Europe's Freezing Winter: Putin turns off gas taps

Hello everyone!

Today I will be explaining the consequences that Europe faces as Russia cuts off the gas supplies to Europe in retaliation for the hard-hitting sanctions imposed on Moscow.

Introduction:

Europe is witnessing one of its worst wars since World War 2. Russia's war in Ukraine has had long-lasting and far-ranging impacts around the world and especially in Europe. Russia began with its brutal onslaught on 24th February this year and the end of the war does not seem a possibility in the near future. As the invasion of Ukraine began, the United States and its European allies began imposing a series of economic and political sanctions on Russia and its ally Belarus without shedding light on what consequences Europe may face as winter approaches. These economic sanctions did not have the same effect as what economists feared: a complete collapse of the Russian Economy. For a few months, Russia faced a series of problems like the Rouble depreciation, its severing trade ties with European nations and even a recession. However, Russia came out stronger, in June, when Rouble topped the charts and was declared the best-performing currency. Europe desired to break the back of the Russian economy, however Russia continues to finance its barbaric attacks across Ukraine. Come winter and European nations find themselves at crossroads, whether to keep on raising sanctions against Russia and supplying weapons to Ukraine or save its own back.

Europe's Energy Dependence on Russia

European economies are highly dependent on natural gas for their electricity production, transportation and heating. Europe imports around 40% of its total gas supplies from Gazprom, a Russian majority state-owned energy corporation, particularly Germany, which is dependent on Russia for more than half of its gas supplies. Nord Stream 1, which is the single biggest pipeline, runs between Russia and western Europe that provides Europe with Russian natural gas. Europe's heavy dependence on Russian natural gas could leave the continent vulnerable to freezing winter. Before the war, European imports of Russian gas stood at more than 40%, however, given Russia's recent gas cuts that figure has dropped to a mere 15%.

Economic Sanctions after the Ukraine War

Following Putin's invasion of Ukraine in February 2022, the United States along with its European allies has imposed a series of harsh economic sanctions on Russia. As part of its sanctions package, the EU has imposed a number of import and export restrictions on the EU's trade with Russia. The proposed sanctions forbid the export of aviation industry equipment, semiconductor technology, spare parts for aircraft, jet fuel and a number of luxury items such as cars and jewellery etc from the Eu to Russia. Some of the import restrictions include: phasing out of Russian crude oil by the end of 2022 and restricting imports of goods such as steel, iron, liquor etc. Ten Russian banks have also been banned from the SWIFT banking system, which facilitates information exchange between financial institutions. As a result, Russian banks will be prevented from exchanging foreign currency and assets from abroad. This will negatively impact the Russian banking system and broadly the Russian Economy.

Kremlin's Response to the Sanctions:

Following a series of sanctions on the Russian economy, the Kremlin in early September warned Europe that it will not resume gas supplies to Europe through Nord Stream 1 if the sanctions are not lifted. Moscow has blamed the sanctions by western economies have resulted in technical problems in the gas pipeline and thus they will be unable to resume supplies until Europe rolls back the sanctions. The European Parliament has proposed a price cap on Russian gas to which Putin's response has been swift and he has threatened to cut all gas supplies to Europe if it agrees to such measures.

Conclusion:

If Putin keeps the gas taps off this winter, an inevitable recession will loom all over Europe. Gazprom has threatened to freeze Europe this winter. The European governments however have come up with a plan of gas-rationing to tackle the crisis but it's one thing to reduce the demand and consumption of natural gas and quite another to implement it in the middle of the 'European winter'.

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References:

NBCUniversal News Group. (2022, July 21). Energy War looms as Europe braces for Putin to reduce natural gas exports. NBCNews.com. Retrieved October 9, 2022, from https://www.nbcnews.com/news/world/russia-ukraine-nord-stream-putin-europe-gazprom-rcna39043

Guruswamy, M. (2022, September 17). Winter is coming: Europe without Russia's gas supply could face a harsh season. The Indian Express. Retrieved October 9, 2022, from https://indianexpress.com/article/opinion/columns/winter-is-coming-europe-without-russias-gas-supply-could-face-a-harsh-season-8156009/

Palumbo, J. H. & D. (2022, September 29). Russia sanctions: How can the world cope without its oil and gas? BBC News. Retrieved October 9, 2022, from https://www.bbc.com/news/58888451

Person. (2022, September 7). EU plans to Cap Russian gas price as Putin warns west of winter freeze. Reuters. Retrieved October 9, 2022, from https://www.reuters.com/markets/europe/putin-threatens-halt-energy-supplies-czechs-get-cold-feet-price-cap-2022-09-07/

Jack, V. (2022, September 7). You'll 'freeze freeze,' Putin warns west over energy sanctions. POLITICO. Retrieved October 9, 2022, from https://www.politico.eu/article/commission-president-ursula-von-der-leyen-announced-five-immediate-moves-to-tame-eu-energy-prices/

NBCUniversal News Group. (2022, May 7). Proposed E.U. ban on oil marks a turning point in West's measures against Russia. NBCNews.com. Retrieved October 9, 2022, from https://www.nbcnews.com/news/world/proposed-eu-ban-oil-marks-turning-point-wests-measures-russia-rcna27429