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Moscow turns off the tap
What is the impact? Gazprom will lose close to $5 billion in annual gas sales, while Ukraine will lose $800 million a year in transit fees from Russia. Analysts do not expect a surge in gas prices, and so far the European winter has been mild. EU nations had already cut dependency on Russian gas from 40% to less than 10% since Moscow’s invasion of Ukraine in February 2022, ramping up imports of liquefied natural gas from the US and Qatar and accelerating investments in renewables. In 2023, Russia shipped around 15 billion cubic meters of gas through Ukraine to Europe, down from 65 billion cubic meters in 2020.
What’s next? While turning off the taps represents a symbolic end to Europe’s reliance on Russian gas, several EU countries, including Slovakia and Austria, continued to import significant amounts of gas from Russia, and will now rely on reserves and diversification. Slovakia has decried the stoppage, but EU candidate Moldova could face the worst impact. A harsh winter coupled with energy shortages in its breakaway area of Transnistria could prompt an exodus of pro-Russian refugees to Moldova, complicating its EU bid and further straining energy resources.
Gazprom will continue to deliver gas to Hungary, Turkey, and Serbia via other channels, including the TurkStream pipeline across the Black Sea.German gas line
Germany rejects Russian natural gas shipments
Danke, but no danke. The German government has reportedly ordered its ports to reject all cargoes of liquefied natural gas, aka LNG, coming from Russia, according to the Financial Times.
The move completes a striking turnaround for Germany, which for decades was the world’s largest importer of Russian gas. But since Vladimir Putin ordered the full-scale invasion of Ukraine in 2022, piped gas shipments have been cut by both sides. Germany now imports zero gas directly from Russia.
The US angle: Geopolitical considerations are afoot. While other countries in Europe still import small amounts of Russian LNG under long-term contracts, the EU broadly is looking to import more of the stuff from the growing American market.
European Commission President Ursula von der Leyenraised this issue with Trump during her post-election phone call to him last week. The EU is likely hoping that increased purchases of American LNG could mollify Trump’s pledge to impose blanket tariffs of up to 20% on all US imports.
Ian Explains: If the US steps back from Ukraine, can Europe go it alone?
Two years into Ukraine's all-out war with Russia, Europe has had to cut off nearly all energy imports from Moscow. Can Europe secure its energy future and defend itself without relying on Russia or, depending on the November election, the United States? Ian Bremmer explains on GZERO World.
Europe is facing a critical juncture in its energy and security landscape. When Russia invaded Ukraine, European leaders rallied for a united front. But in the ensuing two years, some of these intra-European ties have shown signs of fracturing. More concerningly, Europe is no longer confident it can rely on steadfast support across the Atlantic.
Depending on the outcome, the November election in the United States could signal a death knell for American support for Ukraine. With Trump's wavering commitment to NATO and Europe facing a future without Russian fossil fuels, the region is reevaluating its energy security and defense strategies. Europe remains vulnerable despite recent price drops and increased renewable energy capacity. The continent's post-pandemic recovery, climate change-induced weather extremes, and Putin's aggression have highlighted the urgent need for energy independence.
To put it bluntly, Ukraine needs Europe now more than ever, and Europe needs to ensure it is strong enough to provide the support Kyiv relies on. No amount of weaponry shipped to Ukraine's battlefields will matter if Europe can't keep its own homes lit or its factories running
Watch GZERO World with Ian Bremmer on US public television (check local listings) and online.
- The Graphic Truth: EU natural gas prices plunge ›
- The Graphic Truth: The European Union's energy mix ›
- Dambisa Moyo: Europe's energy transition needs more than a "band-aid solution" ›
- Who blew up the Nord Stream pipelines? ›
- Europe’s Russian gas dilemma ›
- Norway's PM Jonas Støre says his country can power Europe - GZERO Media ›
- NATO unity will hold no matter the US election, says Norwegian PM - GZERO Media ›
- Europe welcomes US Ukraine package, but pushes to add even more aid - GZERO Media ›
- Europe needs to strengthen its defenses, says President Macron - GZERO Media ›
- Can Europe become a global superpower? - GZERO Media ›
Russian President Vladimir Putin
Russia’s economy (finally) feels the burn of sanctions
It took a little while, but Russia’s economy is finally starting to unravel thanks to hard-hitting Western sanctions, according to a new Wall Street Journal report.
