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Wednesday, February 21, 2024

EU Proposes Price Cap Amid Putin’s Threats of ‘No Gas, No Oil’

Putin warned that supply contracts would be ripped out and nullified, warning the west it would be frozen like a wolf’s tail in a popular Russian fairy tale

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RUSSIA: The European Union proposed a price cap on Russian gas on Wednesday merely hours after it was provoked by Russian Vladimir Putin’s explicit threats to halt oil and gas supplies if they took such a step.

The turn of events now runs the risk of rationing essential commodities like oil and fuel In some of the world’s richest countries as they brace themselves for a harsh winter.

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The rising tensions and escalated standoff between Russia and the Western allies are adding to European troubles as exorbitant gas prices go through the roof. EU governments are now grinding their teeth as they face a hard time paying their energy providers from collapsing in this chaos and preventing their cash-strapped customers from freezing to death in the cold months ahead.

Europe has consistently accused Russia of its irresponsible actions of cleverly monopolizing and weaponizing their energy supplies in retaliation to Western sanctions imposed on Moscow over the Ukraine conflict.

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Meanwhile, Russia blames those sanctions for causing gas supply glitches, which it puts down to pipeline faults. Both sides of the warring divide are now caught in this vicious cycle of blame, the burden of which falls entirely on the global economies.

On account of this energy pandemonium, EU energy ministers have decided to convene in an emergency meeting on Friday to discuss measures and methods to tackle the energy shortage and bring relief to countries.

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European Commission President Ursula von der Leyen; Photo Credit: Various Sources

“We will propose a price cap on Russian gas… We must cut Russia’s revenues which Putin uses to finance this atrocious war in Ukraine,” European Commission President Ursula von der Leyen told reporters.

The Commission will also seek to propose other measures including a mandatory cut in electricity use during peak hours, and a cap on the revenues of energy generated from other sources.

President Putin had perhaps got wind of such strict sanctions or perhaps simply anticipated the move as some sort of intuition. Speaking earlier at an economic forum in Vladivostok, Putin warned that supply contracts would be ripped out and nullified, warning the west it would be frozen like a wolf’s tail in a popular Russian fairy tale.

“Will there be any political decisions that contradict the contracts? Yes, we just won’t fulfil them. We will not supply anything at all if it contradicts our interests,” Putin said.

“We will not supply gas, oil, coal, heating oil – we will not supply anything,” Putin said. Europe usually imports about 40% of its gas and 30% of its oil from Russia.

The Group of Seven (G7) wealthy democracies announced plans to impose a price cap on Russian oil exports last week in a move that could also restrict Russia’s ability to secure tankers and insurance from countries beyond the G7.

Amid such crisis and countermeasures, there are hints of divisive forces at play among EU members over the price cap deal. A Czech minister said it should be taken off the agenda for Friday’s meeting. The Czechs are helping to guide discussions as holders of the EU’s rotating presidency.

“It is not a constructive proposal, according to me. It is more another way to sanction Russia than an actual solution to the energy crisis in Europe,” Czech news agency CTK quoted Industry Minister Jozef Sikela as saying.

Europe’s energy crisis has grown more severe after Russia’s Gazprom fully suspended its gas supplies through the Nord Stream 1 pipeline to Germany after it cited reports of an engine oil leak during maintenance work last week.

Russia refused to acknowledge that it was weaponizing gas supplies as a negotiating tool. Putin said Germany and Western sanctions were to blame for the pipeline not being operational and that Ukraine and Poland have decided on their own to switch off other gas routes into Europe.

He called on Germany to return a turbine for the pipeline’s Portovaya compressor station that would allow Russia to resume pumping gas.

The impact of Russia’s withholding of gas supply and skyrocketing prices are forcing companies to curtail production and governments to spend billions on support to cushion consumers from the impact.

Around half of all aluminium and zinc production has been forced offline in the European Union due to the power crisis, an industry association said on Wednesday and it called on the bloc to cut costs to prevent the permanent closure of metal-producing plants.

In Germany, where the government is spending 65 billion euros to shield consumers and businesses from rocketing prices, a survey showed that more than 90% of medium-sized companies see rising energy and raw materials prices as a major or existential threat.

Also Read: Liz Truss Stands by Europe as It Faces a Crucial Energy Crisis


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