Europe is currently facing an unfolding energy crisis that is sparking questions over the role of Vladimir Putin’s Russia in exploiting rising demand, low supply, and geopolitical unpredictability.
Russia did not cause Europe’s current energy crisis due to which prices of natural gas soared by 600% over the last year, but Putin seems intent on using it to his advantage.
This extreme market instability is hitting key economic areas across Europe from fertilizer plants to the food industry and health sector.
Putin exploits Europe’s energy crisis | Why it is important
Gas prices fluctuate with Putin’s every word (they fell on Thursday when Putin signaled that supply would increase next month), supply press has been an unpleasant reminder of Europe’s dependence on Russian fuel. Moldova is in danger of a very cold and dark winter if Russia shuts down.
The crisis has been rising for quite some time driven by a mixture of rising post-Covid demand, weather-related events, mishaps at gas production plants and speculative trading on the EU’s emissions market.
Driving the news | Putin exploits Europe’s energy crisis
Putin has dismissed all the accusations that Moscow is exploiting the crisis as “utter nonsense and politically motivated tittle-tattle.” High gas prices can actually be a risk for Russia because countries could turn to other fuels like coal.
But Putin is no stranger to using gas to serve geopolitical purposes and to increase the dependence of neighboring countries on Russia or to punish countries that move toward the West.
Russia’s decision of not to transit more gas through Ukraine or to refill its European storage sites has worsened the crisis. Critics say Russia is weaponizing gas supplies. They call it an attempt to blackmail EU and German officials in a bid to put a pressure on them for granting the technical approvals for Russia’s Nord stream 2 pipeline.
How long will the current crisis last? | Putin exploits Europe’s energy crisis
In a high-stakes conflict, Moscow appears to hold all the cards. Kremlin officials have openly stated that certifying Nord stream 2 will ease the crisis. Of a greater concern is the ability of the EU to withstand Russian pressure.
The energy crisis has a variety of causes that have little to do with Russia. First, supply tightened due to a cold winter followed by a hot summer. Second, gas production in the EU has long been in decline and renewables have taken a hit in part due to low winds.
The current drama is unfolding following the completion of construction work on Nord stream 2 pipeline during summer 2021.
Putin exploits Europe’s energy crisis | Bottom line
Europe will continue to rely more on Russia for gas than any other source. But rather than locking in long-term contracts with Russia, several EU countries like Poland have sought to diversify their supply or sign shorter-term agreements, the Baker institute’s Mikulska says.
If the Ukrainian transit route is discontinued and Russian gas transit is directed through Russia’s Nord stream and TurkStream corridors without any clear legal safeguards, Europe’s current energy crisis could be just a foretaste of what may come in the coming years.
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