In the past, after controversies with Kiev, the Kremlin shut the taps off to the European Union. According to Christian Egenhofer, Senior Fellow at ceps, that won’t happen again, or moscow would risk its credibility as supplier
Now that the Ukrainians has decided to “turn their back” to Russia, trying to get closer to Europe, we all are waiting for Moscow’s reactions. The first has already arrived: the 15bn euro financing, agreed by Vladimir Putin and Viktor Yanukovich, has been suspended. But this couldn’t be enough. Moscow holds another powerful pressure tool to exercise, that is Kiev’s dependence form Russian gas. So far, the Kremlin has reassured about the situation, saying all the agreements will be respected. Yet, if this would not be the case, the backlash could be massive, even in Europe.
Energetically speaking, the European Union is far from independent. We import about half of the gas we consume, and a quarter comes from Russia. Historically, Russian gas arrives to Europe through gas pipelines going through Ukraine and Belarus. Only few years ago, 90 percent of the Russian gas to Europe went through Ukraine. Today, with the building of alternative pipelines, this flow has remarkably decreased, yet Kiev is still the main strategic hub for the gas flows getting to Europe. Hence, were Moscow to shut the taps off towards Ukraine, Europe could foot a very expensive bill. Could it really happen?
“There are contracts in place between Gazprom and European gas operators (we are talking about hundred thousand euro), which cannot be interrupted just for political reasons, or consequences could be unthinkable,” says Christian Egenhofer, Senior Fellow at CEPS (Center for European Policy Studies) and well-know expert of these issues. Similar situations happened in the past, in 2006 and more recently in 2009 when, after its controversies with Kiev, Russia stopped gas flows towards Europe, givn that they were passing through Ukraine. Were Moscow to repeat the initiative, “Russia would be finished as gas supplier” and “Europe would no longer count on it,” explains Egenhofer. After 2009, he added, “Russia has experienced huge problems of reliability” indeed. In any case, there are “coordinating group, which would discuss, in case of a break with Ukraine, how to avoid problems with Europe.” Maybe we won’t see such a sharp break between Russia and Ukraine, but Kiev will foot the bill in any case, in terms of costs. “I don’t know exactly which is the deadline for a renegotiation of contracts between the two countries,” adds Egenhofer, “but there lies the possibility for Russia to raise gas costs.”
