This content is not available in your region

Analysis: How the EU's gas addiction is helping Russia's war machine

Access to the comments Comments
By Jorge Liboreiro
EU leaders have chosen to focus on implementation and closing loopholes of existing sanctions.
EU leaders have chosen to focus on implementation and closing loopholes of existing sanctions.   -   Copyright  Michael Kappeler/AP

It’s been more than a month since Russia launched its invasion of Ukraine and the European Union is taking a moment to look back at the most frantic month in its history.

Watching a war unfold on the EU's doorstep, Brussels unleashed a raft of sanctions unlike anything the bloc had ever imposed.

If past conflicts were characterised by lethargic action, internal trifles and factionalism, Russia's war in Ukraine has injected the EU with a renewed spirit of determination, ironclad unity and unheard-of speed.

The 27 countries have punished almost every imaginable sector of the Russian economy: the central bank, the financial system, the aircraft industry, semiconductors, luxury goods, state-owned media – they all have fallen victim to the EU’s retaliation.

The pain from the far-reaching measures is already being felt inside Russia: Western companies have left the country en masse, inflation has soared to 12.5%, foreign reserves have turned inaccessible and the prospect of a sovereign default looms large over the whole country.

But the Kremlin, unfazed by international condemnation, continues its military campaign, even if the advance has mostly stalled on the ground and Ukrainian forces battle to push the invading army out. For the EU, the stagnation offers a chance to catch its breath and take stock.

The respite comes after a failed attempt to slap an embargo on Russian oil products, one of Moscow’s most profitable sources of revenue. The proposed punishment, already introduced by the United States, proved too much to bear for some oil-dependent EU countries, who feared the potential disruption from such a radical move would inevitably outweigh all its possible benefits.

With the energy ban off the table, at least for the time being, the EU's response is entering a reflective phase to assess the practical success of its vast catalogue of sanctions.

Following a two-day meeting in Brussels, whose list of guests featured none other than US President Joe Biden, EU leaders shunned any sort of new announcement and simply vowed to "close loopholes" and "target actual and possible circumvention" of the measures so far imposed.

"Don’t forget that the sanctions package in place at the moment is by far the toughest package I’ve seen in my life as a politician," said Dutch Prime Minister Mark Rutte last week.

"If we want to have new sanctions, we need them to have them as a reaction to something," said his Luxembourg counterpart, Xavier Bettel, describing the current stage of the war as the "status quo."

The absence of novelty stood in stark contrast with the scathing words of Ukrainian President Volodymyr Zelenskyy, who name-checked EU leaders in a gloves-off virtual address.

"Once and for all. You have to decide for yourself who you are with," Zelenskyy told Viktor Orbán, the Hungarian Prime Minister, who had come forward to oppose the energy ban.

Even if Zelenskyy's plea was not enough to sway EU leaders, who have grown used to the president's impassioned speeches, it nevertheless underscored the dilemma surrounding the bloc at this particular point of the conflict: Can the EU afford to sit back and wait for sanctions to kick in?

Waiting for the fifth package

Throughout the conflict, Brussels has numbered each set of sanctions in order to emphasise its quantity and accumulative character. The latest raft, billed as the "fourth", established, among other measures, an export ban on EU-made luxury goods worth more than €300 and the removal of Russia's most-favoured nation status under the World Trade Organization.

The European Commission confirmed to Euronews that "nothing new is in the pipeline" for a fifth package but the executive is prepared to present member states with options according to the war's evolution.

However, the spokesperson noted, the introduction of more sanctions is not dependent on a specific development on the ground and is up to member states to decide if they want to take things up a notch.

Russia's use of biological and chemical weapons against Ukrainians would be a "total game-changer" that would require an extraordinary response not only from the EU but also from NATO, the official said.

For the time being, the EU is focused on tightening existing penalties, fine-tuning their implementation and preventing blacklisted individuals and companies from finding a way out.

The wait-and-see approach has been welcomed in some countries, like Germany and the Netherlands, which have deep commercials links with Russia and need more time to adapt to the new normal, but it has also raised concerns about sanctions fatigue that could give Putin temporary breathing space.

"It is key that these sanctions are fully effective by restricting possible circumventions. Loopholes must be closed immediately," said David McAllister, a German MEP who chairs the European Parliament's committee on foreign affairs, in a statement to Euronews.

