What is Europe’s freedom worth to us?
We must stop funding Putin’s war with our energy imports
The war in Ukraine is on a knife edge. If Putin has speculated that Ukraine will fall into his lap like a ripe fruit, he has thoroughly miscalculated. Not only Kiyv, but also the towns in Russian-speaking eastern Ukraine are fighting back with desperate courage. Putin is now resorting to the methods he has already demonstrated in Chechnya and Syria: Bombing residential neighborhoods, cutting off besieged towns from food and medical aid, attacking energy supplies. We should have known what he was capable of — if we had wanted to know.
A humanitarian catastrophe is unfolding before our eyes. No one knows how long the Ukrainians can hold out. We have hesitated too long to provide them with the weapons needed to keep Russian superiority at bay. We have taken too long to put in place economic sanctions that will hit hard. However, their full impact will be delayed, especially since the sanctions have a gaping hole: the Russian energy sector is largely exempt.
The Russian banks through which the oil and gas trade is conducted, are not subject to any restrictions on their international business. Since Putin unleashed the war, Rosneft and Gazprom have been exporting at full throttle. Due to record oil and gas prices, their revenues have skyrocketed. In other words, the European Union is undermining its own sanctions by increasing imports of Russian hydrocarbons. We are flushing hundreds of millions of euros a day into the Kremlin’s war chest. What schizophrenia, supplying Ukraine with weapons with one hand and financing the Russian war machine with the other.
We are now reaping the poisonous fruits of an energy policy that has maneuvered us over a long stretch into ever deeper dependence on energy imports from Russia. It was pushed by a well-lubricated Russia lobby, headed by a lowlife ex-chancellor. The “strategic energy partnership” with Russia pursued by both the SPD and the CDU/CSU deliberately or negligently ignored the security policy implications of this strategy. It ignored the warnings of our partners in Central and Eastern Europe just as callously as it ignored the security interests of Ukraine.
Now we are stuck in a trap of our own making. 55 percent of Germany’s natural gas consumption and more than 40 percent of our oil imports come from Russia. We have financed Russian armament and Putin’s propaganda apparatus for years. Russia is a fossil empire. Revenues from oil, gas, and coal exports make up the between 30 and 40 percent of the state budget. They are the source of shameless enrichment for the power elites, who use petro-euros to finance their palaces and luxury yachts.
To stop Putin, we must act now and immediately
The exit from this dirty alliance is not witchcraft. It requires, above all, the massive expansion of renewable energies, the establishment of an international alliance for green hydrogen, the electrification of transport, the increased use of heat pumps and thermal solar energy for heating homes and offices, and a leap in energy efficiency. The problem is: This transformation of our economy takes years. But to stop Putin, we must immediately cut off his financial resources for his war machine. Ukraine cannot wait until we painlessly replace Russian oil and gas with alternative energy sources.
If we have good reasons to avoid getting into a direct military confrontation with Russia, we are left with two means of supporting Ukraine’s defensive struggle. We must supply it with the most effective weapons systems and cut off Putin’s money supply. Every day we hesitate and dither will be paid for in the blood and tears of Ukrainians.
Oil export revenues are the largest item in Russia’s trade balance. The most consistent response, therefore, seems to be an import freeze on Russian oil. The lost supplies would have to be replaced by increased imports from OPEC countries. However, the Kremlin could probably get over such a step. If Arab oil flows increasingly to Europe, Russian oil can fill the resulting gaps, provided the country is not completely isolated from international payments.
The situation is different with gas: Russia would not be able to compensate for a loss of the European market in the short term. Therefore, this is the regime’s financial Achilles heel. However, the costs of a gas embargo are also higher for the EU. Russia dominates the global gas market. Current demand exceeds supply, and natural gas imports can only be diversified to a limited extent in the short term. Liquefied natural gas (LNG) is also scarce and expensive.
Challenging, but manageable
Russian natural gas covers a good 40 percent of the EU’s current demand. If we were to pull out completely, we would be left with a gap of roundabout 15–20 percent in the coming winter season after exhausting all the alternatives available in the short term. In Germany, this gap may be even larger due to its particular dependency on Russian gas. It would mainly hit industry, especially basic chemicals. The power sector is the least of the problems. If necessary, gas-fired power plants can be temporarily replaced by coal and nuclear. The biggest gas guzzlers are homes and office buildings. Here, a reduction in temperatures of just 2 degrees would save considerable amounts. No one would have to get cold feet because of this. Saving energy helps us out of a tight spot.
It is also true that a gas and oil boycott against Russia would drive up energy prices even further. Rising energy costs are already a poverty risk for low-income earners and a competitive disadvantage for energy-intensive companies. The state would have to provide social compensation and ease the burden on businesses to give them time to switch to alternative energy sources and more efficient processes.
Measured against the Ukrainian tragedy and Putin’s threat to the European peace order, however, these problems appear in a different light. Tackling them would be less grueling than the show of force that Covid 19 has called for. This applies to the federal budget as well as to civil society. In the end, the price we would have to pay to deprive Putin of funding for his war policy here and now would be much less than the cost of a future confrontation with a neo-imperial Russia.
If German and European policymakers still balk at a complete cutoff of gas imports from Russia, we should at least join with the U.S. in imposing an oil boycott. In addition, the EU could decide to shut down Nord Stream 1. This would affect about one-third of Russian gas imports to the EU and could be managed without much friction. Nevertheless, it would be a strong signal to the Kremlin that the Europeans mean business. Gazprom would then have to send its remaining exports to the EU through the continental pipeline network, much of it through Ukraine. That would be the best reinsurance against destruction of Ukraine’s gas infrastructure by the Russian military.
Either way, we must act quickly now to prevent more suffering and destruction. Putin is speculating that European democracies are not willing to pay a tangible price for defending law and freedom. He must not get away with this. The price could otherwise become much higher.
This text was first published in German at spiegel.de.
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