When Russia got involved in the Ukraine crisis and later annexed Crimea, the question asked when EU sanctions were mooted was, as ever, over the effect that dependence on Russian gas might have on the process. Those opposing mere economic responses told that EU member states would harm themselves by upsetting Moscow, and none moreso than Christopher Booker.
But after well-known serial fraud Booker told last weekend that “The EU’s leaders can scarcely afford to be too aggressive when it imports from Russia 30 per cent of its natural gas. They prattle instead about having to replace it with imports from the US”, it quickly became clear that he was plain flat wrong. Worse, his own colleagues at the Telegraph showed that he was.
Ambrose Evans-Pritchard, on this occasion quite rightly, told “Europe will seek to liberate itself from Russian oil and gas supplies as fast as possible. Fresh investment in Russia will collapse. Putin has grossly misjudged how vulnerable Russia really is to an economic showdown” followed by “European leaders have rushed through plans aimed at breaking the Kremlin’s grip on gas and energy supplies”.
Deutsche Welle, under the headline “Europe has little reason to fear Russian gas cut-off”, observed that “Vladimir Putin has often used the energy giant [Gazprom] to serve his own geopolitical goals. If European countries cut imports of Russian energy, it would negatively impact Gazprom as 60 percent of its revenue comes from the European market”.
And, although there has been some sign of panic – the Lithuanian energy minister called for the USA to speed up gas exports to Europe – it seems there will be no need for EU member states to trouble producers Stateside. For starters, there is enough gas stored around the EU, after a mild winter, to last four months, which gives time to make alternative arrangements.
And, as the Bruegel blog has estimated, alternative sources for gas can be found in Norway, North Africa and the Netherlands, along with liquefied natural gas (LNG) from the world market. That could be sourced anywhere, and right now there is a world oversupply of gas. It is the oversupply that is driving prices down in the USA, not the use of fracking to extract the stuff.
So the EU, it seems, can afford to be as economically aggressive as it likes with Russia, and does not have to “prattle” about anything. The Bruegel estimates of comparative costs shows Russia would suffer $14 billion in foregoing revenues, while EU member states would have to pay an extra $400 million for moving suppliers. This is why capital is fleeing Moscow right now.
Booker cannot admit that the EU has leverage. But that is today’s economic reality.