By Valeria Vitikainen
“The tragic loss of human life in Ukraine … is still often paid for by cash that Russia receives from the export of oil and gas, enabled by loopholes that persist in the sanctions regime imposed on Moscow by the United States and the European Union”.
Svitlana Romanko and Oleh Savitsyi
About a month ago, on the 24th of February, it marked two years since Russia’s full-scale invasion of Ukraine, and it has been ten years since Russia invaded and seized Crimea. The European Union has responded collectively by adopting restrictive measures against Russia and providing Ukraine with political, humanitarian, military, and financial support. The EU has implemented sanctions targeting Russia across economic sectors, broadcasting activities, and individuals. In the energy sector, the EU has banned the imports of Russian-seaborne crude oil, refined petroleum products and all forms of coal. However, natural gas remains unrestricted. Despite the sanctions not only from the EU but also from the US, the Russian economy has adapted, and the drop in the energy sector that was hoped for has not materialized. Despite claims about a fast and successful green transition, the European Union is still dependent on Russian energy. Examining how Europe’s reliance on Russian energy has evolved since the annexation of Crimea and the start of the Donbass war to the present day is of interest. What challenges remain for the EU in breaking away from Russia? What challenges does the EU still face in breaking away from Russia?
EU – the underdog of negotiations
Judy Dempsey, editor-in-chief of the Strategic Europe blog, addressed a crucial question “Is Europe too dependent on Russian energy?“. The responses from experts shed light on the political attitudes toward Russia at that time. Sissi Bellomo, a commodities correspondent at Il Sole 24 Ore, highlighted that previously the EU lacked negotiation power over Russia due to insufficient competition. Erik Brattberg, director of the Europe Program at the Carnegie Endowment for International Peace, further explained, pointing out Gazprom’s dominant position as a seller which has left some European countries vulnerable to Russian pressure.
Germany > EU
Brattberg also criticized the Nord Stream 2 pipeline, considering it harmful to Central and Eastern Europe, and worsening Ukraine’s situation. It highlights the lack of unity within the EU and Germany’s prioritization of its economic interests over the union’s. Sijbren de Jong, a strategic analyst at the Hague Centre for Strategic Studies, was also sceptical about Nord Stream 2 as even though the EU is set to diversify the portfolio of gas suppliers, the pipeline lies against this idea. Especially considering the Minsk 2 ceasefire accord, which Germany oversees, it is strange that Germany did not suspend the project, especially considering US sanctions targeting companies supporting Russian export pipelines.
The Finale of Ostpolitik
Kristina Berzina, a senior fellow at the German Marshall Fund of the United States, highlighted the EU’s weakness and disunity in forming a unified gas market, allowing Russia to make deals with individual EU countries, thereby undermining EU cohesion further. Interestingly, Berzina suggested that the EU should “depoliticize the question of Russian gas,” a challenge that appears impossible from the perspective of 2024. On the same note seems to be Stephen Szabo, a resident senior fellow at the American Institute for Contemporary German Studies. He cautioned against destabilizing the Russian economy through abrupt shifts in energy policies, in my opinion echoing the principle of Ostpolitik in the cautious approach Western countries had been practicing towards Russia. The Ostpolitik was a political policy of Western Germany in favour of détente used towards Eastern Europe and the USSR during the Cold War. It was built on the assumption that economic exchange, in the past few decades characterized more by interdependence, provides security, stability, and improved political relations. “Wandel durch Handel” (change through trade) saw its end only after Russia’s massive attack on Ukraine in 2022. Germany and the whole of Europe had to foresee events in Georgia in 2008, Crimea, and Donbass in 2014 before being sure of Putin’s intentions.
There was and is what to choose from
The interviewees do seem to portray the EU as a prisoner of inevitability. On the other hand, Bledowski Krzysztof, council director and senior economist at the Manufacturers Alliance for Productivity and Innovation, argued that Europe has been having alternative energy sources, such as the area between Norway and the Caspian Sea, with abundant liquified natural gas. He advocated for reducing dependence on Russian energy due to security concerns. With this in mind, the European Union launched the Energy Union Strategy in early 2015 with the aim of “building an energy union that gives the EU secure, sustainable, competitive and affordable energy”. Apparently, its implementation wasn’t successful.
Black on white
According to CREA’s (The Centre for Research on Energy and Clean Air) analysis, since the beginning of the full-scale invasion, “the average EU citizen has paid an estimated €420 for Russian fossil fuels”. The amount that the EU pays for fossil fuels to Russia, 28,1 billion euros, is more than double the Union’s yearly support to Ukraine. This infographic shows the largest importers of fossil fuels from Russia. In the timeframe from January 2023 to March 2024, the top largest importers are China with €105 million, India with €35 million, Turkey with €38 million and EU with €37 million. Furthermore, CREA’s report shows that after banning or limiting imports of Russian crude oil and oil products, EU and G7 countries have been increasing oil purchases from “laundromat” countries that have become the largest importers of Russian crude. Since December 2022 up to the anniversary of Russia’s invasion of Ukraine, vessels owned and/or insured by the price cap coalition countries have transported 56% of Russian crude oil shipped to laundromat countries.
Civil society demands more action
290 European, international and Ukrainian civil society groups urge the EU and G7 to stop funding the militarization of Russia. They wrote a joint public appeal to leaders demanding full reinforcement and lowering price caps on Russian crude oil and oil products and preventing expansion of the Russian shadow fleet by setting a spill insurance verification programme for vessels travelling through European borders. These uninsured, old tankers pose a risk of oil spills,potentially leading to an enormous environmental catastrophe. The civil society groups also insist on closing the “refinery loophole” and fully banning LNG imports from Russia. Refinery loopholes allow imports of Russian oil products to EU and G7 countries. These oil products are produced mainly in India, Turkey, and the UAE. Surprisingly, the exports of Russian LNG to the global market from 2022 to 2023 expanded regardless of Western sanctions. The full ban on LNG imports would also contribute to climate action, in fact, a step towards a green transition. Also, the last proposal from civil society to EU and G7 countries is about climate actions. The West should reduce oil and gas consumption and import dependency, which requires a long-lasting transition in different societal sectors.
To conclude
As highlighted by experts and NGOs, the European Union faces significant challenges in reducing its independence from Russian energy. However, stakes are high, involving not only the freedom and human lives of a sovereign Ukraine but also the future of our planet. While the EU demonstrated unity and determination a few years back, leaders and citizens alike show the same resilience over again.