Russia hits back at Europe with counter-sanctions

The Russia-Ukraine war has taken a new economic turn with Russia imposing sanctions on Gazprom’s German and Polish subsidiaries, which would disrupt crucial gas supplies to these two countries and to Europe. Russian President Vladimir Putin’s military onslaught in Ukraine has not given Russia the strategic advantage it was seeking, but its counter-sanctions move is going to hurt Europe.

Russia has also imposed new conditions that European countries must pay for the Russian gas in roubles and not in dollars. Russian gas is, however, flowing eastward into Germany through Nord Stream I gas pipeline from the Baltic, but that may not enough to meet Germany’s and Europe’s energy consumption needs. Meanwhile, Ukraine has closed the gas pipeline passing through its territory saying that it would not let the gas supplies flow until it is in control of the pipeline system. This has only added to the energy woes of Europe. Germany and other countries have 40 per cent of gas supplies stored and this will seem through the greater part of the year, but it is feared that winter could face gas shortages. Due to the economic sanctions from the Europeans and Americans on the one hand, and the Russians on the other, gas prices have shot up.

It appears that Putin’s military campaign in Ukraine has not been a tale of triumph but his economic war of counter-sanctions against Europe could help him win some of the battles. It has now become a certainty that there is no immediate military outcome to the war in Ukraine because the Russians, despite their devastating missile attacks on Ukrainian cities, reducing them to rubble and forcing people to cower in bomb shelters in the basements of decapitated buildings, have not helped Russia to declare victory on the battlefield.

The Ukrainians are defying the Russian military might and they have emerged heroes in the eyes of the world. But the Russians have not given up their mission to force Ukraine to concede defeat. A long war in Ukraine will have a negative impact on the European Union (EU) countries because the economy of the zone would be under siege.

On the strategic front, quick moves are being made to admit Sweden and Finland to Nato, a consequence of the war in Ukraine. Russia has threatened to cut off gas supplies to Finland if it were to join Nato. An expanded Nato would be seen as an increased threat by Russia and it could make President Putin to press on with his futile war in Ukraine. For the first time since the Second World War, Europe finds itself at the edge of war. Though Russians are keen to confine the war to Ukraine and are not keen to escalate it, especially with Nato members, the clouds of war would be hovering over Europe and it will have a dampening impact on the economic prospects of Europe.

There would not be total economic disconnect between Russia and its European neighbours, but that is not good news for either Russia or for Europe. Russia and Europe have benefited due to the trade relations between the two, and it has helped in each other’s economic growth and prosperity. Now the prospect of prosperity is endangered, and it seems both Russia and Europe do not know how to get out of it. The stalemate cannot be allowed to continue for too long. The United States seems keen to push President Putin further into the corner in order to weaken his political position. And the American military and financial aid to Ukraine would make Ukrainian President Volodymyr Zelensky adopt an uncompromising position. But this does not look like that neither the United States nor Ukraine can inflict military and economic defeat on Russia.