysts argue over the interpretation of a ‘guideline’ issued last week for countries on how to deal with the Russian requirement. Nevertheless, at a press conference on Wednesday, von der Leyen said the directive was “clear”. “Payments in rubles violate our sanctions unless allowed under current contracts.”
Also read: Can we do without Russian gas?
5What are the consequences for Russia?
For a long time it was thought that Russia would never take this step, because it itself is also dependent on gas sales to Europe. That provides Russia hundreds of millions every day, money that is partly used to finance the war.
However, Russia will be able to spare the gas revenues from Poland and Bulgaria, it is not a huge amount (Poland obtains 10 billion euros of gas from Russia annually, which amounts to about 6 percent of the total European import of Russian gas). The price increases as a result of the shock also offset the loss. But it will certainly not be easy for Russia to find alternative buyers. There are not that many pipelines to China, for example.
For Moscow, the question is also how Brussels responds, and above all: how quickly. A European oil boycott will hit Russia hard. In recent weeks, it seemed strongly that if such a boycott were to come, it would certainly not take effect immediately (to give countries time to phase out). The question is whether that will now change. After all, according to experts in ‘economic warfare’, it is imperative to react hard and quickly. However, Commission President von der Leyen did not mention countermeasures in her statement on Wednesday morning. A possible oil boycott will come “when the time is right,” she told reporters during her press conference.