Europe pays every day Russia, by imports of gas and oil, more than €800 million, almost 300,000 million euros a year. Enough to finance a few wars.
The European sanctions on Moscow, especially the economic ones, such as the freezing of more than 300,000 million euros of assets of its Central Bank, hurt the russian economybut the damage does not seem to be enough to make President Vladimir Putin change his mind.
Europeans have left a penalty that would bring Russia economically to its knees, apply a virtually total trade blockade that included the ban on importing Russian gas, oil and coal into Europe.
The economic blow to Moscow it would be huge but it would also be a considerable blow for some European countries especially those further east and those most dependent on Russian gas to run their industry.
Sanctions on Russian gas? Germany, Italy and Hungary say “no”
The meeting of European foreign ministers this Monday in Brussels, preparatory to the summit of heads of state and government on Thursday and Friday (which will be attended by the American Joe Biden, visiting the Belgian capital for the NATO summit of the same Thursday), focused on the next round of sanctions and the fifth, and if that veto of Russian hydrocarbons will enter it.
The European foreign minister, the Spanish-Argentine Josep Borrell, asked the foreign ministers sanctions on the energy sector. The Czech, Slovak, Slovenian and Irish foreign ministers joined the request that the Polish, Estonian, Latvian and Lithuanian have been making for days: stop buying russian oil and gas because if it doesn’t, Europe is financing Putin’s war.
the chancellors did not reach an agreement. If eight countries push for that veto to be activated now and a majority of governments would follow that plan without much fuss, the German, Italian and Hungarian executives refuse.
German Chancellor Annalena Baerbock said at the start of the meeting that Berlin will eliminate its dependence on Russian hydrocarbons. “gradually and at full speed”. If that means anything. Germany refuses because of the impact it would have on its industry, something that Ukrainian President Volodymyr Zelensky made ugly to the Bundestag in his speech to German MPs last week.
Italy is more discreet but he is also against that commercial veto on Russian hydrocarbons. Italian industry is one of those better relations has with Moscow from all over Europe. The Hungarian veto is more political for the good relations between Prime Minister Viktor Orban and the Russian president.
Hungary will not support sanctions on Russian exports of hydrocarbons because it considers that it would jeopardize its energy security.
Hungarian Foreign Minister Peter Szijjártó said in Brussels on Monday: “We do not support sanctions that endanger Hungary’s energy security.”
Hungary depends on its neighbors. If the Ukraine, Poland, Slovakia, Bulgaria… decide to turn off the taps, Russian oil and gas will not reach them.
The economic cost
economic institutes and think tanks Brussels and other capitals have already calculated the economic cost to Europe if they make that decision.
They believe that turning off the oil tap will make it more expensive, but may be substituted by imports from other suppliers. Stopping buying Russian gas immediately would be more difficult.
almost the 40% of natural gas that Europe consumes is bought in Russia. A part could be replaced by more imports from Algeria (via Spain and Italy) and from Norway. Another part could come by increasing the number of methane tankers that carry liquefied gas to European ports, mainly from the United States, Qatar and Nigeria, to regasify it in Europe.
That idea has limitations until they are built more regasification plants because right now more than a third of all these plants in Europe are in Spain and there are not enough gas pipelines to France to greatly increase gas transportation. The final solution would be to reduce the demand for natural gas by between 10% and 15%.
The meeting of chancellors also served for the 27 to give the go-ahead to double, from 500 to 1,000 million, the community budget for pay for weapons and send them to Ukraine. Germany on its own will put another 1,000 million.