The Putin era has allowed Russia to reemerge as a powerful global actor – using its oil and gas reserves as foreign policy tools. However, this conscious effort to make Russian gas preeminent throughout Europe can be traced back to its Soviet past. Thus, it is of little surprise that Russia continues to use its Kremlin-style tactic of applying the ‘carrot and stick’ strategy of rewarding its allies and punishing its enemies with gas prices.
The Cold War and sometimes "Hot War" manner of the Moscow-Kiev conflict has now claimed over 3,700 lives and with relations further deteriorating over Ukraine’s unpaid gas bills, the European Commission has launched a ‘Stress Test’ assessing the potential impact of Russian gas disruption supplies to Europe.
European leaders hope to move on from the 2006 and 2009 disputes which caused suspension of gas flows, as the EU imports 53% of the energy it consumes via Ukraine. The European Energy Commissioner, Guenther Oettinger, recommended that the Kiev government pay Russia a total of $3 billion by the end of this year. However, one could argue that in order to prevent future interruptions of gas flows there needs to be a universal cooperation from all European member states. In the event of Russia cutting off its natural gas supplies to Europe, countries such as Finland and Estonia would be affected the most. And even high storage levels among other European countries will not guarantee a safe gas supply level as one cannot predict a long-standing crisis, or a particularly cold winter. Nevertheless, President Putin has to consider the laws of economics and markets when using Russia’s natural gas resources as a political weapon.
Making fewer and fewer sales of natural gas to Europe, will not allow Russia to continue funding its KGB-style state along with its foreign gambles. The Russian oligarchs will not see their companies lose profits to satisfy President Putin’s hunger for European autonomy and beyond. Russia’s poor record of unreliable gas supply has already forced many countries to seek out substitutes. Therefore, the European Commission’s Stress Test implies that in the case of a complete gas cutoff, Europe may be able to manage. However there must be a free interstate trade.
The Stress Test findings suggest that Europe can stand up against President Putin’s bullying and political masquerade. To the same degree, suspending gas supplies to Europe will lead to creating alternative supply markets. Therefore, EU countries should start acting jointly by introducing the free flow of natural gas and maximising capacity storage. It has been reported that as early as 2009, some of the major EU countries have been unofficially developing counter-measures to reduce dependence on Russian gas, however substantially more needs to be done.
According to a White House statement, the US is “accelerating in its plans to export natural gas” and with “such abundant, new supplies of gas and oil in America” it is only a matter of time until it will become “a major supplier to world markets” with its first customers being its “good friends in Europe."
President Putin’s regime solely relies on its energy industry and according to Gazprom the dealings with Ukraine have already caused its gas revenues to drop by $5 billion. Putin’s propaganda efforts to drive the Western and Eastern European countries apart through gas prices will undoubtedly fail. This is the time for Europe and the United States to stand up to the bully by creating a political foundation which will put an end to Putin’s aggression by depriving Russia of its geopolitical tool once and for all. If Europe does not want to be reigned over a volatile dictator, then Brussels will have to take control of its own fate. However, this may be extraneous to the subject being dealt with. A simple endeavour of containing Vladimir Putin’s ‘quasimonopoly’ might not force him out of Ukraine, but it will certainly offer Europe more authority over the European oppressor.
At the end of the day, trade is trade. Even in Russia.