For much of the past year, there has been a seeming disconnect between the state of Russia’s economy and the scope of punitive measures imposed on Moscow by the US and its allies. But the slow burn of sanctions – many of which only came into force over the past few months after lengthy negotiations among allies – is now finally being felt by the Russian economy.
High global energy prices during the first half of 2022 kept Russia’s economy afloat, and its gross domestic product dropped by a lower-than-expected 1.1% when many analysts had initially anticipated a sanctions-linked contraction of up to 15%.
What’s more, it took a while for Europe to kick its Russian natural gas habit. For the first six months of 2022, major European economies continued to pump money into Russia’s war machine.
Similarly, the G7 and EU price cap on Russian gas – a bloc-wide ceiling on the price of Russian gas bought by EU energy companies – only came into effect in Dec. 2022 along with the EU ban on seaborne Russian crude oil.
The US has now surpassed Moscow as the main supplier of crude oil to the EU. Consider that before the war, Russia accounted for around one third of the bloc’s imports, while the US trailed at 13%.
Consequently, the Kremlin’s energy revenue dropped by nearly half in the first two months of this year compared to the same period in 2022. The country’s budget deficit is also ballooning as the Kremlin continues to pump money into its military-industrial complex – and into that of its ally, Iran.
Meanwhile, brain drain as a result of talented Russian professionals gradually fleeing the Kremlin’s autocracy is also hurting economic output.
Even Russia’s political elite now say things are looking bleak, with oligarch Oleg Deripaska warning that the country could run out of cash by next year unless friendly countries step in to help.
China and India, meanwhile, continue to buy large quantities of Russian oil, though at a significant discount.
Did Ukraine blow up the Nord Stream pipelines?
Ian Bremmer's Quick Take: Hi everyone. And have you seen the latest news on Nord Stream 1, 2? It has been months since that pipeline, those pipelines were destroyed, were sabotaged, and we haven't had any information on who's behind it. Been big questions. Why would the Russians blow up their own pipelines? I've been skeptical, and the investigations that the Europeans have been engaged in, no evidence whatsoever. There was this piece by Seymour Hersh that I looked into pretty closely, one anonymous source claiming the Americans and the Norwegians were behind it. That turned out to be not standing up on its facts on a whole bunch of pieces of ostensible evidence brought in the piece. But now we have a New York Times piece that's come out with direct sourcing from US senior officials, including intelligence officials, claim that there is evidence that a Ukrainian organization was behind the explosion.
Now, I want to say, first of all, that was my view over the last few months, is if anyone was likely behind it would probably be Ukraine. And the question is, would they have the capacity? Because the interest was certainly highest. They are the ones that desperately want to ensure that the Russians don't continue to have leverage to potentially drive a wedge around European support and get that gas flowing again from Russia into Germany and into Europe.
Now, they're big questions given the level of sophistication that would be required in pulling off an attack like that, and also doing it without any fingerprints at all in terms of the investigations and the intelligence, would the Ukrainians be able to pull it off? So they're very interested, but could they actually do it? And the view was, well, maybe not. And I would've said no, except for some of the other attacks that we've seen the Ukrainians pull off, like blowing up the Kerch Bridge from Russia to Crimea, which I was quite surprised to see them be able to do. As well as the assassination attempt that almost happened against Aleksandr Dugin, instead killing his daughter, and only because she decided the last minute to take the car that he was meant to be in, and that was just outside Moscow.
So the Ukrainians have shown more capacity than a lot of people have believed, but still lots and lots of questions here that are going to need to be investigated. One is this Ukrainian organization, this outfit, an extremist group, do we believe that they were operating by themselves or did they have direct support/complicity of the Ukrainian government? It's hard to imagine that such an attack would've happened and the Ukrainian government had no idea. And I say that in part because of funding and in part because of the impact that it would have, and so you're potentially doing a lot of damage to Ukraine's position vis-a-vis the Europeans, even the Americans, if you get away with it. Why would you take that kind of a risk as an organization ostensibly supporting Ukraine unless the government was behind it? Also, would you have that kind of capacity without direct governmental support?
So one would expect that if it's an Ukrainian organization, the Ukrainian government probably at some level knows about it, probably at a high level knows about it. Let's keep in mind that despite all of the support from the United States, and it's been incredible, the military support, the economic support, Biden's trip directly to Kyiv, that there's not a lot of trust between the United States and Ukraine at the highest levels. There's a lot of alignment. There's a lot of belief that the Ukrainians need to be able to defend their territory and beat back the Russians. There's a lot of respect with Zelensky's courage and his ability to lead his people over the last year of war. I mean, really facing death himself on a daily basis on the ground in Kyiv. He's enemy number one for Putin and the Kremlin. No one wants to be in that position, and yet Zelensky has been. But that's not trust.
