Putin's gas strategy is doomed to fail
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Loading... - Isabella Borja
- 03 Nov 2022
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As Russia continues to unleash devastating attacks on Ukrainian civilian infrastructure, Europe is weighing up a future without Russian gas. European Union countries are negotiating a common response to the energy crisis while seeking to strike deals with alternative gas providers.
In order to understand the direction of the Russian-Western economic war, and thus ensure continued support for Ukraine in its resistance to Russia’s invasion, it is more important than ever to understand President Vladimir Putin’s strategy.
Firstly, the declining gas flows to Europe are having a significant impact on the Russian economy. Despite the recent sky-high energy prices, the record budget surpluses that the Kremlin recorded in the first six months of the war have been all but erased. The Kremlin remains without significant credit support from abroad, as even China remains reticent to extend financial support.
While Beijing and some non-aligned countries like India are happy to buy up its oil and gas at a discount, diminishing discretionary spending and a decrease in industrial production as a result of sanctions will further rack the Russian economy in the short term. Russia’s long-term prospects are also increasingly dim due to the impact of sanctions and the country’s declining population – a trend which has been exacerbated by Putin’s draft and the hundreds of thousands who have fled as a result.
The reality is that Russia’s entire economic model is dependent on hydrocarbon exports to Europe. Putin has chosen to gamble everything on his Ukrainian folly. As gas flows fall to a trickle, so does the lifeblood of Russia’s economy. The Russian president seems to be playing an energy game, while hoping his fortunes will be reversed. Read More...
