Despite the generalized panic, the EU has a very strong hand against Russia when it comes to gas. In reality Russia cannot play the game of selective cuts for long: it simply cannot stop production without unbearable costs and without seriously damaging production capacity in the long run, it cannot consume more, store more and cannot sell more outside the EU than it has already done. The EU can rally all its members and dissenting voices in a joint, effective containment of Kremlin’s gas blackmail by a EU-wide cap on Russian gas prices, coupled with a simple solidarity mechanism.
Gazprom’s gas blackmail on key European countries and companies is paying off: the threat of total cuts of supplies by winter leads to generalized panic for decision- makers and the public. In reality, Kremlin’s remaining gas leverage over the EU is close to zero from summer to end-year. Gazprom has played until now with gas cuts targeting individual clients or countries to push spikes in spot prices on EU markets, cashing in large amounts from the remaining long-term contracts which are linked to spot prices. This is why Russia makes more money now from gas than last year, despite the reduction of quantities delivered.
The urgency is thus to 1) understand how much Gazprom can play this game for the rest of the year and 2) devise a sanction which keeps all the EU united.
This advocacy campaign is part of the EFOR project “Civil society support for Ukraine”, supported by
Friedrich Naumann Stiftung für die Freiheit.
Friedrich Naumann Stiftung für die Freiheit.