REUTERS/Alexei Nikolskyi
- The US and UK have said they want to ensure that Russia is never able to take aggressive actions again.
- But as long as the EU continues to rely on Russian energy, it's providing funding that Russia could use for more military campaigns like the Ukraine war.
- Ukraine has ripped into the EU for continuing to purchase Russian energy as the war rages on.
Top officials in the US and UK have signaled that the broader goal of the West's support for Ukraine is to see Russia defeated so decisively that it's unable to invade other neighbors in the future, but that may well be unattainable despite their stiff Russia sanctions and arms support to Ukraine.
"Now is not the time to be complacent. There should be no talk of ceasefires or appeasing Putin. We need to make sure that Ukraine wins, that Russia withdraws, and that we never see this type of Russian aggression again," British Foreign Secretary Liz Truss said Friday.
These comments echoed remarks from US Defense Secretary Lloyd Austin following a trip to Kyiv in April. "We want to see Russia weakened to the degree that it can't do the kinds of things that it has done in invading Ukraine," Austin told reporters at the time.
But as long as Russia continues to be a major supplier of gas and oil to the EU, it will effectively have a chokehold over much of the region, and a revenue source to fuel future military campaigns. Even if Ukraine wins the war and regains its territory, Russia's influence over Europe's long-term energy supply grants Moscow significant leverage and power.
Russia exported much less crude in April, for instance, but the rising prices — triggered in part by its invasion of Ukraine — resulted in $28 billion in energy export revenue. The Kremlin has also discounted its energy relative to other countries' exports, solidifying its existing trade relationships with India and China. With Russia's brutal war grinding on, commentators and Ukrainian leaders are arguing the EU must to do much more and sooner to break its reliance on Russian energy.
Ukraine's top diplomat, Dymtro Kuleba, in April said that as long as the West "continues buying Russian gas and oil" then it's "supporting Russia's war machine." The US and its allies have slapped unprecedented sanctions on Russia over the war. But Kuleba has warned that the West's ongoing Russian energy purchases limits the impact of these economic penalties.
Ukrainian President Volodymyr Zelenskyy in a virtual address to the World Economic Forum in Davos last week pushed for "maximum" sanctions on Russia, including an oil embargo.
"We urgently need to move away from our dependence on Russian fossil fuels," Valdis Dombrovskis, European vice president and commissioner for trade for the European Commission, told CNBC last week.
"We are in somewhat of a paradoxical situation where we are providing massive support to Ukraine with one hand and then we provide financing to Putin to continue its war with another hand. So this clearly needs to stop," Dombrovskis said in separate comments during a trade panel at the World Economic Forum, per the Associated Press.
The Biden administration rolled out a ban on Russian oil, coal, and natural gas in late March, with the president saying the US "will not be subsidizing Putin's war." The UK followed with a plan to phase out oil imports by the end of the year.
The EU — which relies on Russia for 40% of its natural gas and 27% of its oil — took a smaller first step, announcing in April it would only immediately ban Russian coal. On Monday, the bloc agreed to ban most Russian oil imports by the end of the year. This came after Hungarian Prime Minister Viktor Orbán, who has close ties to Putin, stalled the agreement for weeks — citing economic concerns. Hungary's resistance to a complete ban led the EU to agree to a partial embargo that bars sea shipments but exempts pipeline deliveries as Hungary receives, and upon which the Orbán regime relies.
"This immediately covers more than 2/3 of oil imports from Russia, cutting a huge source of financing for its war machine," European Council president Charles Michel tweeted on Monday, adding, "Maximum pressure on Russia to end the war."
Additionally, Poland and Germany said they would end pipeline imports.
"This will effectively cut around 90% of oil imports from Russia to the EU by the end of the year," European Commission President Ursula von der Leyen said in a tweet Monday.
But at the end of the day, this is not a total or immediate ban. The EU can't quickly sever its ties to the Kremlin's energy business without facing a crisis of skyrocketing prices and dramatically slowed economic growth. Russia, meanwhile, is still raking in plenty of cash with which to power its war effort. Despite a sharp drop in crude output, elevated prices lifted the country's oil and gas revenue to 1.81 trillion rubles ($28 billion) in April, according to the country's finance ministry. That's up from 1.2 trillion rubles in March.
More broadly, the Kremlin expects to bring in $321 billion from its energy business in 2022, Bloomberg reported in April, up more than a third from last year.
Much of that business will come from India and China. Both countries have ignored sanctions and continue to snap up Russian oil at a Kremlin-backed discount.
Yet the EU remains a major buyer. The group has spent about $58 billion on Russian fossil fuels since the invasion of Ukraine began in late February, according to the Center for Research on Energy and Clean Air. Germany alone is the second-largest buyer after China and the single largest buyer of Russian gas.
It's true the EU has plans to cut itself off from Russian energy. But with prices at historic highs and a full embargo several years away, the bloc has little choice but to continue indirectly funding Putin's invasion.
from Business Insider https://ift.tt/KmdpEWY
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