Putin’s gas cut destabilizes Europe at little cost to the Kremlin 2022-04-28 12:03:45

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BRUSSELS (AFP) – Cut off natural gas from Poland and Bulgaria It costs Russian President Vladimir Putin very little — but it adds pressure on European countries grappling with how to reduce energy imports feeding the Kremlin’s war fund and how to maintain a united front in war in ukraine.

EU officials say surrender to Putin asked to pay for gas in rubles Violates Western sanctions imposed on the invasion. Poland and Bulgaria were cut off after the request was rejected and said they would succeed because they were already working on a finish Reliance on Russian energy supplies.

Analysts say there is enough ambiguity in the European position to allow the Kremlin to continue trying to undermine unity among its 27 member states – even if there is an implicit threat of definitiveness. Big clients like Germany Italy may be empty because it will cost Russia a lot.

The power cuts have cooled the concerns of EU officials who are wondering how their utility companies will do Heating homes and generating electricity next winter. Putin got maximum turmoil for what he sees as a hostile alliance at minimal cost because Poland and Bulgaria, relatively young clients, were about to end their contracts at the end of the year anyway.

Poland’s gas imports totaled 10 billion cubic meters annually, out of the total European imports of 155 billion cubic meters from Russia. Approximately this amount of gas flows to Poland from other European countries to provide assistance.

Russian energy giant Gazprom lost relatively little revenue but opened a new front in its confrontation with Europe.

Putin creates “a system in which he can essentially divide countries – we see – because countries that do not want to comply with this new scheme will be cut off, while others will try to comply and essentially oppose the EU,” said Simone Tagliapietra, an energy expert and senior fellow at the Bruegel Research Center in Brussels.

European payments for Russian oil and gas run up to $850 million a day even as governments condemn the war. It is the result of decades in which Russia has been considered a reliable supplier of cheap gas despite warnings from Poland and other Central and Eastern European countries that Russia could use energy as a weapon. While Europe needs oil and gasThese sales are the mainstay of the Kremlin’s budget.

John Love, associate fellow in the Russia and Eurasia program at think tank Chatham House, said Russia’s cutting of Poland and Bulgaria was a signal to major importers Germany and Italy, which get 40% of their gas from Russia.

But if they are to follow through on their threats, he said of the Russian officials, they should cut off their noses to hate their faces. This is a big problem. So it’s kind of a chicken game.”

Large-scale gas cuts will lead to industrial users who cannot easily replace other energy sources. Spokeswoman Barbora Cerna Dvorakova said Liberty Ostrava steel plants in the Czech Republic “do not have a short-term solution to replace natural gas” because the changeover would take nine to 12 months.

Senior European Union officials said, Thursday, that European Union countries or companies that agree to the terms of a Russian presidential decree that insist on paying gas bills in rubles will violate EU sanctions. About 97% of European gas contracts with Russia are in euros or dollars.

Under Putin’s new payment system, the Kremlin said importers would have to open an account in dollars or euros at Russia’s third largest bank, Gazprombank, and then a second account in rubles. The importer will pay the gas bill in euros or dollars and instruct the bank to exchange money for rubles.

The violation of sanctions mainly comes with the use of the second bank account because the conversion of the ruble involves a transaction involving the sanctioned Central Bank of Russia.

The EU’s executive branch, the European Commission, says companies can remain committed by paying in euros or dollars per contract and then providing a “clear statement” to Gazprombank that their payment obligations have expired.

This leaves an opportunity for the Kremlin to accept or reject the statement – a potential pressure point on member states.

said David Elmes, energy expert at Warwick Business School. “So they are Europe’s hoax, if you like. What do you want to do about gas – or do you want sanctions?”

Uniper, Germany’s largest importer of Russian gas, said it was paying in euros and would continue to do so, but indicated it would be willing to open a second account in rubles.

“We believe it is possible to change payments in accordance with sanctions laws and the Russian decree,” the company said in a statement. “What is clear is that Uniper will continue to pay in euros.”

The company refused to specify when and under what conditions it will open the ruble account. “Dispensing with Russian gas in a short time is not possible, but it will be,” she said Dire consequences for our national economy. “

This is the reason for the imposition of EU sanctions so far Avoid Russian oil and gas. German Chancellor Olaf Schulz acknowledged Thursday that “any interruption will have consequences for the economic situation.”

Italian officials said they are waiting for more guidance from the European Union on whether the payment solution violates sanctions. Carlo Bonomi, head of Italy’s main business lobby, said he did not believe Russia would cut off natural gas shipments to Italy.

“It is clearly a situation in constant development, but regardless, the government is working with the aim of making Italy independent in case of any escalation,” he said. We are optimistic.”

But Putin may be playing a longer game, knowing that next winter will put more pressure on gas supplies. The European Union’s Executive Committee has unveiled proposals to reduce dependence on Russian gas by two-thirds by the end of the year through additional supplies of LNG by ship, faster distribution of wind and solar energy, and strict conservation measures.

Tagliabitra said coordinated action on energy diversification could be a victim of Putin’s demand for ruble payments as some countries get waivers while others don’t.

“How can we get a common response in the energy field if the different countries are working or not doing business with Putin?” He said.

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Kirka contributed from London and Jordan from Berlin. Karel Janicek in Prague and Maria Grazia Moreau and Nicole Winfield in Rome contributed.

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