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EU Leaders Say Putin’s Gas Power Is Weakening

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BERLIN — Shortly after Russian troops invaded Ukraine, another mobilization began. European energy ministers and diplomats began flying around the world signing energy deals. Russia is racing to prepare for a harsh winter if it chooses to cut off cheap gas in retaliation for Western sanctions.

Since then, Russian President Vladimir V. Putin has repeatedly fiddled with gas valves to Europe. Through its Kremlin-controlled gas monopoly Gazprom, Russia has been slashing supplies or shutting them off for days at a time — through the Nordstream 1 pipeline that supplies Germany last week. , much of Europe, until it announced that it would stop the flow indefinitely.

But when the blow finally came, it caused more ridicule than indignation among European leaders. They say they expect nothing more from Mr Putin now and have accepted that Russia’s era of cheap gas is over…it seems like only a few months ago.

In some regions, European leaders are scrambling to blunt the blow from falling gas supplies and rising prices, but perhaps weaponizing Russia’s gas exports is a profit-diminishing strategy. , there is a growing sense that Putin may have gone too far with his own hands.

“It would have been a surprise if it had been the other way around,” German Economy Minister Robert Habeck said this week after Russia announced the closure of Nord Stream 1. “The only thing from reliable Russia is a lie.”

Even markets seemed to be coping with the latest turmoil. The price is now lower than at the beginning of last week after he rose 5% following Gazprom’s announcement.

This does not mean that European nations have not felt pain or avoided the risk that energy shortages could sow social unrest and collapse their unity with the Kremlin this winter. No. But much of the damage has already been done, with gas prices several times higher than normally thought, increasing pressure on consumers and businesses.

So the question remains how successful the hard pivot from Russian energy is in practice. Whether Europe has enough new energy sources, whether its stocks can survive the winter, whether conservation efforts can make a difference, and whether governments can help. Protect consumers from rising prices.

Russian officials are watching and waiting for what they believe Europe’s resolve will inevitably collapse as economic pain hits.

“I think the coming winter will show how real their beliefs about the possibility of denying Russia gas are,” said Russian Energy Minister Nikolai Shulginov in an interview with the Russian state-run TASS news agency. “This will be a whole new life for Europeans. For the most part, I don’t think they can refuse.”

Russia’s state-run news outlets are full of reports of protests in Europe. Russian state media reported that Italians were told to boil their pasta for two minutes before turning off the heat, while Germans refrained from showering.

Message: Sooner or later, European ties to Russia will collapse under the weight of rising gas prices while Russia’s status is rising.

“We haven’t lost anything and we won’t lose anything,” Mr Putin said Wednesday.

But more and more European leaders have been preparing for this moment for months and are now signaling that they are ready for the showdown.

“Now our work is paying off!” European Commission President Ursula von der Leyen said Wednesday in Brussels. “When the war began, Russian pipeline gas was her 40% of all gas imports. Today, it has fallen to just 9% of gas imports.”

That’s because European leaders, especially those of Italy and Germany, which are most dependent on Russian energy, have traveled all over the world. From Algeria to Qatar to Senegal to Congo to Canada, they have negotiated deals to replace Russian supplies.

Germany also relies heavily on Norway and the Netherlands, who have agreed to extend the life of their largest gas fields to deal with the energy crisis.

As a result, Germany’s dependence on cheap Russian gas, which once accounted for more than half of all gas imports, fell to less than 10% in August.

In Italy, consumption from Moscow fell from 40% to 23%.

German Chancellor Olaf Scholz and other European leaders are defiantly calling for the end of an era.

For decades, since the days of the Soviet Union, Moscow has claimed to Germany and others to be a reliable energy partner regardless of the political situation. But now European leaders say Putin has shattered that understanding.

“What was true throughout the Cold War is no longer true,” Mr. Scholz said last weekend. “Russia is no longer a reliable energy supplier. That is part of the new reality.”

That new reality probably shouldn’t have come as much of a shock. Putin’s gas brinkmanship dates back to 2004, when Gazprom cut supplies to Belarus in a battle for control of a transport pipeline to Western Europe.

In 2009, when Ukraine sought NATO membership under a pro-Western president, Putin ordered a drastic cut in gas flows in the country. After Ukraine elected a pro-Russian president a year later, the Kremlin rewarded him with a 30% cut in natural gas prices.

And even before Russia invaded Ukraine, it cut exports in the summer of 2021 and did not replenish European storage facilities owned by Gazprom.

German Bonn analyst Sergey Bakrenko, who worked in the Russian energy industry for years, said that over the past two decades, Russian officials have seen the geopolitical power the United States derives from its influence over the global financial system. said it came. In a similar way, it will take advantage of Russia’s status as a major energy exporter.

“As a superpower, there was a huge desire to have something similar,” he said. “There was a sense that oil and gas was the answer.”

But the reduction in gas exports to Europe since Russia invaded Ukraine is an order of magnitude. “This is no longer just blackmail,” said Russian energy analyst Mikhail Krutykhin. “I’ve never seen anything of this scale before.”

So far, Putin has also introduced greater risks.Economic forecasts inside the Russian government explained this week bloomberg news It is estimated that a total cut off of gas supply to Europe would cost $6.6 billion in lost tax revenue.

But Gazprom made a record $41.75 billion profit in the first half of this year, of which $10 billion was passed on to the Kremlin, a cost Mr. Putin calculated was acceptable.

Oil is Russia’s biggest source of income, and Putin may want to use gas as a political weapon whenever possible, said Thomas, an energy expert at Berlin’s Harty School of Public Policy. Mr O’Donnell said.

“This is where he has the most leverage to cause the most trouble within the European Union,” O’Donnell said. He said, “It’s a lever he knows he’s going to lose within a year.

And it may depend heavily on the severity of the winter.

Even as liquid natural gas imports into Europe from other sources continue at record high rates, a study released this week by the research institute Bruegel the Elder said that stopping Russia’s supply altogether would require reducing consumption across Europe. We estimate that we need to reduce by 15%.

European countries, which have relied on gas imports from Russia for much of their domestic energy production, are racing to suffice gas storage facilities. Germany is now 86 percent and Italy almost 84 percent.

In Germany, large industry players have so far managed to reduce consumption by around 20%. A similar amount would have to be cut from domestic use if Russian gas were to remain turned off, according to the German Energy and Economy Ministry’s model. If households don’t cut back, German gas regulators have repeatedly warned, an option could be rationing.

Europe aims to have a full liquefied natural gas solution in place by next year. Germany recently signed a contract for a fifth floating LNG terminal, but terminals in Belgium, France and the Netherlands are fully booked.

The key to surviving this winter in the face of the closure of Nord Stream is how well European countries work together.

So far, only Hungary has signed a contract for additional supply with Gazprom.

By contrast, France and Germany agreed this week to send Paris its surplus gas to Germany, where it needs it, and in return Berlin promised to send its surplus electricity.

The tricky question is what happens when the more important German industries have to shrink and voters start insisting that goods not be diverted to neighboring countries. It’s a challenge many European leaders could face this winter, German Foreign Minister Annalena Beerbock warned.

“That’s going to be the central question that really tests us in the coming months,” Beerbock said at a meeting with the German ambassador in Berlin this week. “Can we, in solidarity, secure energy supplies for all people in Europe?”

Gaia Pianigiani Contributing to the report from Siena, Italy, Matina Stevis-Gridnev from Brussels.

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