Russian President Vladimir Putin must be delighted. A rift appears to be forming between the United States and the European Union over how to handle possible Russian aggression in Ukraine, a scenario that appears more likely by the day.
U.S. President Joe Biden this week said he expects the Russian military to “move in” to Ukraine and has pleaded for transatlantic unity in punishing Russia if it does. But on Wednesday Mr. Biden’s game plan came under stress when his French counterpart, Emmanuel Macron, called on the European Union to develop its own strategy to deal with Mr. Putin and Russia.
In a speech at the EU parliament in Strasbourg, Mr. Macron said: “It is good that Europeans and the United States co-ordinate, but it is necessary that Europeans conduct their own dialogue.”
The statement revealed that the united front of the EU and the U.S. might be breaking down. Mr. Macron’s comments came even as U.S. Secretary of State Antony Blinken, on a visit to Kyiv, said the strength of “any response to Moscow’s aggression demands unity among allies and partners, as well as within Ukraine.”
What brought this on? And was Mr. Macron speaking only for France or for most or all of the EU?
The latter, it appears. Mr. Macron this week began his six-month presidency of the European Council, the body made up mostly of the heads of government of the 27 EU member states, which defines the EU’s overall political direction. Mr. Macron has close ties with several prominent EU prime ministers, including Italy’s Mario Draghi, suggesting that his key allies, if not all EU leaders, quietly approved the go-it-alone strategy he unveiled.
That his motivation may have been partly personal cannot be ruled out. He was angry and humiliated when the U.S. signed the AUKUS security pact with Australia and Britain in September behind his back. The pact saw Australia cancel its order for French attack submarines in favour of nuclear-powered subs largely of U.S. design.
But the greater motivation may have been the EU’s recognition that savage U.S. and EU sanctions imposed on Russia could inflict enormous economic damage on the EU, too.
That’s because the EU – and in particular Germany, the continent’s biggest economy – is highly dependent on Russian natural gas supplied by state-controlled and Kremlin-friendly Gazprom, the largest market-listed gas company in the world. Germany is Gazprom’s biggest customer. Italy is the second-biggest, and Turkey is No. 3.
Gazprom supplies about 40 per cent of the EU’s gas imports. That level will probably rise because of dwindling EU supplies and natural gas’s emerging status as a “transition” fuel, as Europe closes its coal-fired generating plants and moves toward renewable energy sources, a net-zero process that will take decades.
Last year, as much as three-quarters of Germany’s gas needs were supplied by Gazprom. Under the government of Angela Merkel, who stepped down in December as chancellor, Germany decided a decade ago to shut down all its nuclear plants by the end of 2022, making the country ever more dependent on the fossil fuel.
Russia leapt at the opportunity to make Germany a slave to Gazprom. The Nord Stream 2 gas pipeline, which runs from Russia to Germany under the Baltic Sea, bypassing Ukraine and Poland, has just been completed. But its operation has yet to be approved by Germany’s energy regulator.
If Russia were to invade Ukraine, one obvious sanction would be to ensure the pipeline never gets approved – an idea that has divided the new German coalition government, led by Olaf Scholz.
If Nord Stream 2 is blocked as part of a barrage of export and financial sanctions against Russia, Mr. Putin would surely retaliate by restricting gas exports to the EU, a scenario that has raised anxiety levels among governments across Western Europe. According to the European Commission, wholesale prices for natural gas climbed more than 400 per cent between 2019 and last September. They are still climbing, reaching painful levels for many industrial and retail clients.
Mr. Putin has been openly accused of accelerating the price increases by withholding exports to put pressure on Germany to approve the Nord Stream 2 pipeline. “We believe there are strong elements of tightness in the European gas market due to Russia’s behaviour,“ Fatih Birol, the executive director of the International Energy Agency, said last week. “I would note that today’s low Russian gas flows to Europe coincide with heightened political tensions over Ukraine.”
Several European countries already face a cost-of-living crunch because of rising consumer prices, rising taxes needed to pay for pandemic recovery programs, the prospect of higher interest rates and, now, possibly crippling energy costs if a sanctions war breaks out between Russia and the West.
That’s why EU leaders, some of whom, like Mr. Macron, are facing election campaigns in 2022, may resist launching severe sanctions against Russia if it invades Ukraine. Mr. Draghi said as much the other day, noting that the EU was in no position to end its reliance on Russian gas. “It would not be the right moment,” he said.
Mr. Biden has vowed “disaster” for Russia if Mr. Putin orders an invasion of Ukraine. Mr. Macron and Mr. Draghi have signalled that the EU might not fully support Mr. Biden’s effort to wreck the Russian economy. Russia’s energy stranglehold on the EU seems to be working in Mr. Putin’s favour as he amasses troops and military hardware on the border with Ukraine.
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