And when you talk to senior level American officials and European officials as well, NATO officials, it's not as if they believe that the Ukrainians are telling them everything they're doing. And further, that if the Americans or Europeans were to press the Ukrainians, for example, on when negotiations might need to start, what they should be about, there's a view that you couldn't keep that private, that would be leaked by the Ukrainian government to harder line allies like Poland, like the Baltic States and to the press very quickly. So there is a challenge here that if this was credibly the Ukrainian government behind it, it is going to worsen the view in the United States and among allies that when push comes to shove. Zelensky as much as you want him to win, is not someone that you can completely count on, rely on with sensitive information or in the war's next phase. In other words, as you move towards at some point actual diplomacy. That's a problem.
I would also say there's a problem because the Europeans have made it very clear that whoever is behind this Nord Stream explosion, remember Russian pipelines, but critical infrastructure that was necessary for the Europeans, and in international waters, they said whoever's responsible for it, they must be held accountable at the highest levels. And I've heard that from Ursula von der Leyen. I had that conversation directly with the Estonian Prime Minister a couple of weeks ago. She made that very clear. The Germans have made that very clear. Okay, well, at the beginning, I think there was a presumption on the part of many of them that, well, we're really talking about the Russians.
But of course we're probably not talking about the Russians. So what does it mean if the Ukrainian government is responsible at the highest levels? If we find that out, how are they going to be held accountable for blowing up these pipelines? And that's a very serious concern for the credibility of a coalition to hold together, as well as for strong, continued support of Ukraine by the West, which is utterly essential if Putin is going to stay on the back foot on the ground in Ukraine in terms of the ability to not make his war aims successful.
So I think this is important news. We're going to follow this story going forward. I'm glad that we're getting information finally, even if only a little bit from these investigations, but there are still a lot of questions to be answered. So that's the latest. Talk to you soon.
Nord Stream explosion mystery: We need proof, says Estonia's PM Kaja Kallas
Who blew up the Nord Stream pipelines? We still don't know, and that's a pretty troubling thought given it's the single biggest attack outside of Ukraine during the war. Multiple investigations determined the September 2022 explosions of Nord Stream 1 and 2 were sabotaged, and the west immediately blamed the Russians. But months after the attack, there's still no evidence of Russian involvement and the explosions are still an international unsolved mystery.
At the Munich Security Conference, Estonian Prime Minister Kaja Kallas sat down with GZERO World and Ian Bremmer, where he asked her directly if she buys the story of Russian involvement. Kallas has an interesting theory about a possible pipeline mix-up, and says that the question of who is responsible is still an open one. Ultimately, Kallas says there must be proof if there is going to be accountability, and achieving that accountability might mean rethinking international law.
Catch Ian Bremmer's full interview with Kallas in this week's episode of "GZERO World with Ian Bremmer," airing on US public television stations nationwide. Check local listings.
Ian Bremmer: The West is united on Russian energy, the rest of the world is not
With talk at this year’s Munich Security Conference from most of the world’s most powerful countries about decoupling from Russian energy, it can be easy to forget that most of the world’s population has other priorities.
“What we're seeing is that a majority of the world's economic strength and certainly military strength really wants to put Russia back in a box, but a majority of the world's population does not. And that is because of what's happened with the pandemic. It's what happened with climate change”, said Eurasia Group President Ian Bremmer during a Global Stage livestream conversation hosted by GZERO in partnership with Microsoft.
Europe, he explains, can better afford to move away from Russian sources of energy than developing countries, who are increasingly feeling distant and fragmented from the West, and richer countries shouldn’t forget that.
Watch the full Global Stage Livestream conversation here: Is there a path ahead for peace in Ukraine?
Who blew up the Nord Stream pipelines?
Ian Bremmer's Quick Take: Hi, everybody. Ian Bremmer here. Quick Take to kick off your week, and I want to talk about Nord Stream one and two. These are the pipelines, the gas pipelines that the Germans had wanted and the Russians had built, multi-billion dollar pipelines to bring gas from Russia into Germany and Europe. The United States had been very critical of these pipelines for years. The Trump administration particularly vocal about it, and only shut down after the Russian invasion of Ukraine, and then sabotaged, blown up.
