Russia Was Already Cutting Off Europe's Gas Before Invading Ukraine. What Can Be Done?
In the short term, not much. But there is hope for the future.
Russian regular forces invaded Ukraine early in the morning of February 24 local time.
Even if they win their battles against the Ukrainian military, the war will be costly for the Russian people, both in the short term and in the longer term as the country becomes an international pariah. The Russian people will not be safer or richer as a result of any conquests. Instead, they will have to the bear the expenses of occupation and sanctions. The downturn in living standards after the first invasion of Ukraine and annexation of Crimea will look mild by comparison.
But the Russian government nevertheless decided to attack. Putin and his allies evidently believed that, in the short term, Russia has more leverage over the West than the West has over Russia. In general, Russia needs to be able to sell oil, natural gas, coal, and other commodities to Europe to earn the hard currency necessary to pay for imports of manufactured goods. However, Russia has so many foreign reserves that it can afford to withhold energy and other raw materials from European customers for years, if necessary, to make a point, even if it is cut off from access to Western capital markets.
This is most obvious in the case of natural gas. Unlike oil, coal, or other commodities, gas is most easily transported via dedicated pipelines. Russia’s state-owned Gazprom is the biggest source of natural gas for European customers, which is essential for electric power generation and heating. A close look at the daily delivery data published by the company reveals that they have been squeezing European supplies since the summer, which helps explain the destabilizing surge in European natural gas prices. Things could get worse if relations deteriorate.