Cutting off Europe's gas supply is Putin's last throw of the dice
As Lawrence Freedman observes, there is now an economic war between NATO and Russia. This must be subject to just war tests. I discussed these and their application to proposals to sanction Zimbabwe in mid 2008 when Mugabe's conduct became intolerable: https://www.thinkingfaith.org/sites/default/files/20080701_1.pdf. The article sets out the principles to be applied succinctly. I did not think that the case was made then in the particular circumstances of Zimbabwe. The facts over Russia and Putin are different and the just war tests appear to be met.
Back in the 1980s, when Germany and the UUSR first planned a pipeline, it was was arguable that to be weighed against Germany becoming exposed to the risk of the USSR cutting off supplies the USSR would be at risk of losing hard currency from Germany. I can recall this being carefully analysed at Oxford.
The mischief is not that some import of gas from Russia was regarded then as beneficial but subsequently allowing such a large risk to build up through successive investments in importing gas from Russia and reducing investment in other sources (e.g. nuclear). In the longer term, if Putin or his successors withdraw Russian forces from Ukraine then the ending of economic war should be on the basis of careful and ongoing monitoring of risks and probably some NATO and/or EU institutional arrangements to coordinate national policies to ensure that commercial and security considerations are properly weighed.
This is not the last throw of the dice. We have just heard this morning that Putin will be importing millions of dollars worth of rockets and shells from North Korea. And we have yet to see how European solidarity will hold-up over the long, cold winter to come.
This strikes me as a very cogent analysis: Putin has played his final ace. I hope Europe can "hold the line" through the difficult next seven months and the longer term transition off of Russian gas. Perhaps Europe and the U.S. now will look at providing Ukraine with more HIMARS and additional weapons systems, including longer range ones, in order to increase probability of/expedite collapse of Russian logistics that are sustaining their misbegotten invasion.
I have thought for many years that Germany was making two huge mistakes in the energy domain: moving away from nuclear power and increasing reliance on Russia.
Putin is forcing Germany to reverse both these mistakes.
It might be Putin's last throw of the dice to win in Ukraine, but he can still go for the Götterdämmerung solution and use his nukes. It will be game over for Russia,, but also for much of the planet. Numerous war gaming simulations have shown that escalation almost inevitably ends up using nuclear weapons (after all WWII ended in the Pacific this way, but fortunately there was no hope of a matching response).
A protracted embargo on gas to Europe that causes real suffering to the EU populations could well push NATO to engage more forcefully to end the war and push Russia out of Ukraine, and who knows what else. US weapons to do so would certainly help repair the trust the EU has with the US that was damaged by TFG. Putin might just play this last hand rather than be seen to be bluffing. If so, one can only hope that the Russian military proves more rational and refuses to obey that order.
Excellent analysis - thank you!
No gas? No problem. You've got more than enough hot air for all of Europe's needs.
How can you stay in business if you stop selling to your best customer?
Great analysis of the bigger picture, thank you so much!
Thanks for the analysis again. Very timely, and especially as Bloomberg subsequently published the summary of what is claimed to be (quite credibly it seems) an internal Russian government document showing how dire the economic situation will be absent a quick release:
I wonder also if you took in the recent Yale study on the state of the Russian economy:
Both show that we should be quite circumspect in digesting Russian government economic data “unchewed”. Those statistics are now a very important part of Russia’s war effort, and should be considered as unreliable as Russia’s other war-related statements (on Russian military successes (how many HIMARS now destroyed???), Ukrainian losses etc).
I appreciate your point on the exchange rate (so often missed) that the value is really a one-sided trade, plus all the capital controls now in place, and thus FX rate not a true indicator of condition in any way.
The economic war, I would argue goes beyond just NATO and Russia. Many important non-NATO states are involved, not least Japan, still one of the largest economies in the world with an important currency, and other states such as Australia, NZ, Switzerland (important for Russians for well known reasons), and non NATO European states. On the other hand Turkey and Hungary, both NATO members, are not supporting sanctions fully. China is clearly not supplying Russia with arms as Russia would like (North Korean Shells and Iranian drones instead).
I particularly like your conclusion. The logic on the western side now must be to end all future dependence on Russian energy (still can buy, but at much lower levels in terms of mix), move to Green as fast as possible, perhaps reconsider nuclear, retrofit homes away from gas to electricity asap (heat pumps and insulation). It must also be to hasten Russia’s defeat, as you rightly say, it will be politically impossible to go back to business as usual given Bucha, Mariupol, whatever has gone on in Kherson (assumed to be pretty terrible), deportations, child separations and deportations etc. presumably longer range HIMARS ammo and more systems should now be provided so Ukraine can do its strikes from anywhere. U.K. training programme continues with support from many countries.
Isn't the problem that Europe has to win series of dice rolls to keep going:
- that they will manage to contain prices
- that they will manage to secure enough supply/substitution
- that they will be manage to keep social unrest at manageable levels
and so on
while Putin only needs one serious defection to win?
European gas crunch can go on for years; it is certainly not going to be resolved by this winter, and it might conceivably not be resolved by next winter either.