Russia is using its dominance of the European oil and gas market, where it accounts for 40% of EU gas consumption, to attempt to reduce support for Ukraine.
To ramp up that pressure ahead of the winter, Russia has closed off the Nord Stream 1 pipeline to Germany from August 31 to September 3 – ostensibly for maintenance, but probably as an attempt to seek concessions from Brussels over sanctions relief. Meanwhile the UK’s chancellor of the exchequer Nadhim Zahawi was due to meet the US treasury secretary Janet Yellen on August 31 with a plea for the US to step up energy exports to help with the crisis.
As European gas prices soar, Russia has burnt off gas, rather than send it through its European pipelines. For instance, a gas plant near the Finnish border has been burning an estimated $10 million (£8 million) worth of gas daily since August 27.
Russia’s domination of gas supply to the EU is its biggest economic weapon, and there are fears that it will decide to turn the gas taps off completely. On August 30, Gazprom cited a contract issue when it cut off gas to France – and the same thing happened to Poland and Bulgaria in April 2022.
Russia has demanded that all gas payments be made in roubles, even though this infringes the contracts, and this has also been used as justification to stop gas being supplied. Meanwhile, EU states and the UK are scrambling to find energy supplies for the winter, and to move away from reliance on Russia.
European states have become desperate to fill their storage facilities for the coming winter. Germany appears to have met its target of 80% capacity, but whether other European states can find the necessary storage is unclear. Countries are looking for different solutions: Bulgaria is saying it will renegotiate a gas deal with Russia, and Hungary has started negotiations with Russia.
Conservative leadership candidate Liz Truss has said that if she becomes UK prime minister, the UK will drill for more oil in the North Sea. It is possible that if winter is cold, old divisions in Europe will return and national fights over energy supplies may fracture alliances and the EU.
Russia’s economy has long been based on resource extraction and exportation. According to the World Bank in 2020, it makes up 46% of Russia’s GDP. Oil and gas account for nearly half this figure, with metals, chemicals and food products making up the rest. According to figures from Statista, oil and gas accounted for 21.7% of Russian GDP for the first three months of 2022 – the highest figure for oil and gas as a fraction of Russian GDP since 2017.
After the Orange Revolution in Ukraine in 2004, the pro-Russian regime lost power to a popular uprising against electoral fraud. Russia then adopted other techniques to put pressure on nations including Ukraine to fall in line with its plans. Through promotion of culture, ideals and values, often called soft power, a state can convince others to fall in line with its plans. Russia tried to implement these soft power tactics in the post-Soviet region with varying levels of success.
Ultimately, however, the need for others to perceive Russia’s status as a major power is cemented not by the promotion of cultural values but by having the capacity to use force.
Russia’s tough tactics
Consequently, Russia has relied on either military incursion, as in Georgia in 2008, or economic pressure. At various points it has used economic weapons such as banning Moldovan wine or the famous Borjomi water from Georgia – both in 2013 – to entice these states to follow a more pro-Russian line.
However, it is gas which has always been Russia’s major economic weapon against the EU and its neighbours. The gas wars of 2006 and 2009 are cases in point. In 2006, due to Ukraine not paying its gas bills, Russia reduced the pressure in the gas pipes through Ukraine and reduced supply. This adversely affected EU economies and emphasised the fragility of reliance on Russia. In 2009, the scenario played out once again.
Russia has systematically used gas as a weapon to reduce gas flows to Europe, thereby forcing European politicians to be more accommodating. These crises highlighted that Europe needed to act quickly to wean itself off Russian gas decades ago, as the Kremlin would continue to exploit this control. However, logistical hurdles have proved difficult to overcome.
The Russian government believes it can reduce western support for Ukraine by limiting gas supplies and creating a European recession. However, Europe needs to steel its nerve and continue to support Ukraine militarily and use smarter sanctions. This is the only way to bring Russia to the negotiating table.
The Kremlin hopes a cold winter and high energy bills will turn European voters away from supporting Ukraine, as they grow ever more concerned about domestic issues. Pro-Russia voices are already playing on this message to convince them that the fighting in Ukraine is not worth it. However, it would send a terrible message to Russia and other autocrats if the west gives up when Russia turns up the pressure.
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