- By Alexei Kalmakov
- BBC Russian Language Department
image source, Getty Images
Europe is dependent on fossil fuels such as oil and natural gas from Russia.
According to data from the Research Center for Energy and Clean Air (CREA), since the Russian invasion of Ukraine Europe paid more than $146 billion worth of oil and natural gas from Russia.
So far, following almost a year of war and nine rounds of sanctions once morest Russia, how much can Europe stop relying on Russian fossil fuels?
“Russian Fortress”
President Vladimir Putin has been preparing for an economic war since he was hit with sanctions following his annexation of Crimea. His well-known economic team has earned Russia the nickname “Fortress Russia,” or “Russian Fortress,” a country whose economic strength is ready to take on any storm.
Over the past 8 years, Russia has accumulated a huge reserve currency. and export more fossil fuels than ever before. They also invest in technology and products from Europe and critical infrastructure such as natural gas storage and crude oil refineries in Europe.
image source, Getty Images
In Europe, efforts to phase out coal have led them to increasingly rely on natural gas from Russia. According to Eurostat, the European Union’s statistics agency, in 2020, Russia accounted for 25% of oil and more than 40% of the country’s natural gas supply. all used by the European Union
This is the reason why Europe can’t cut economic ties completely when Russia invades Ukraine.
Russia is gradually being squeezed by more and more sanctions, but there are some exceptions. Europe must plan to deal with an unprecedented crisis.
Never before have such sophisticated sanctions been imposed once morest a Russian power that is a member of the United Nations Security Council.
Western nations seize regarding $324 billion in reserves. In addition, Europe stopped deliveries of technologically advanced goods and services to it.
and final step The European Union has banned imports of all coal from August 2022, maritime fuel from December 2022 and all diesel and other oils from February 2023.
Russian retaliation
When all sanctions were not implemented, fuel prices skyrocketed. Russia also earns billions from exports to Europe.
Russia retaliated once morest Europe by cutting natural gas supplies by 80%. However, most economists believe that Putin will only benefit from this strategy in the short term.
Konstantin Sonin, an economist at the University of Chicago, said Putin made the same mistakes as Iraq, Iran, Venezuela and Soviet-era leaders.
image source, Getty Images
They tried to sell oil and invade other countries but as a result they got into conflict with western countries and were blacklisted.
The energy war is hurting key Russian industries. Russian energy company Gazprom reports that by 2022, Russia produces 20 percent less fuel and exports 45 percent less.
It is true that high fuel prices in Europe keep Russia’s earnings the same. But if this war is protracted Russia will eventually lose market share.
The International Monetary Fund (IMF) said it expects the Russian economy to shrink by 3-5% in 2022 and 2023, instead of the 2-3% growth predicted before the war.
Domestic labor is less because people flee or die in war. Investment, exports and consumption are also less.
since the collapse of the soviet union Russia is dependent on Europe for technological know-how, investment and trade. This makes it difficult to turn to non-oil and gas revenues.
Can China, India and Turkey help?
Since the war began and sales to Europe decreased China and India buy massive discounted crude oil from Russia. Turkey has also benefited by becoming a transit country for Russian natural gas.
However, although some benefits The war in Ukraine has also affected the country posing as Russia’s new ally.
The size of developed western countries’ economies account for two-thirds of the world’s economy. But the size of the Russian economy is only 2%.
Western nations are the source of technology, money, education, skills and wealthy consumers. While Russia only has oil and natural gas. and there was no infrastructure to transport these goods out of Europe to the east.
image source, Getty Images
Previously, Europe imported oil from Russia for 60% of its total and almost all of their natural gas imports. This makes Europe the source of more than half of Russia’s total income.
While the oil revenues are less and the cost of war is increasing. Russia is being left alone.
Europe has long been planning to abandon its dependence on Russian fossil fuels. And now the war with Ukraine is motivating them to accelerate the transition to clean energy.
if they succeed Europe will never need as much oil and natural gas from Russia as it once did. With or without war