Commentary on Political Economy

Wednesday, 9 March 2022


Buying Russian gas and oil has funded Putin’s war, says top EU official

Josep Borrell says bloc failed to act in past but must now cut dependence on supplies by two-thirds this year

Josep Borrell addresses MEPs at the European parliament in Strasbourg, France

Vladimir Putin is able to finance his war machine thanks to EU payments for Russian gas and oil, the bloc’s foreign affairs chief, Josep Borrell, has said.

Speaking in the European parliament, the Spanish former foreign minister told MEPs that the west should have acted more quickly in the face of Russian aggression over the last decade.

Putin felt that the US was distracted by the risk of China, Borrell said, and the Russian president was confident that the EU would not be able to dispense with the country’s oil and gas.

Borrell told MEPs that Putin had been wrong in believing the west would fracture, but he admitted that the EU had a lamentable record when it came to its dependency on Russia’s fossil fuels.

“It’s true,” Borrell said. “We are affected by our energy ties. When it comes to oil and gas, we are paying the equivalent of the amount of assets that have been frozen owned by the Russian central bank. So, the first thing that we need to do is to cut the umbilical cord. We need to stop these flows that allow them to gain assets to finance this war.

“That means that by the end of the year, we will have cut our dependence on Russian energy by two-thirds. It is a difficult objective but something which is achievable if we really put our minds to it. It means that European citizens need to turn the heat down in their houses. Everybody needs to make an individual effort when it comes to cutting use.”

In 2021, the EU imported 155bn cubic metres of natural gas from Russia, accounting for about 45% of its gas imports and close to 40% of the bloc’s total gas consumption.

Borrell added: “We started too late, but it is better late than never. When we saw the invasion, in Crimea, we knew we had to reduce our dependence on Russian energy, but actually we only increased it instead of decreasing it.

“The Russian economy is not that interlinked with the global economy. It is basically pumping out gas. And it uses money from these energy transactions to fund its military to expand its influence where it can, to the Caucasus, now to Ukraine.”

After the US and UK announced a ban on Russian oil imports on Tuesday, EU leaders will discuss a similar move when they meet in Versailles on Thursday, but are not expected to follow, because of Europe’s dependence on imported Russian fossil fuels.

“The US has a different reality when it comes to imports from Russia,” a senior EU official said.

The US gets just 8% of its oil from Russia and does not buy any natural gas, while the EU imports about a quarter of its oil from its eastern neighbour. Instead, EU leaders are to agree “to phase out our dependency on Russian gas, oil and coal imports”, according to a draft summit communique, without setting a date to this pledge.

“Some [member states] are asking for 2030, some are asking for 2027, some are saying now. So that is why we do not intend to put a date, because I think some member states might meet this target earlier,” the EU official said.

Earlier this week, the European Commission outlined how the EU could cut its use of Russian gas by two-thirds this year and completely “well before” the end of the decade.

However, the plan depends on EU member states speeding up plans for net zero emissions by 2050, as well as ramping up expensive purchases of liquefied natural gas in the short term.

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