"Further restrictive measures remain on the table, depending on the Kremlin’s actions."

His colleague Nathalie Loiseau, a French MEP from Renew Europe who is a close associate of President Emmanuel Macron, disagreed with the assessment, arguing the "unthinkable" level of destruction and civilian death toll justify putting "additional pressure on Russia to stop this brutal war."

"I don’t think we should wait to trigger additional sanctions," Loiseau told Euronews. "I favour a total and temporary ban on Russian oil and coal in order to stop funding the war."

Her comments echoed those of Gabrielius Landsbergis, Lithuania's foreign affairs minister, who recently said Europe cannot "tire of imposing sanctions" and "give an impression of fatigue."

Although the Commission has refused to provide any specific details for a potential fifth package, options could include restricting EU access to Russian ships, expanding the catalogue of banned exports, enlarging the list of sanctioned oligarchs and expelling more Russian banks from the SWIFT system.

Despite grabbing headlines around the world, the SWIFT ban was considered disappointing upon its release because it only targeted seven banks and conspicuously left out Russia's first and third largest institutions, Sberbank and Gazprombank, due to their role handling energy-related transactions.

'Bankrolling both sides of the conflict'

In Brussels and across the other capitals, officials insist the EU's arsenal of sanctions is still broad and rich and Europeans should feel proud of the sweeping response against Vladimir Putin.

But as the war enters its second month, the all-important question of energy has gradually taken over the whole debate, overshadowing past sanctions and capturing all the attention.

"Russia is committing serious and horrible crimes against innocent civilians in Ukraine every day," Urmas Paet, an Estonian MEP, told Euronews. "As long as we are buying energy from Russia, we are helping the Russian war machine to commit these atrocities."

Since the invasion of Ukraine began on 24 February, the EU has spent over €21 billion on Russian fossil fuels, including €13 billion on gas, according to a tracking tool set up by the Centre for Research on Energy and Clean Air (CREA), an independent research organisation.

The bloc's refusal to target the energy sector, which brings over 40% of Russia's federal budget revenue, is hindering the effectiveness of all the other "massive" sanctions, as Brussels calls them, and offering Putin a much-needed lifeline to carry on with his campaign.

"In that sense, EU sanctions are not producing the short-term effects that are commensurate with the massive violence and devastation that the Russian army is exacting in Ukraine," says Steven Blockmans, director of research at the Centre for European Policy Studies (CEPS).

The glaring exemption has turned into a headache for the EU, particularly after the US, a country with a higher degree of self-reliance, announced a total ban on Russian energy imports.

Blockmans believes the 27 still have room to manoeuvre and can enhance coordination with allies to guarantee the sanctions in place become bulletproof and inescapable. But, he notes, the bloc finds itself in a contradictory position, "bankrolling both sides of the conflict" by buying gas to Moscow and sending weapons to Kyiv.

EU leaders have become painfully aware of their complicit actions and are nudging each other to take drastic measures and cut the Kremlin's tap. But political consensus, crucial in the bloc to approve new sanctions, is simply not there and looks unlikely to materialise as long as the war is stuck in an impasse.

"The basic rule is that sanctions must have a much greater impact on the Russian side than on the European side. We don't wage war on ourselves," said Belgian Prime Minister Alexander De Croo.

Weighing heavily on capitals is the persisting power crunch that has afflicted the continent since late summer. Gas prices have skyrocketed over a mismatch between offer and demand, bringing consumers and companies impossibly high bills. The war has only served to exacerbate the crisis and made some leaders wary of toying with delicate energy supplies.

But the invasion has also laid bare the EU's great vulnerability: its deep, costly dependency on Russian fossil fuels. The Commission has unveiled an ambitious roadmap to slash imports of Russian gas by two thirds before the end of the year, although concrete details are still being thrashed out.

The plans present the EU with a unique chance of inflicting great pain on the Russian state and crippling the expensive military apparatus. Most of the gas that Russia sends to the bloc comes via pipeline, which means that, if the EU begins to considerably cut off its purchases, the key infrastructure will be rendered obsolete and Moscow will be unable to find an immediate substitute to fill the whole gap.

"Even if [the roadmap] is not a sanction," Blockmans said, "in the medium term, it is probably more devastating than the current sanctions, which will be eventually lifted."