Editor’s note: David A. Andelman, a CNN contributor, a two-time Dealine Club winner, is a Knight of the French Legion of Honor, and author of “A Red Line in the Sand: Diplomacy, Strategy, and the History of Wars That May Still Happen” and blogging. He was previously 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 his best against Europe’s stronghold. This is the only way to view comments made by Kremlin spokesman Dmitry Peskov on Monday that Russian natural gas will not flow again through the massive Nord Stream 1 pipeline until the West lifts sanctions against Russia. This latest move “significantly increased the risk of Europe not getting more gas flows through Nord Stream 1 throughout the winter,” analysts at energy consultancy Rystad Energy said in a report cited by CNBC.
There is no other name for this than blackmail. It 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 forces invaded Ukraine in February. Putin, of course, wasn’t very skilled at playing in the long run. But his short game did not put an end to the pain and suffering. This is certainly the case in Europe. But, for a number of reasons, Europe and the West have to stand firm and united. It’s the only real way to fight a bully.
Europe reacted swiftly and decisively. Even before Peskov’s remarks, much of the continent had begun implementing measures to soften the blows of cutbacks that had already begun, rising energy prices and inflationary consequences affecting millions. On Monday, the front page of the French newspaper Le Monde carried the headline “Energy price: European countries mobilize”. Eurozone inflation is at 9.1% – more than four times the target of 2% – and a Reuters survey indicates that the continent is “definitely heading into recession”.
However, at a meeting on Monday of the oil ministers of the main OPEC countries, as well as other major oil producers, including Russia, a decision was made to cut production targets by a relatively small – but not insignificant – amount of more than 100,000 barrels. day. This decision was completely contrary to OPEC’s promise to increase production by this amount, following the president’s controversial 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 even worse. Within minutes, OPEC’s move on Monday boosted oil prices in global markets by 3%.
To meet these challenges, from rising energy costs to hyperinflation, many countries are beginning to take drastic measures. On Sunday, the federal government in Berlin announced a $65 billion aid plan to help German families. Finance Ministry sources told the Sunday Times that new British Prime Minister Liz Truss is considering a similar rescue plan, which is likely to exceed 100 billion pounds (115 billion euros).
The meeting of European Energy Ministers, on September 9, will present a plan to reduce natural gas prices across the continent. The energy ministers of the Group of Seven major industrialized countries agreed to impose a ceiling on the prices of Russian oil and petroleum products from December, with the aim of reducing the Kremlin’s revenues and weakening Russia’s financial institutions, while allowing its oil to continue to supply global markets.
Leaders from two pillars of the continent, French President Emmanuel Macron and German Chancellor Olaf Schulz, held a video conference on Monday to discuss energy. At a press conference after the meeting, Macron told reporters that they had reached an agreement: France will supply Germany with surplus gas, and in return Germany will send the electricity it produces to France. Macron also urged French residents to reduce their energy consumption by 10%. He said cuts, or rationing, would be “only a last resort.”
But the pain is unlikely to subside anytime soon. The euro fell to a 20-year low against the dollar on Monday after Peskov’s comments. The European Central Bank was already considering a sharp 75 basis point increase in interest rates at the continental level at Thursday’s meeting, reversing the path taken by the US Federal Reserve for months. “A radical change,” in the words of the Financial Times of London. “There are no more doves in the ECB, only hawks,” Katharina Utermole, chief European economist at German insurer Allianz, told the Financial Times. The bank may even start cutting its balance sheet of €9 billion in securities.
Europe has other alternatives, though less attractive and less impactful, to be sure. Soviet-era gas pipelines continue to see an uninterrupted flow of natural gas through Ukraine despite the Russian invasion and objections from Ukraine’s leaders via Turkey. Increased supplies from the North Sea oil wells controlled by Norway and Britain could help Europe cross, perhaps until such time, perhaps, when reason can return to the Kremlin. But re-drilling in the North Sea could be highly controversial due to long-standing environmental concerns.
It’s certainly a price worth paying, but the pain will be excruciating and there have already been rumors of setbacks. Matteo Salvini, the leader of Italy’s far-right party, claimed over the weekend that the sanctions had already helped Russia achieve a $140 billion surplus in payments, while hurting the country’s economy, and Europe – especially Italy. “I do not like that sanctions harm those who impose them more than those affected by them,” Salvini declared. Salvini’s League has united in a coalition with other Italian right-wing parties that enjoy significant leadership in the run-up to the country’s national elections on September 25, according to a Politico poll.
It is fitting that Ukraine and most of Europe’s official states are resisting calls for sanctions to be lifted. Ukrainian President Volodymyr Zelensky, in a phone conversation with European Commission President Ursula von der Leyen, pressured Europe to tighten the screws on Russia with a new round of sanctions.
A strong will is essential in suffrage, ministries and parliaments across the continent. Putin enjoys significant support in some of the still isolated sectors. There must be an equally deep understanding on the part of the West of how low the price of any compromise in the face of the Russian threat.
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