What Russia cutting off energy to Poland and Bulgaria means for the world : NPR


Pipes are seen on the fuel transmission level in Rembelszczyzna close to Warsaw, Poland, on Wednesday.

Janek Skarzynski/AFP through Getty Photos

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Janek Skarzynski/AFP through Getty Photos

Pipes are seen on the fuel transmission level in Rembelszczyzna close to Warsaw, Poland, on Wednesday.

Janek Skarzynski/AFP through Getty Photos

The Russian nationwide vitality large Gazprom announced on Wednesday that it was reducing off pure fuel exports to Poland and Bulgaria over the nations’ refusal to pay in rubles.

It was seen as a method for Russia to prop up its unstable currency and likewise retaliate in opposition to its European neighbors for Western sanctions associated to the invasion of Ukraine.

It additionally marked a brand new entrance within the struggle. Russia, which has grown extra remoted from a Europe more and more aligned with the USA, signaled it was prepared to make use of the continent’s heavy reliance on Russian pure fuel as political leverage.

Here is what the choice, which one European chief referred to as “blackmail,” may imply for the continent and the world:

It may speed up the European Union’s transition away from Russian vitality

About 40% of the EU’s fuel comes from Russia, however the bloc had been making an attempt to wean itself off of Russian energy even earlier than the invasion of Ukraine.

“We are going to stay united and help one another whereas phasing out Russian vitality imports,” European Council President Charles Michel said in a tweet.

Analysts say the choice demonstrates that Russia can be ready to penalize different, bigger European nations for failing to pay in rubles — even when it means Gazprom takes a monetary hit.

“It does present that Russia is prepared to halt provides if individuals do not subscribe to the brand new cost system,” mentioned James Waddell, head of European fuel on the London-based Vitality Points. “It is a warning shot for different greater patrons in Western Europe that they’re prepared to hold out that risk.”

Germany and Italy are among the many major European importers of Russian pure fuel.

Some European vitality firms seem prepared to satisfy Russia’s demand, nonetheless. At the least 4 European fuel patrons have made funds to Gazprom in rubles, Bloomberg reported. Hungary introduced earlier this month that it might pay for Russian pure fuel in rubles, too.

Vitality costs may rise internationally because the EU seeks gas elsewhere

EU nations that do not purchase pure fuel from Russia should purchase it elsewhere. That might result in a shake-up in international vitality markets, which have already seen their costs spike.

European patrons will probably search out liquefied pure fuel, or LNG, and bid up the costs as they’ve up to now, in response to Henning Gloystein, vitality director on the Eurasia Group.

“This, after all, signifies that fuel patrons internationally as distant as Japan and China and South Korea should pay extra for fuel as a result of these Europeans are coming into the market and driving up the worth,” Gloystein told NPR’s Morning Edition.

With the summer season approaching and no use for warmth, Gloystein says fuel demand is decrease, however that can change within the winter months.

Along with shopping for new vitality, some nations say they’re going to depend on their vitality reserves. Officers say each Poland and Bulgaria have gas reserves they may draw from.

The European vitality crunch might result in a bigger monetary disaster

Rising vitality costs may additionally worsen a world financial system that is already stifled by inflation, says Jason Bordoff, director of Columbia College’s Heart on International Vitality Coverage.

“If Russia had been to actually minimize fuel provides to a lot of Europe, notably Germany, it might trigger extreme financial ache,” he mentioned. “You are speaking about potential recession.”

Bordoff mentioned it might be too tough to search out sufficient various vitality provides to fill the hole within the short-term, which may result in vitality rationing and document excessive pure fuel and vitality costs.

Relations between Russia and the West stay tense

European leaders angered by Russia’s resolution to chop off fuel provide to EU members Poland and Bulgaria referred to as it “blackmail” and mentioned they’d search various sources of gas.

“That is unjustified and unacceptable,” European Fee President Ursula von der Leyen said in a statement. “And it reveals as soon as once more the unreliability of Russia as a fuel provider.”

The Kremlin mentioned the transfer was a “obligatory” response to what it referred to as “unprecedented unfriendly steps” — together with a choice to freeze the Russian Central Financial institution’s overseas forex reserves.

“They blocked our accounts, or — to place in Russian — they ‘stole’ a good portion of our reserves,” Kremlin spokesman Dmitry Peskov mentioned in a name with journalists.

Some Russia-based analysts mentioned taking cost in rubles was merely a method for Gazprom to guard its revenues from Western sanctions.

Peskov additionally pushed again on criticism that Russia was “weaponizing” its vitality assets. “Russia was and stays a trusted supply for fuel deliveries and stays dedicated to all its contractual obligations,” he mentioned.

However Bordoff, of Columbia College, says he thinks Russia made a misjudgment when it minimize off provide to Poland and Bulgaria.

“I believe utilizing fuel as a weapon, utilizing vitality as a weapon is shortsighted, self-defeating and capturing your self within the foot from Russia’s standpoint,” he mentioned.

“It is why Russia, for probably the most half, has not used vitality that method earlier than, even on the top of the Chilly Battle or the peak of battle between Europe and Russia.”


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