Europe can help Ukraine by ending Russia’s energy stranglehold

The writer is the former general director of Naftogaz

European leaders must learn from the mistakes of the past and help end the war in my country using one of the most powerful tools at their disposal: energy sanctions.

First, a little background. Ukraine gained full independence from Russian natural gas imports after the Maidan uprising in 2013-2014. It has not bought a single cubic meter of natural gas from Russia since 2015. All imported volumes come from the European market via Poland, Slovakia and Hungary.

During the winter of 2014-15, the Kremlin tried to block Ukrainian imports of European gas by cutting off the natural gas supply to the EU. The decision had no tangible impact on Ukraine, although Gazprom, Russia’s state-owned energy group, lost nearly $5.5 billion in the process.

It is disappointing that the summit of European leaders held in Paris on March 10-11 did not result in a decision on energy sanctions against Russia, but not surprising. I remember very well the doubts expressed by European Commission officials in 2014 about our plan for independence from Russian gas. There was also skepticism when we warned Western political leaders that as soon as the Nord Stream 2 gas pipeline was completed, giving Gazprom enough transit capacity to bypass Ukraine, Vladimir Putin would launch a full military invasion of our country.

Fifteen years at Naftogaz, Ukraine’s state-owned energy company, gave me insight into the thinking of the Russian president and his gang in the Kremlin. Two points, in particular, are relevant to the debate around energy sanctions.

First, Putin is convinced that Europe is too weak to risk its own comfort and therefore will never be willing to stop buying Russian energy. Second, he is a tyrant. Putin does not respect the weak and the corrupt, but fears the strong and the brave. Nor will he be disconcerted by measures he considers reversible. Temporary measures, such as freezing Russian assets, will only persuade him to hit Ukraine harder.

Several things follow from this. It is clear that Russian aggression will not stop with Ukraine unless there is strong retaliation from the west. Beyond the military realm, the most obvious target of this retaliation is Russian energy exports, which account for about 36% of the country’s total budget revenue, most of which is used to fund military spending.

Europe should move quickly to permanently replace Russian energy supplies. Yes, Europe is heavily dependent on energy supplied by Russia. But guess what? Addiction goes both ways. Additionally, the EU green deal, which commits the bloc to becoming carbon neutral by 2050, means the balance of bargaining power has shifted decisively from fossil fuel producers to consumers. European governments should use this advantage to sanction Russian energy exports in a way that will not hurt their own economies.

Liquefied natural gas is the obvious target. In 2021, the total supply of Russian LNG amounted to less than 8 percent of the world supply. Almost half was imported through Europe. But a full EU embargo on Russian LNG imports would carry negligible risk, as those volumes could easily be replaced by increased production in 2022 from other suppliers.

Petroleum products are almost as easy a target as LNG. The critical product is diesel fuel. Europe imports around 15% of its total consumption from Russia. This can be replaced by increased domestic production and additional imports from North America and Asia.

Crude oil is more complicated. Prospects for short-term success may be affected by the behavior of other potential suppliers. But I am convinced that, if producers believe that Europe is serious about a crude oil embargo against Russia, there will be strong competition to replace Russian oil and secure long-term relations.

An embargo is expected to be implemented gradually, with an immediate halt to imports of Russian crude by sea, followed by a gradual phasing out of imports of crude by pipeline over the next nine months.

Natural gas by pipeline poses the most challenges, accounting for 40% of total EU imports. The best approach is the tried and true Iranian sanction model: natural gas is allowed to flow from Gazprom to Europe, but all profits are held in special escrow accounts in European banks until certain conditions are met by Russia.

I understand that a crude oil embargo and pipeline sanctions may require further analysis. But there is no reason for the EU not to immediately implement an embargo on deliveries of Russian LNG and petroleum products. Russia’s energy stranglehold has gone on too long. It will save lives, not just in Ukraine.

Mary I. Bruner