Editor’s note: CNN correspondent David A. Andelman, two-time Dealine Club Award winner, French Légion d’honneur, author of Red Line in the Sand: Diplomacy, Strategy, and a History of Wars That Can Still Happen, and blogging. Previously, he was a correspondent for The New York Times and CBS News in Europe and Asia. The opinions expressed in this comment are those of the author alone.
Vladimir Putin is doing everything possible against the stronghold of Europe. This is the only way to view comments made on Monday by Kremlin spokesman Dmitry Peskov that Russian natural gas will not flow back through the massive Nord Stream 1 gas pipeline until the West lifts sanctions against Russia. This latest move “significantly increased the risk that Europe will not receive more gas from Nord Stream 1 all winter,” analysts at energy consultancy Rystad Energy said in a report cited by CNBC.
There is no other name for this than extortion. This is a bad idea in the short term for Europe and in the long term for Russia.
The West imposed sanctions on Moscow after Putin’s troops invaded Ukraine in February. Putin, of course, never knew how to play in the long run. However, his short game did not end the pain and suffering. This is certainly the case in Europe. But for a number of reasons, Europe and the West must be firm and united. This is the only real way to deal with a bully.
Europe reacted quickly and decisively. Even before Peskov’s speech, most of the continent had begun to implement measures to soften the blows of cuts already underway, rising energy prices and inflationary impacts affecting millions. The front page of the French newspaper Le Monde on Monday carried the headline “The Price of Energy: The Mobilization of European States.” Eurozone inflation is at 9.1%, more than four times the 2% target, and a Reuters poll suggests the continent is “almost certainly headed for a recession.”
However, at a meeting on Monday of oil ministers from major OPEC countries, as well as other major oil producers, including Russia, it was decided to reduce production targets by a relatively small – but not negligible – amount than 100,000 barrels. day. The decision was the exact opposite of OPEC’s promise to increase production by that amount after the controversial presidential summit. [dos EUA] Joe Biden with Crown Prince Mohammed bin Salman at Al Salam Royal Palace in July. The meeting was a bad idea, now it’s even worse. Within minutes, OPEC’s actions on Monday led to a 3% increase in oil prices on world markets.
To address these issues, from rising energy prices to skyrocketing inflation, several countries have begun to take drastic measures. On Sunday, the federal government in Berlin announced a $65 billion plan to help German families. New British Prime Minister Liz Truss is considering a similar bailout plan likely to top £100bn (€115bn), Treasury sources told The Sunday Times.
At a meeting of European energy ministers on September 9, a discussion of a plan to cap natural gas prices on the continent will be presented. And the G7 energy ministers agreed from December to impose a ceiling on the price of Russian oil and oil products, designed to cut the Kremlin’s revenues and weaken Russia’s financial footing, while still allowing its oil to continue to supply global markets.
Also on Monday, the leaders of the continent’s two pillars, French President Emmanuel Macron and German Chancellor Olaf Scholz, held a video conference to discuss energy issues. At a press conference after the meeting, Macron told reporters that they had reached an agreement: France would supply Germany with excess gas, and in return Germany would supply France with the electricity it produced. Macron also called on the people of France to cut their energy consumption by 10%. Reductions or rationing would be “only a last resort,” he said.
But the pain is unlikely to subside anytime soon. The euro fell to a 20-year low against the dollar on Monday following Peskov’s words. The European Central Bank was already considering a sharp 75 basis point rate hike at the continental level at Thursday’s meeting, reflecting the path the US Federal Reserve has been on for months. “Dramatic change,” as the London Financial Times put it. “There are no more doves at the ECB, only hawks,” Katharina Utermeul, senior European economist at German insurance company Allianz, told the FT. The bank may even start cutting its securities balance sheet by 9 billion euros.
Europe has other alternatives, although they are certainly less attractive and less efficient. Soviet-era gas pipelines still carry an uninterrupted flow of natural gas through Ukraine, despite Russian incursion and objections from Ukrainian leaders through Turkey. Increasing the supply of oil from oil wells in the North Sea, controlled by Norway and the UK, could help Europe hold out, perhaps until a time, perhaps, when reason can return to the Kremlin. But re-drilling in the North Sea could prove highly controversial due to long-standing environmental concerns.
It’s certainly a price worth paying, but the pain will be severe and there are already rumors of failures. Matteo Salvini, leader of Italy’s far-right party, said over the weekend that the sanctions had indeed helped Russia accumulate a $140 billion in payments surplus, hurting the country’s economy in Europe, especially in Italy. “I would not want sanctions to cause more harm to those who impose them than to those who are affected,” Salvini said. According to a Politico poll, Salvini’s League is forming a coalition with other Italian right-wing parties that are holding a significant lead ahead of the September 25 national elections.
Accordingly, Ukraine and much of official Europe are resisting calls for sanctions to be lifted. President of Ukraine Volodymyr Zelensky in a telephone conversation with the head of the European Commission Ursula von der Leyen called on Europe to further tighten the screws against Russia with a new package of sanctions.
Strong will is needed in elections, ministries and parliaments across the continent. Putin has significant support in some still isolated sectors. On the part of the West, there should be an equally deep understanding of how high the cost of any compromise in the face of Russian bluster.
