Energy crisis and its impacts on Europe and Russia

It seems that a harsh winter awaits Europe as a result of the lack of energy supplies, especially gas, which will cast a shadow over the European peoples; the matter may affect the standard of living through the rise in commodity prices and the cost of living. It may negatively affect the governments of European countries in their inability to find quick solutions to get out of the crisis, as Europe imports about 40% of the natural gas it consumes, equivalent to 175 billion cubic meters, from Russia through several lines.

After Russia invaded Ukraine, Western countries sought to follow the policy of sanctions as punitive measures towards Russia for its military intervention in Ukraine. They also sought to neutralize it from the world order as a “second pole” by imposing harsh sanctions on it and searching for alternatives to its gas to get out of its dependence on it. This policy led Russia to take punitive measures towards European countries by reducing gas supplies to them until it completely stopped supplies in some lines like Nord Stream, which made European countries take steps, whether austerity by rationalizing energy consumption or restarting suspended nuclear plants and increasing reliance on renewable energy sources and dependence on American gas to fill its gas tanks to cover the lack of Russian gas supplies ahead of the winter season. These measures, despite their importance, will have a greater impact on Russia’s complete cessation of gas supplies to Europe, as there have been attempts by Western countries to find alternatives to Russian gas since 2014 after Russia annexed the Crimea, but their attempts failed, and even increased its imports of Russian gas and the establishment of new “Nord Stream 2” lines.

It seems that the European countries are determined to search for alternatives to get out of the dependence of Russian gas, and the European Union may try to revive or develop some projects, including the Nabucco pipeline project, Trans-Anatolian Natural Gas Pipeline (TANAP) development which is based on the transfer of Azerbaijani gas to Europe via Turkey by increasing the production capacity of the gas pipeline, East Mediterranean Gas which may turn into a project to transport gas from the Eastern Mediterranean to Europe through the construction of a pipeline linking gas from Egypt, Israel and Cyprus to Greece and then to Europe, the Trans-Saharan Gas Pipeline (TSGP) project from the gas fields in southern Nigeria, passing through Niger, reaching Algeria towards Europe, and a project to transport gas across the Atlantic coast from West African countries “Nigeria”.

However, Russia is not far from these projects, as it realizes how dangerous these projects are to its gas supplies to Europe, so it is trying to expand in Africa either by strengthening its relations with countries that may be an alternative source of its gas, such as Algeria, which recently joined the BRICS group, Egypt and Iran under the heading of common interests and the formation of a multipolar world order weakening Western hegemony, or by concluding agreements between the Russian company Gazprom and African countries and strengthening its relationship with Turkey, which is trying to become a center for the transfer of energy from the Middle East to Europe. The Russian intervention comes to tighten the noose around the Europeans who are trying to find alternatives to its gas.

It is also not about finding alternatives to Russian gas, as there are many problems that may await Europe in the event that the nearby Russian gas is completely dispensed with:

• Race and competition between European countries over the sources close to them – Northern Africa, especially Algeria – which may create differences between these countries, as is the case between Italy and Spain over Algerian gas and between France and Germany over the Medgaz project, where France opposes a German plan to build a gas pipeline with Spain. This is in addition to the differences between European countries about sanctions against Russia and the impact of these sanctions on its economies.
• The big difference between Russian and American gas prices in the event that American gas is heavily relied upon and the lack of nearby sources may affect the high prices of European products and thus their inability to compete with foreign products as a result of their high prices, which means that many European companies are exposed to bankruptcy, unless there is a government support policy to save its companies from bankruptcy. This means allocating part of its general budget to support companies, in addition to the reflection of the high prices and the shortage of supplies on the standard of living of the population.
• Russia’s ability to manipulate energy prices by reducing its gas and oil exports to global markets, as it is one of the largest gas and oil exporters in the world.
• The return of the Cold War and the increase in armaments in the European continent to confront the Russian threat, and the return of American guardianship over Europe.

Despite assertion by European Commissioner for Economy, Paolo Gentiloni, that the European Union is well prepared in the event of a complete halt to Russian gas supplies, thanks to storage and energy-saving measures, with the continued imposition of sanctions on Russia for its invasion of Ukraine, and the European Union directed to ban the import of crude oil from Russia and refined products, and the attempt of the Group of Seven to impose a ceiling on the price of Russian oil with the aim of reducing revenues for Moscow’s war on Kyiv, the European countries will remain dependent at this stage on American gas supplies and the East. Therefore, gas supplies to Europe will not be stable in the absence of sufficient alternatives to cover the continent’s need for gas, which means further economic deterioration increasing inflation, increasing unemployment rates and deteriorating in the value of the Euro and the Sterling. On the other hand, Western sanctions began to cast a shadow on Moscow. In light of the continuation of its war on Ukraine, it will accelerate the impact of Western sanctions on its economy. Despite Moscow’s ability to find alternatives to the European market, especially in China, India and other countries, it will be under the dependence of these countries on the one hand and on the other hand it will sell its gas at discounted prices much lower than international prices, which will affect its economy. Also, the loss of its dominance over the European natural gas markets will affect its political weight in the world.

In this context, both parties are facing economic crises. In order to get out of this impasse and before reaching the point of no return, it is necessary to start peace talks between Russia and Ukraine, reconciliation between Russia and European countries, and sitting at a negotiating table to end the crisis and reach a compromise solution, such as withdrawal from some areas it occupied in Ukraine, the failure to hold a referendum in the Donetsk and Luhansk regions in the Donbas basin to annex them, the return of gas to Europe in exchange for lifting sanctions and stopping military support for Kiev. However, the problem lies in who is the victor and who is the loser, as this has a great internal impact on both sides and makes reconciliation difficult at the present time. As for the European countries to overcome the gas problem in the winter and insist on stopping Russian gas supplies, and Russia was unable to find a solution to get out of this impasse, and in light of the continuation of Western sanctions and the absence of any prospect for any solution to end the crisis, Russia will have no choice but the military option and the expansion of its operations in Ukraine. In the end, the international community is facing an economic crisis that may lead to economic stagnation and depression, and an increase in armaments unless a solution is reached that ends the conflict between the West and the Russians.