Finland was prepared for Russia to cut off natural-gas exports to the country last week, cabinet ministers in Helsinki said, as their government was getting ready to announce its decision to join NATO. With Moscow’s military campaign in Ukraine having largely failed, and Western sanctions having badly damaged the Russian economy, President Vladimir Putin has started to use his energy resources as a weapon. Two weeks ago, Moscow stopped sending gas to Poland and Bulgaria, a move that amounted to “energy blackmail,” according to the German government. Putin said he’d halted gas supplies to the two countries because they didn’t accept his recent demand for payment in the currency of Russian rubles, even though the European Union had told all member countries that using rubles would violate EU sanctions on Moscow. But stopping gas exports deprives Russia’s already hobbled economy of a vital source of income: In the years before the war, revenues from oil and gas sales usually accounted for more than 33 percent of Russia’s annual GDP. So why would Putin do this?
Samantha Gross is the director of the Energy Security and Climate Initiative at the Washington-based Brookings Institution. As Gross sees it, Putin knows Europe is more reliant on Russian gas than Moscow is reliant on revenue from it—and he wants to show Europe he’s willing to use it as a weapon in the economic conflict between Moscow and the West. Russia brings in far more money from oil exports than from gas. Still, Gross says, it’s hard to see Putin’s decision as rational: He’s destroying his country’s reputation as a reliable supplier, and countries in Europe and around the world will react by phasing out Russian oil and gas as quickly as they can. As the West and its allies decrease their energy imports from Moscow, that will only increase Russia’s economic reliance on China. But, Gross says, China can’t and won’t buy all of Russia’s oil and gas—meaning it’s highly uncertain where Russia will end up finding long-term buyers for all the fossil fuels so critical to its economy.
Michael Bluhm: How do you understand Putin’s strategy here?
Samantha Gross: In natural gas, Putin has the upper hand over the Europeans. They’re extremely dependent on natural gas—and on Russian natural gas, in particular; it’s much more difficult to get natural gas from elsewhere. Europe is directly connected by pipeline from Russia, and gas delivered by pipeline tends to be less expensive than gas delivered from overseas as liquefied natural gas [LNG]. The Europeans’ own natural-gas production is declining, and they’re losing it faster than they’re replacing it with renewables, so they’ve become more dependent on Russian gas.
Bluhm: If no European country is agreeing to pay Russia in rubles, then why is Putin cutting off gas just to Poland and Bulgaria?