Putin’s Trump Card: Energy Supremacy

8569327577_19127369f0_o_variantWinter is coming, and the E.U. cannot afford to play Russian roulette.

By Juda Jelinek.

Napoleon and Hitler both surrendered to frosty Admiral Winter in their attempted territorial expansion towards Russia. It seems that Vladimir Putin could once again use the conditions of winter for his country’s advantage. While an unconvincing temporary ceasefire was arranged in September between the Ukrainian government and East-Ukrainian separatists, in recent days there has been a reduction in the flow of gas that Russia’s state-owned company Gazprom supplies to Poland, Austria, and Slovakia. While negotiations have begun in Ukraine, appeasing Putin’s ambitions will not be so easy. With the cold season approaching in the North Hemisphere, a question looms over the situation: could Vladimir Putin exploit the E.U.’s energy security dependence on Russia to shift Europe’s borders in his favor?

In April, Russian President Vladimir Putin declared in an open letter to European leaders that Europe faces an increasing risk of a new gas supply crisis. For the third time since 2006, Moscow cut gas supplies to Ukraine, citing Ukraine’s unpaid bill. Gazprom has already increased Ukraine’s gas price by 81 percent from $268.5 per thousand cubic meters (TCM) in late 2013 to $485 per TCM in April 2014. Ukraine considered this new tariff—Russia’s highest gas price in Europe—unfair and unsustainable. The European Commission accused Moscow of raising gas prices as another move in Putin’s game to ‘divide and conquer’.

This, together with the other aspects of the dispute over Crimea and Eastern Ukraine, prompted Moscow to halt gas supplies to Ukraine in June. The two nations are currently engaged in talks mediated by the E.U. to ensure that gas will be provided throughout the winter if Ukraine immediately begins payment on its outstanding debt, but the cut-off lever will still remain on Putin’s desk should he want to exert pressure on behalf of the Russian-speaking separatists in Eastern Ukraine.

Since June 16, Gazprom has only been supplying the exact amount of gas requested by its European partners on the other side of Ukraine. So far Ukraine, which relies on Russia for 60 percent of its yearly gas consumption, has managed to keep its heating on by using reserves. But as winter approaches, supplies are running out, and the country has already turned to neighbors Poland and Slovakia for gas.

Moreover, the economic brew in Europe has worsened since the summer as the U.S. and European Union launched their latest sanctions, blocking Russia’s banks and defense and energy companies and prohibiting both crucial financing provided by Western banks and the sale of high-value Western technologies to Russia. Those bans led Russia to retaliate with bans on many European and American food exports.

On September 8, just before the E.U. sanctions were introduced, the energy market went…

To read complete articles from the Autumn 2014 issue, you must subscribe to our eReader edition.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s