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Alumni Media

Europe Is Winning The Energy War Against Russia

By Ariel Cohen, Alum of The Fletcher School of Law and Diplomacy at Tufts University

The invasion in Ukraine was supposed to be long over by now – by Kremlin’s count. After the first three days, Russia’s “short victorious war” would end with a Quisling government in and a parade through Kyiv which would have cemented Russian President Vladimir Putin’s legacy and the Russian empire redux of Eastern Orthodox Slavs: Russia, Ukraine, and Belarus, or as the czarist lingo went, “the Great, Little and White Russia”.

Instead, Russia’s invasion has floundered in the greatest display of military incompetence since Saddam’s Iraqi army collapse in 2003, but here it was not a superpower defeating a regional army starved with sanctions. It was a regional army defeating “the second most powerful army in the world”.\

The totality of Russia’s geostrategic and economic failures are enormous: mass emigration (about 1,000,000 of the most skilled and entrepreneurial Russians; economic dislocation and sanctions; diplomatic isolation; and a reinvigorated West. This is all Russia must show for its war, and its rulers, like Nikita Khrushchev in 1964, were removed for much less than that.

Russia also weaponized its energy resources to pressure Europe. The hope: high energy prices for Europe and discounted prices for anti-Western rivals would force Europe to abandon Ukraine and pressure Kyiv to surrender for their own convenience.

Russia was hoping, especially as winter approached, increasing home heating and industrial energy demands from the West would give Russia political leverage. General Winter fought Russia this time, as Europe enjoyed one of its warmest winters on record. This warm weather combined with a pragmatic energy-based diplomatic and economic offensive helped Europe a lot.

Before the war, Russia was the leading supplier of energy, including oil, uranium reactor fuel, natural gas, and coal to the continent as 40 percent of the gas used to heat homes and power businesses throughout the EU came from Russia. This made Russia a significant trading partner for some of the world’s richest countries giving Moscow considerable leverage. However, Europe’s response to Russian aggression and war crimes, such as the 2008 invasion, occupation, and annexation of Georgian territory, the 2014 annexation of Crimea, or occupation of Donbas and the downing of an MH-17 civilian airliner were unforgivable failures that emboldened Putin to invade Ukraine.

Even before the war began, Europe and the U.S. prepared contingency sanctions that would hurt Russian energy exports and allow the West to wean itself off Russian gas. Russia responded in kind, restricting its exports and leading the Schadenfreude headlines such as “German ‘Green’ minister admits coal-burning plants will have to go back into production”, or “Spain’s prime minister suggests ditching neckties to save energy”. Many missed the deeper meaning of these headlines: Europe was rapidly replacing a cornerstone of its economic architecture and wasn’t letting ideological purity or optics get in the way of saving itself from the Russian habit despite decades of Ostpolitik, and especially Angela Merkel’s efforts.

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European Commission President Ursula von der Leyen (5th-R) poses for a group photo with the EU … [+]AFP VIA GETTY IMAGES

The speed with which Europe was able to find alternative sources of energy and succeed in weaning itself off Russian imports has surprised many, most of all Russian leaders. This will increasingly leave Moscow with significantly fewer resources to finance the war. The drop in revenue will hurt average Russians and expose them to the economic pain inflicted by Western sanctions. There is also little hope that Europe’s partnership with Russia can resume after the war ends unless there is a regime change in Moscow. It is unlikely that European leaders will not repeat the mistake of relying on Russia; as inflation decreases in the West and Europe readjusts its energy policy, the sanctions imposed on Russia will only become more severe and more damaging.

Russia has found the usual cabal of anti-Western or neutral actors to be poor replacements for European energy markets. China’s promised “friendship without limits” has turned into an unwillingness to even finance the new energy partnerships. Beijing buys Russian oil with 30-40 percent discounts.

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Russian President Vladimir Putin meets with India’s Prime Minister Narendra Modi on the sidelines of … [+]SPUTNIK/AFP VIA GETTY IMAGES

India, the Kremlin’s purported panacea, has also turned its position as Russia’s only high-volume importer by wrangling significant discounts. Even India’s purchase of thirty-three times as much Russian oil in 2022 as in 2021 hasn’t saved Russian finances, especially as the Sino-Indian rivalry traps Moscow between the dragon and the elephant.

Former Russian economic partners in Central Asia are now absorbing Russia’s fleeing youth and competing with it in the energy market. Even former Soviet republics and Russian allies such as Armenia are attempting to escape Moscow’s orbit. In every instance, Europe has pushed its own energy diplomacy to compound Russian strategic errors. Now, Russia is left only with the most irrelevant or sycophantic: Belarus, the Central African Republic, Eritrea, Iran, Nicaragua, Tajikistan, and Venezuela.

The predictable economic results showcase the scale of this failure. The recent ban on seaborn imports from Russia cost Moscow about 160 million euros per day. Two weeks before the EU sanctions and G-7 price cap on Russian crude went into force, Russia had lost 90% of its market in the bloc’s northern countries. By December 2022, Russia witnessed revenue from fossil fuel exports slump to its lowest level since the invasion in February. Its 2022 annualized inflation was almost double (11.9%) the West’s (6.5% in the US), with its total economy shrinking as its deficit balloons. At least the army is taking care of unemployment.

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The Liquefied Natural Gas (LNG) tanker Maria Energy (background) is moored alongside the Floating … [+]AFP VIA GETTY IMAGES

It is especially ironic that the actual beneficiary of Putin’s failed geostrategic gamble is the United States. In 2022 the US overtook Russia as a gas supplier to Europe. Most European leaders rushed to secure LNG deals with the US, leading to an additional $1 trillion in revenue for American energy companies such as Cheniere Energy (LNG.A.) and TotalEnergies (TTEF.PA). The energy crisis deepened cooperation between Washington and Brussels, leaving Europe all but disconnected from Russia and more reliant on the US. Synergistically, this new energy cooperation will strengthen the transatlantic alliance which bodes well for the Ukrainian war effort as well.

Putin’s actions weren’t worse than criminal, they were unprecedented strategic blunders. The enormity of this disaster can’t escape even Russian nationalist invasion supporters. Many thought Putin would not make such a monumental mistake. Unfortunately, he reflected a consensus whipped by the Kremlin TV and talking heads – and the czar swallowed his own bait, believing his own propaganda. Like so many before him, he bought into invincibility and destiny, falling victim to the illusion of a “short victorious war” – a phrase that doomed Nicholas II. This isn’t over, as Russia is determined to increase its military to 1.5 million, and send another half a million to the battlefield.

While the war is not over, Russia – and Putin – have already lost. Whatever the outcome, Russia lost the European energy market and a principal source of revenue, and Europe shed its dependence on Russian energy and is better off as the result.

This piece is republished from Forbes.

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