Russian President Vladimir Putin is planning to use economic pressure to divide the Western alliance against him, according to The Wall Street Journal (subscription).
What’s happening: Putin hopes to use Russia’s position as a major energy supplier against the West, including those countries that have sanctioned Russia since Putin’s February invasion of Ukraine.
- “The calculus would be that rolling blackouts and rationing would both undermine European public support for Ukraine and set NATO allies against one another as each nation tries to hoard gas.”
- As things stand, “Russia seems likely to become heavily dependent on China as its main gas customer, giving Beijing the upper hand in its relationship with Moscow.”
Told you so: The U.S. has been telling Europe for years that its growing reliance on Russia for energy needs puts it at a political and economic disadvantage, according to the Journal.
- “‘Russia is using energy as a weapon of war,’ said French President Emmanuel Macron this month.”
Already hurting: In recent months, Europe has felt the pain of reduced energy supplies from Russia, with power-source prices surging to historic highs and inflation reaching a record rate.
- The strain has begun to show among U.S. allies. Hungary “has ordered an export ban on fuels including natural gas.”
- Canada recently exempted from sanctions the gas turbines that power the Nord Stream pipeline, drawing criticism from Kyiv.
Meanwhile, Russia’s energy giant Gazprom will continue to make money “[a]s long as small volumes of gas keep getting pumped to Europe at high prices.”
- In a conservative estimate, Gazprom’s exports revenue from pipeline natural gas “will double this year to $100 billion,” Oxford Institute for Energy Studies Senior Research Fellow Vitaly Yermakov told the Journal.
- However … Russia is not likely to be “the energy superpower” anytime soon, energy expert and S&P Global Vice Chairman Daniel Yergin said. “I think two or three years from now, Russia is going to be a major producer of oil and gas, but … [i]t’s going to be much more dependent on China.”
The NAM’s view: “This power play by Putin underscores, yet again, the need for increased U.S. domestic energy production,” said NAM Vice President of Energy and Resources Policy Rachel Jones. “An all-available-options approach to power sources here at home—one that gives energy producers the tools they need to ramp up production—is what will give us energy security in the near and long terms.”