The EU is playing hard to disarm Putin's gas weapons

 

Wolfgang Hansson 

 

The latter are crucial details that neither Europe or Russia can control.

 

Published: Less than 3 hours ago 

 

Updated: Less than 3 hours ago

 

This is a commenting text. Analysis and positions are the writer's. 

 

 

         Photo: Alexei Nikolsky/AP

 

COLUMNISTS 

 

The EU is playing a high stakes game to try to wrest the gas weapon out of Vladimir Putin's hands and at the same time reduce his war coffers.

 

If you succeed, it means that the price of electricity can drop significantly. 

 

If not, an already difficult situation this winter will worsen further. 

 

A central part of the EU's plan is to set a price ceiling on Russian gas. In other words, the EU would decide how much the Russian gas can cost. According to the EU Commission, this is possible because Russia has few alternative recipients of the gas that normally goes to Europe. 

 

To transport the gas, pipelines such as Nordstream 1, which runs on the bottom of the Baltic Sea to Germany, are required. There are very few alternative pipelines that allow Russia to export to others instead. Building new ones for China, for example, takes many years. 

 

Today, Russia is said to be burning up the gas that would normally go to Europe in Nordstream 1 without getting a penny for it. 

 

Even if Russia's war is unjust, it is natural for Putin to use the weapons at his disposal to try to win and for Europe to counter as best it can. 

 

Similarly, the world's seven richest countries, the G7, have promised a price cap on Russian oil. This is thought to be possible because a large part of the world's fleet of tankers insures its cargo via Western insurance companies. 

 

The tankers are simply prohibited from transporting oil sold above the price ceiling. The price ceiling is to be introduced from the turn of the year. 

 

In addition to reducing Russia's income, the price caps have the advantage of dampening the galloping inflation that is currently destabilizing the economies of the West.

 

 

A facility for Nordstream 2 in Germany. Photo: AP TT NEWS AGENCY 

 

Close all faucets 

 

But the Russian president made it clear yesterday that he does not intend to tacitly accept the EU's and G7's attempts to regulate the prices of Russian energy.

 

- We will not deliver anything if it goes against our interests, Putin claimed at an economic summit in Vladivostok. We will not deliver oil, gas, coal or heating oil. We will not deliver anything. 

 

Of course, Russia can close all taps to Europe, but then they also miss out on large revenues. Europe is the largest importer of Russian gas. In that case, Putin would effectively be targeting sanctions against himself because he cannot resell the gas to anyone else. 

 

Today, Russia has continued large revenues from gas exports to the EU because the shortage causes the gas price to rise all the time. But if Russia stops exporting, the income disappears completely. 

 

So what we are seeing between Russia and the EU is a chicken race where both sides play high to get the other to back down. 

 

Putin may choose to let Europe "freeze like wolves' tails", as he himself put it, and hope that he can thereby split the EU. Something he expects will lead to a reduction in Europe's military and financial support for Ukraine and an easing of sanctions against Russia. 

 

If the tactic succeeds, it may be worth partially draining the Russian treasury. 

 

If it fails, Putin's opportunities to carry the war on are weakened. 

 

Reduced dependence 

 

The EU, for its part, coldly expects that Russia will be forced to accept the lower price and continue to supply gas to a certain extent. Enough to see Europe through the winter. 

 

They dare to play high because Europe's dependence on Russian gas has decreased after all. EU chief Ursula van der Leyen claims that Russia now only accounts for nine percent of the gas the EU imports, compared to 40 percent when the war started. Among other things, the EU has signed contracts with Qatar, Algeria, Azerbaijan and the United States to replace the Russian gas. 

 

If it works, an additional benefit of the EU's bold tactics is that Russia will receive less money from its energy exports and thus find it harder to finance the war in Ukraine. 

 

If the EU's strategy does not succeed, it will be even more difficult and painful for Europe's citizens and businesses to get through the winter. 

 

The EU has a few more instruments in its toolbox. Proposals that will also be discussed when the EU's energy ministers meet tomorrow, Friday. 

 

"Solidarity tax" 

 

A "solidarity tax" on the energy companies that today make profits "they could never dream of" because the high gas price also drives up the price of electricity produced from wind, solar and nuclear power. The income from the tax must be distributed to needy companies and consumers in the Union. 

 

Mandatory savings on electricity during the hours where consumption is at its highest. In a worst-case scenario, rationing may become relevant. 

 

 Will it work? 

 

The truth is, no one knows. There are so many uncertainties. 

 

How will Russia act? 

 

How windy is it this winter? How cold will it be?