Europe’s Energy Reckoning
Continued European purchases of Russian hydrocarbons are helping to finance President Vladimir Putin’s war against Ukraine. But while the European Union has banned Russian coal imports and is currently debating an oil embargo, ending its gas dependency will prove much more difficult.
In this Big Picture, MIT’s Simon Johnson urges Europeans to stop funding Putin’s aggression by refusing to buy oil immediately and eliminating gas purchases over time. But former Spanish foreign minister Ana Palacio argues that Europe should employ energy sanctions against Russia judiciously, not least because Putin may otherwise conclude that he has nothing to lose.
Much will hinge on what Germany, the biggest European purchaser of Russian energy, decides about gas imports. The University of Munich’s Hans-Werner Sinn says years of misguided energy strategy mean that Germany will be unable to halt imports without triggering economic chaos, public outrage, and opposition from many firms.
But Dalia Marin of the Technical University of Munich argues that, contrary to German political and business leaders’ claims, the costs of ending Russian energy imports would most likely be manageable. Andrés Velasco and Marcelo Tokman agree, drawing lessons from Argentina’s sudden cutoff of Chile’s gas supply in 2007.
Russia, too, may take it upon itself to close the gas taps – as it recently did by suspending deliveries to Poland and Bulgaria. Karsten Neuhoff of the Technical University of Berlin and Isabella M. Weber of the University of Massachusetts Amherst therefore urge policymakers to agree to EU-level gas-saving targets and other contingency measures before it is too late.