Putin’s calculation is that Europe will blink first because it might be unable or unwilling to go through the winter without Russian gas. That’s not going to happen.
“How did you go bankrupt?” “At first gradually. Then suddenly.”
Ernest Hemingway
For nearly seven months Vladimir Putin has been fighting against Ukraine a war that he cannot win. He might even lose it. In the last week Russia has lost ground – and credibility – to the Ukrainian counter-offensive. But he cannot backtrack. Too much is at stake.
Russia’s security and Russian territory are nowhere threatened by his war of choice. But his power is.
For two decades Vladimir Putin has built it, domestically and externally, on a track record of rapid success, ruthlessness, and bullying. He cannot let it go. What can he do?
Putin’s default response is likely to escalate the conflict. He is running short of options, of troops, of conventional assets. But he still has an array of non-conventional tools.
Leaving aside how far Putin — with Russia’s cyber, chemical and nuclear arsenals — might be willing to go to prevent Ukraine’s further advances, let alone victory, he is trying his chance at a second war by weaponizing energy and, specifically, gas.
On this second front, the European Union is the primary target. Gazprom is Putin’s faithful army. In a two-pronged offensive it is aiming at crippling European economies with a combination of shortages and skyrocketing prices and at sapping European resolve and unity in supporting Ukraine.
As a collateral benefit, the entire West, even if it does not directly dependent on Russian energy exports, feels the pain of unbearable energy bills for households and industries, gas prices at the pump, rising inflation, and potential social unrest.
In duly executing Kremlin’s orders, Gazprom reduced this year’s overall gas supplies to Europe by 40% compared to 2021, selectively targeting, countries and companies. As of September Nord Stream 1 was shut down completely. Even the pretense of maintenance was abandoned. Moscow announced that regular gas flows would only resume if EU sanctions were lifted.
That request is key to understanding the rationale of Putin’s gas war. The sanctions are beginning to bite Russian economy especially because of the loss of essential Western technology. Threatening to leave Europe without gas, while turning off and off the taps, is the best weapon to put pressure on energy starved Europeans. It also punishes them for supporting and militarily assisting Kyiv. In short: two birds with a stone.
But like any war, the gas war is not risk-free. The squeeze also amounts to a self-imposed embargo. Europe is left short of gas. In return, Russia will be short of money. It is that very money that keeps the Russian economy afloat and Putin’s war machine running.
Isn’t it counter-intuitive? Or not?
The energy/gas weapon will not last forever, and Putin knows it. He must use it now. The EU is on a one-way ticket to no-dependence on Russian oil and gas. It will not go back to Russian supplies.
Yes, Europe faces a critical energy crunch in 2022-2023 with severe risk of shortages. Yet don’t forget that storage facilities are filling up and Europeans have rapidly diversified their energy sources, however costly.
So in a couple of years Europe will have stabilized supply from non-Russia sources to meet demand.
Thus, Putin must maximize his leverage now with multiple purposes: removal of sanctions; sowing divisions within the EU and splitting the West; decreasing the intensity of political support and of military assistance to Ukraine – those hurt; scoring a political victory over Brussels and European capitals.
Again, as he did on 24 February, Vladimir Putin has entered an all-or-nothing game.
Either, the EU bends and he wins, or the EU does not remove the sanctions and he remains high and dry with unsellable gas. There are the existing pipelines that go to Europe – and what happens to them – and the new pipelines to China and India that have to be built from scratch. Call it victory and bankruptcy: there is not very much in between.
Putin’s calculation is that Europe will blink first because it might be unable or unwilling to go through the winter without Russian gas. And that the EU and/or individual countries will cave in before Russia’s war machine runs out of money (and/or he runs out of power). Putin bets on the EU being forced to lift the sanctions and/or at least fracturing. He is counting on unhappy public opinions pressuring governments to relent on sanctions and stop sending weapons to Ukraine.
Again, Vladimir Putin might have miscalculated. The EU will not remove sanctions. Even if some EU countries might lean in that direction, removal of sanctions requires unanimity. There’s not a chance for them to lift sanctions. Sanctions will stay.
Moreover, the EU has responded quickly. It has adopted a new regulation (2022/1369) on reducing gas demand reduction by 15% target. And it is working on new measures to contain prices, such as cap prices, windfall taxes etc.). Meanwhile, gas storage is up, already over the 80% target set for the end of September.
The EU, as well as the UK, is gearing up to a winter of a “war economy” that is needed to make sure that Putin also loses his second war.
Ambassador Stefano Stefanini is the former Italian High Representative to the North Atlantic Council