Will the energy war hurt Europe more than Russia?

Not long ago, “the energy poker game played by Europe and Russia, although dangerous,” seemed to be under control, according to The Economist. Despite the imposition of sanctions on most sectors, Europe continued to buy energy from Russia, which supplies over 40% of its gas and 25% of its oil, while Russia raked in billions in revenue.

Yes, the rhetoric escalated – and Moscow had called for all payments to be made in rubles, contrary to EU sanctions to shore up its currency – but “each side thought the other lacked the courage to go all out”. Then, on April 27, Russia “upped the ante”. When Poland and Bulgaria missed the ruble payment deadline, the Russian state-owned energy giant Gazprom stopped supplying gas.

Europe also took a significant step this week, Andrew Gray said on Politico. The European Commission proposed a total ban on Russian oil. Pending member states’ approval, crude oil would be phased out over a six-month period and refined products phased out by the end of the year. “To put it bluntly: It won’t be easy,” said Commission President Ursula von der Leyen.

The energy war will hurt Europe much more than Russia, Philip Pilkington said on UnHerd – especially the countries that are “on the front lines”. Neither Bulgaria nor Poland are rich and both have their own currency. If their energy markets collapse, they will face price hikes and blackouts, a recipe for ultra-high inflation. The real sticking point will come in mid-May, Daniel Boffey said in The Guardian, the next big payment date for gas by European energy companies.

There is “no alternative” that can fully compensate for the loss of Russian gas. If Moscow cuts it off altogether, it is widely predicted that Europe as a whole will face a recession. The oil embargo should be easier to manage, the FT said. Europe has the remainder of 2022 to “engage in intense diplomacy to secure alternative supplies” and the pain for Moscow will be considerable. Oil is the biggest source of revenue and 70% of it goes west. It will struggle to find new markets and tankers willing to ship its oil.

Still, there is a real risk that higher prices could “crash the global economy.” Europe faces tough choices, said The Daily Telegraph. Either the economy takes a hit, or Ukraine’s suffering increases. “The most perverse response” to the invasion was to target individual Russians while bolstering the Kremlin’s war chest by buying oil and gas. But there are clear signs that even the countries most dependent on Russian energy, like Germany, are poised to reach for the nettle.

The price of defying Putin is a skyrocketing cost of living, Martin Sandbu said on the FT. Western politicians will have to tell their people that we are now in “something like a war economy”. We must both protect democracy and create an energy system that is cleaner and independent of our enemies. “This is a task that our generation must fulfill for the benefit of the next.”