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Russia’s sanctions ultimatum piles pressure on Europe

The euro sunk below $0.99 on Sept. 5, 2022 after Russia announced cutting gas deliveries to Germany. (AFP)
The euro sunk below $0.99 on Sept. 5, 2022 after Russia announced cutting gas deliveries to Germany. (AFP)
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09 Sep 2022 05:09:34 GMT9
09 Sep 2022 05:09:34 GMT9

The Kremlin this week put an ultimatum to Europe: If Europe lifts its sanctions, Russia will allow its gas to flow again. To what extent is this realistic? And what are the possible implications for the Ukraine conflict?

Russian energy supplier Gazprom last Friday declared that a suspension of gas supplies westward via the Nord Stream 1 pipeline would be continued indefinitely, citing “malfunctions” on a turbine along the pipeline. The head of the European Commission, Ursula von der Leyen, responded by announcing that it was time to impose restrictions on Russian gas in the EU. She specified that the European Commission would soon come up with an initiative.

On the same day, the finance ministers of the G7 countries (the US, UK, Canada, Japan, Italy, France and Germany) declared their intention to impose a price cap on Russian energy. To do this, they want to create a “broad international coalition” that sets a price limit for Russian oil. The US Treasury believes the introduction of a restriction on the flow of oil from Russia would eliminate sharp jumps in gas prices, but Germany is against setting a price cap on Russian gas.

In Berlin, it is thought that the approach should focus on “less provocative steps” in the context of the energy crisis, such as imposing taxes on the excess profits of energy companies. Serbian President Aleksandar Vucic predicted at a joint press conference with his Turkish counterpart Recep Tayyip Erdogan that the upcoming winter in Europe will be cold, and that the next one will be “polar,” as he believes that no one wants to look for solutions and everyone expects the defeat of their enemy, not a compromise.

Europe is in a very complicated position. On the one hand, it has no alternative suppliers of gas. Despite ongoing deals with other energy suppliers, including the energy-rich GCC member states, it is impossible for another supplier to offer gas to Europe in time for the coming fall-winter season due to existing contracts and logistical limitations. On the other hand, sanctions remain an effective economic tool, which in the eyes of Europeans cannot be lifted, as that would mean accepting Russia’s actions in Ukraine.

Besides harming the Russian economy, European sanctions are also damaging European economies — perhaps even on a larger scale

Dr. Diana Galeeva

This scenario may lead to the “acceptance” of Russian referendums in various Russian-held territories. As of the end of August, Russian forces continued to occupy all or parts of the Donetsk, Zaporizhzhia, Kherson, Luhansk, Kharkiv and Mykolaiv oblasts. The referendum held in Crimea in 2014 can be seen as an example for all these regions. Moreover, Russian President Vladimir Putin, answering questions at the plenary session of the Eastern Economic Forum on Wednesday, called the Kyiv government “illegitimate,” because it is based on a 2014 “coup.” This suggests that a key condition for dialogue between Russia and the European states will be the replacement of the current Ukrainian government.

If Russia’s ultimatum is not met, Europe will experience soaring prices for energy and even shortages. The outcome of this conflict is that ordinary people and businesses are facing challenges. For example, in the UK, pubs are warning of mass closures as the energy crisis deepens, while other small businesses are folding in the face of high energy bills. Germany has delayed the closure of two nuclear power plants, along with offering a €65 billion ($65 billion) support package. Besides harming the Russian economy, European sanctions are also damaging European economies — perhaps even on a larger scale.

It seems that Vucic’s prediction of the consequences of the two sides not finding a compromise is the most accurate, and that Europe will not accept the ultimatum.

Ukraine has become the indicator of relations between Russia and Europe, and trying to find compromises might suggest that Russia can take further steps or even other “special military operations” in Europe. Russia, on the other hand, stresses its position that Russian forces are aiding the Donetsk and Luhansk People’s Republics “in full compliance with the UN Charter.”

In other words, this deadlock is unlikely to be broken soon, despite the pressures. The question is how long Europe will be able to deal with this challenge and how quickly other energy-rich countries, including the GCC states, will be supportive of Europe.

• Dr. Diana Galeeva was an academic visitor to St. Antony’s College, Oxford University (2019-2022). She is the author of two books: “Qatar: The Practice of Rented Power” (Routledge, 2022) and “Russia and the GCC: The Case of Tatarstan’s Paradiplomacy” (I.B. Tauris/Bloomsbury, 2023). She is also a co-editor of the collection “Post-Brexit Europe and UK: Policy Challenges Towards Iran and the GCC States” (Palgrave Macmillan, 2021). Twitter: @diana_galeeva

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