Editor’s Note: CNN contributor David A. Andelman, two-time winner of the Dealine Club Award, is a Knight of the French Legion of Honor, author of the book “A Red Line in the Sand: Diplomacy, Strategy, and the History of Wars That Might Still Happen” and blogging. Prior to that, he was a correspondent for The New York Times and CBS News in Europe and Asia. The views expressed in this commentary are those of the author alone.
Vladimir Putin is doing his best against the stronghold of Europe. This is the only way to review Monday’s comments by Kremlin spokesman Dmitry Peskov that Russian natural gas will not flow back through the massive Nord Stream 1 pipeline until the West lifts sanctions against Russia. This latest move “significantly increases the risk of Europe not getting gas through Nord Stream 1 all winter,” analysts at energy consultancy Rystad Energy said in a report quoted by CNBC.
There is no other name for it than extortion. It is a bad idea in the short term for Europe and in the long term for Russia.
The West imposed sanctions on Moscow after Putin’s forces invaded Ukraine in February. Putin, of course, was never very adept at long-term play. However, his short game did not end the pain and suffering. This is certainly the case in Europe. But for a number of reasons, Europe and the West must stand firm and united. It’s the only real way to fight a bully.
Europe reacted quickly and decisively. Even before Peskov’s remarks, much of the continent had begun to take measures to cushion the blows of the austerity measures already underway and the rise in energy prices and the inflationary consequences affecting millions of people. On Monday, the front page of the French newspaper Le Monde ran the headline “Energy Prize: Mobilizing European States”. Inflation in the eurozone is at 9.1% – more than four times the 2% target – and a Reuters survey suggests the continent is “almost certainly heading into recession”.
However, at a meeting on Monday of oil ministers from major OPEC countries, as well as other major oil producers, including Russia, it was decided to cut production targets by a relatively small – but not insignificant – amount below 100,000 barrels. one day. This decision was the exact opposite of OPEC’s promise to increase production by that amount, following President’s controversial summit. [dos EUA] Joe Biden with Crown Prince Mohammed bin Salman at the Royal Palace in Al Salam in July. The meeting was a bad idea, now even worse. Within minutes, Monday’s OPEC action sent oil prices up 3% in world markets.
To address these challenges, from rising energy costs to skyrocketing inflation, several countries have begun taking radical measures. On Sunday, the federal government in Berlin announced a $65 billion bailout plan to help German families. New British Prime Minister Liz Truss is considering a similar bailout, likely to cost more than £100bn (€115bn), Treasury sources told the Sunday Times.
The meeting of European energy ministers on 9 September would present discussion of a plan to curb natural gas prices across the continent. And the G-7 energy ministers agreed to impose a price cap on Russian oil and petroleum products from December, intended to lower the Kremlin’s revenues and weaken Russia’s financial base, while the oil would boost global markets. continue to supply.
Also on Monday, leaders from two of the continent’s pillars, French President Emmanuel Macron and German Chancellor Olaf Scholz, held a video conference to discuss energy. At a press conference after the meeting, Macron told reporters that they had reached an agreement: France will supply Germany with its surplus gas and in return Germany will send France the electricity produced. Macron also urged the people of France to cut their energy consumption by 10%. Cuts or rationing, he said, would be “just a last resort”.
But the pain probably won’t go away anytime soon. The euro fell to its 20-year low against the dollar on Monday following Peskov’s comments. The European Central Bank was already considering a sharp 75 basis point rate hike at the continental level ahead of Thursday’s meeting, reflecting the path the US Federal Reserve has been taking for months. “A sea change”, as the Financial Times of London put it. “There are no more pigeons at the ECB, only hawks,” Katharina Utermöhl, senior European economist at the German insurance company Allianz, told the FT. The bank may even start to reduce its balance sheet of €9 billion worth of securities.
Europe has other alternatives, although they are certainly less attractive and less impactful. Soviet-era gas pipelines are still seeing an uninterrupted flow of natural gas through Ukraine, despite the Russian invasion and Ukrainian leaders’ objections to Turkey. A greater supply of North Sea oil wells controlled by Norway and Britain could help Europe get through, perhaps until such time as reason returns to the Kremlin. But re-drilling in the North Sea could be highly controversial due to long-standing environmental concerns.
It is certainly a price worth paying, but the pain will be severe and there are already rumors of setbacks. Matteo Salvini, leader of Italy’s far-right party, claimed last weekend that the sanctions had indeed helped Russia achieve a $140 billion surplus in payments while harming the country’s economy, Europe and especially Italy. “I wouldn’t want sanctions to harm those who impose them more than those affected,” Salvini said. The Salvini League is united in a coalition with other Italian right-wing parties that have significant leadership ahead of the country’s September 25 national elections, according to a Politico poll.
It is fitting that Ukraine and much of official Europe oppose calls for the lifting of sanctions. Ukrainian President Volodymyr Zelensky, in a telephone conversation with European Commission leader Ursula von der Leyen, urged Europe to further tighten Russia with a new round of sanctions.
Strong will is essential in the polls and in ministries and parliaments across the continent. Putin has significant support in some still isolated sectors. There must be an equally deep understanding on the part of the West as to how high the price would be for any compromise in the face of Russian turmoil.