The economic war against Ukraine is entering a new phase


Russia opened a new front in its war with Ukraine on Wednesday over energy exports – an offensive directed against two other frontline states in Eastern Europe that have supported kyiv’s efforts to defend itself.

Although anticipated, Gazprom’s decision to suspend natural gas shipments to Poland and Bulgaria has lifted the last vestiges of European leaders’ doubts about Moscow’s desire to separate its commercial interests from its territorial (some would say imperial) ambitions. ).

Poland and Bulgaria, as well as the President of the European Commission, have vowed not to give in to “blackmail” and to step up the pace of their efforts to achieve energy independence from Moscow.

Since the start of Russia’s all-out invasion of Ukraine on February 24, the world has witnessed brutal conventional warfare leaving death and destruction in its wake, coupled with cyberattacks in various parts of the globe ( including Canada).

He responded with an unprecedented economic war against Russia, deploying sanctions to – according to Prime Minister Justin Trudeau – have the same effect on war industries that bombs and missiles did a generation ago.

While experts disagree on the effectiveness of the sanctions, Gazprom’s decision on Wednesday is an extension of this economic war.

Energy has been used as a geopolitical weapon in the past. Just look at the Arab oil embargo of the 1970s and the US decision before World War II to cut off oil shipments to Japan – an attempt to starve that country’s war machine as engaged in a brutal war of conquest in China.

What’s new, experts say, is how tightly shutting off gas taps now fits into Moscow’s ongoing military campaign in Ukraine.

No more ‘illusions’

“I think that if anyone had any illusions about Russian activities, gas or oil activities in the European Union, [they] totally lost all those illusions,” said Zuzanna Nowak of the Polish Institute of International Affairs.

“Armament, I would say that is a fitting word and this word somehow unifies European countries.”

Energy security in Europe took up much of the discussion in early March when Trudeau met with European leaders who implored Canada to help them find energy alternatives to Russia.

Gazprom’s decision will lead to higher energy prices in Poland and Bulgaria.

European energy prices rose around 24% on overnight trade after Gazprom’s statement, but fell later in the day.

In a press release, the company blamed its decision on Poland and Bulgaria’s refusal to pay their bills in roubles, which Russian President Vladimir Putin demanded late last month.

In its statement, Gazprom warned the two countries not to siphon off gas destined for other nations like Hungary, which agreed to Moscow’s terms.

A “direct attack” against Poland

In a speech to the lower house of parliament on Wednesday, Polish Prime Minister Mateusz Morawiecki called the move an act of revenge for new sanctions imposed by Poland on Russian oligarchs.

“This is a direct attack on Poland, a country that showed yesterday what it means to deliver a real blow against the Russian oligarchs,” Morawiecki said in quotes translated by Polish news agency Polska Agencja Prasowa SA.

“We published the first list of Russian oligarchs, Russian entrepreneurs [to be sanctioned] and in revenge for that, the Kremlin made a threat yesterday, a threat to cut off the gas, and this morning that threat was carried out.”

Polish Prime Minister Mateusz Morawiecki speaks to the media at the Gas-System gas station in Rembelszczyzna, near Warsaw, Poland, Wednesday, April 27, 2022. (Czarek Sokolowski/Associated Press)

Some observers are reluctant to draw such a direct line between the actions taken by Poland and Bulgaria and Gazprom’s decision. They said they believed the message sent by the suspension was aimed at a wider audience.

Orysia Lutsevych is a research fellow at the Ukrainian Forum at Chatham House, an independent policy institute in London. She said she believed Wednesday’s decision was just the start and that other European countries that had refused to pay in rubles would be targeted.

This is another sign that the war is entering a new phase, she said.

“The West is serious now”

“After all these atrocities we have seen, I think there is a commitment from the West to impose more pain on Russia and Russia’s response [is] make the West suffer. So it’s quid pro quo,” Lutsevych said.

Although Gazprom has been signaling the move for weeks, the timing of the decision seems significant – a day after allied nations met in Germany and pledged to step up the delivery of heavy weapons to Ukraine.

“The West is serious now and Russia really has very little influence other than energy in Europe,” Lutsevych said. She added that Russia wanted to “hit Poland hard” first because it was a critical transit point for Western arms entering Ukraine and it had generously supported the refugees.

Ukrainian refugees fleeing the Russian invasion watch a train at Przemysl Glowny station in Poland on April 9, 2022. (Leonhard Foeger/Reuters)

A senior official of Ukraine’s president described it as an attempt to drive a wedge between his country and its allies, many of whom have begun supplying Ukraine with heavy weapons.

Earlier this week, Poland admitted sending 100 ex-Soviet T-72 tanks to Ukraine to help its neighbor fend off the Russians.

It is the first time Gazprom has cut gas supplies since Putin decreed last month that “unfriendly foreign buyers” should deal with Gazprom in rubles instead of US dollars and euros. Putin made the request in response to waves of international sanctions imposed on Russia since the invasion.

European Commission chief Ursula von der Leyen said the suspension of gas shipments to the two countries is “unacceptable and unjustified” and proves that Russia is unreliable as an energy supplier. She called it “blackmail”.

An unknown number of other European countries have decided to share their natural gas supplies with the two countries concerned.

Russian President Vladimir Putin, left, listens to Alexei Miller, head of Russian gas monopoly Gazprom, during a meeting in Moscow on September 16, 2020. (Mikhail Klimentiev/Associated Press)

“It firstly shows the main solidarity between us,” von der Leyen told a press conference in Brussels. She said Russia’s decision to turn off the taps shows the wisdom of Europe’s previous investments in infrastructure that have made natural gas sharing practical.

She promised that the European Commission “will mitigate any impact on possible gas disruptions” and said Russia was only harming its own economic interests with its actions.

Poland’s state-owned energy company imported around 54% of its gas supply from Russia over the past year. Morawiecki said Poland’s natural gas storage facilities are three-quarters full and he is working to find replacement gas elsewhere.

Bulgaria is the most vulnerable country from an energy point of view. It receives 90% of its natural gas from Moscow, but tries to compensate for these imports by buying liquefied natural gas from other countries.

Bulgarian Prime Minister Kiril Petkov warned on Wednesday that his country was reviewing all its contracts with Gazprom, including those that allow Russian gas to transit through Bulgarian territory to Serbia and Hungary.

“Unilateral blackmail was not acceptable,” Petkov said.