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While the West is united in punishing Russian President Vladimir Putin for invading Ukraine, Europe’s reliance on Russian energy is making that difficult.
President Joe Biden joined European Commission President Ursula von der Leyen on Friday to announce a new plan under which the U.S. and other countries will increase shipments of liquified natural gas to Europe by at least 15 billion cubic meters in 2022, with further increases in years to come.
“We want as Europeans to diversify away from Russia towards suppliers that we trust, that are friends and that are reliable,” von der Leyen said during a joint news conference in Brussels.
However, Europe remains reliant on Russian energy and can’t cut it off overnight.
How Much Do The U.S. And Europe Depend On Russia For Energy Supplies?
Last year, Russia provided 8% of all U.S. petroleum imports, including 3% of crude oil imports, according to the U.S. Energy Information Administration. The U.S. has not imported any natural gas from Russia since 2019, according to Forbes.
The U.S. banned imports of Russian oil and gas earlier this month.
“The United States produces far more oil domestically than all of Europe,” Biden said when he announced the ban, according to NBC News. “We can take this step when others cannot.”
The European Union relies on Russia for 40% of its gas, 27% of its oil imports and 46% of coal imports, according to Reuters.
“We are much more dependent in Europe in comparison to the situation in the United States,” Charles Michel, president of the European Council, told CNN’s Christiane Amanpour on Wednesday. “It’s why we must be intelligent. The goal is to target Russia, the goal is to be painful against Russia. The goal is not to be painful for ourselves.”
Exclusive: @eucopresident Charles Michel says that on sanctions, the EU’s situation differs from the US.
Europe is much more dependent on Russian gas, “that’s why we must be intelligent… The goal is to be painful against Russia. The goal is not to be painful for ourselves.” pic.twitter.com/ah3X8WAc6y
— Christiane Amanpour (@amanpour) March 23, 2022
Why Did Europe Begin Using Russian Energy?
Russia’s energy relationship with Europe traces back to the Cold War, explained Pierre Noël, global research scholar at the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs. Natural gas from the Soviet Union helped Western Europe move away from oil products after the oil shocks of the 1970s.
In 1981, then-U.S. President Ronald Reagan imposed sanctions effectively banning American companies from participating in development of a gas pipeline from Siberia to Germany. But Reagan lifted the sanctions a year later following fierce opposition from the gas and oil industry, according to The New York Times.
Years later, in the early 2000s, some European countries were growing increasingly wary of dependence on Russian energy as Putin first came to power and Europe’s political relationship with the country changed.
“However, Russia was always a very reliable supplier and adapted its commercial terms to the changing European market, ensuring the competitiveness of its gas,” Noël said.
Besides, some European powers like Germany and France wanted to maintain a relationship with Russia, and deemed energy an area where cooperation had proven successful, Noël added.
How Costly Would It Be For Europe To Cut Off Russian Gas And Oil?
E.U. countries are worried that further pressure on Russia could cause vast damage to the global economy.
Germany — Europe’s biggest economy and the world’s fourth-largest — relies on Russia for more than half of its gas and a third of its oil, according to the London School of Economics. Stopping Russian energy supplies could prove risky.
“Economic damage would be considerable,” Christian Egenhofer, an associate senior research fellow at the think tank Center for European Policy Studies, told HuffPost. “Should we weaken our economies is one question. The other is whether we should keep more sanctions ready, for in case Russia uses chemical weapons or more brutality towards civilian targets.”
In the meantime, it is unclear how much financial pressure the E.U. is willing to tolerate to punish Russia.
“I think it’s important for us at the European Union level to protect our economic strength, our economic power,” the E.U.’s Michel told CNN. “This is the key condition in order to support Ukraine and to take painful measures against Russia.”
Worldwide prices of gas and oil reached record highs after Russia invaded Ukraine. Soaring costs also may affect other industries, warned Anne-Sophie Corbeau, global research scholar at the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs.
“High gas prices also mean high power prices,” Corbeau told HuffPost. “That could have a serious impact on our industries. That can also have a disastrous impact on fertilizer production and therefore food production, which can compound a potential food crisis.”
How Is Putin Taking Advantage Of Europe’s Reliance On Russian Energy?
Biden has accused Putin of using his country’s energy supplies to “coerce and manipulate his neighbors” and “drive his war machine.”
“We’re coming together to reduce Europe’s dependence on Russian energy”
US President Joe Biden outlines major deal between US and EU on liquified natural gas which will attempt to reduce Europe’s reliance on Russian energyhttps://t.co/KpRuUtfR48 pic.twitter.com/SXyXDYouQw
— BBC News (World) (@BBCWorld) March 25, 2022
Putin has already shown he is willing to exploit this reliance by announcing Wednesday that payments for Russian gas will have to be made in rubles for “unfriendly countries.”
That could prove even more complicated for Europeans, who must balance their dependence on Russia with their condemnation of a war that has forced over 3.7 million Ukrainians to flee their country.
“I suppose people will first look at their contracts and demand that the contracts be respected,” Noël said of Russia’s European customers. “However, there is no appetite in Europe for a sharp aggravation of the energy crisis, and therefore governments would likely ask European companies to comply, forcing them to procure the Russian currency.”