So who did it? It's a big question. And the presumption immediately after the explosions back in September that came from the West and Ukraine was that it was the Russians. And there was no evidence, but you're blaming the Russians for everything since they invaded Ukraine and they're committing all these war crimes. But this one always struck me, Nord Stream, as not having enormous credibility, trying to figure out why would the Russians blow up their own multi-billion-dollar pipelines?
Especially because, when you talk to Russian advisors, the presumption was that, over time, over years, Russia's focused on Ukraine. The Europeans perhaps not so much. The expense for the Europeans and providing support goes up. The costs, as they get colder over time, goes up and they get weary. And so having an option of getting Russian gas turned back on could be attractive for a potential peace movement. Not saying it's going to happen, but certainly was seen as an option by the Russians that they wouldn't want to suddenly take off the table by blowing up their own pipeline. So then after the pipelines were blown up, there have been a couple of investigations that the Europeans have conducted for months now. And there has been not a shred of evidence that has pointed to the Russians being responsible for this sabotage. And you'd know that if they found anything that pointed to Russia, because they'd want the world to know, they would tell us.
And especially after the extraordinary intelligence from the United States on Russia's plans to invade Ukraine, as well as various faults, flag efforts that the Russians were scheming up as the drumbeat of war was increasing, that the Americans made known to allies and some of which they made public. The fact that the United States has come up with nothing, I mean, I'm not just talking about fingerprints or signature on the explosions, I'm also talking about any communications, signals intelligence and email, anything from anyone involved in this effort. We have no idea who's behind this. So it doesn't smell right to me that the Russians are responsible. So then who is?
And, well, enter Seymour Hersh, a very well-known journalist. He got a Pulitzer Prize for his work uncovering the Mỹ Lai massacre by the United States in Vietnam. And he writes this extraordinary piece independently published on his Substack newsletter that fingers the United States and Norway in a covert operation blowing up these pipelines. It got huge attention, especially and predictably with Russian state media and the Russian government now saying that they're planning on taking steps to retaliate. The question is, does the story hold up? If it does, it's an extraordinary story. It would risk driving a wedge in the NATO coalition. It's worth taking a look at. And I've done that now, and I will say that, as skeptical as I am that the Russians are behind Nord Stream one and two exploding, the Hersh story doesn't hold up at all.
First of all, the core concept that the United States would target infrastructure partially owned by a key ally without telling the Germans about it runs very counter to what the United States has been doing in the war. I mean, at the same time that this occurred, the US was pursuing much deeper ties with Germany on a lot of issues like tech regulation and China decoupling and strengthening transatlantic ties to reverse the pullback and cooperation that you saw in the Trump administration. Blowing up Nord Stream risks all of those initiatives for a very questionable benefit to the United States, which is breaking Russia-Germany ties, while also risking spiking energy prices in the EU.
Partnering with Norway, a chartered NATO member, to sabotage Nord Stream also risks fracturing internal NATO cooperation, which Biden and his entire team have made very clear, both publicly and privately, has been the single most important gain that they have seen since the invasion has started. The fact that NATO, which was fragmenting, now has a reason for being. It's expanding, it's very coordinated, consolidated under US leadership. You risk that. Biden administration strikes me as much more risk averse than that. But okay, that's a practical and theoretical argument. Now, need to talk about some of the things Hersh said in the piece itself. Explanation that he lays out for hiding the operation from Congress isn't actually internally consistent. Hersh's claim that the operation was devised without using special operations personnel in order to avoid notifying Congress is actually incorrect.
A covert action pursued under Title 50 authority, that's the part of US Code that allows the CIA to pursue covert action regardless of what assets are used, would still be briefed to Congress. And that never happened. Specifically, CIA can request DoDEA personnel through the Defense sensitive support system. And those requests are briefed to Congress every month. And in Hersh's telling, the CIA would've asked the US Navy for deep water divers via that system, and Congress would've been notified. Whether those divers were special operations or not actually is immaterial to that process. He then suggests that the operation was downgraded to avoid congressional notification. That's not actually a thing. If it was a covert action, there would've been a finding before DoDEA assets were requested or before operational planning got past the initial stage. So the argument here kind of is nonsensical. Okay.
Also, the publicly verifiable facts, which are critical, don't line up with Hersh. He specifies that a Norwegian Alta-class minesweeper was used to support the divers that were planting explosives during the Baltops exercises. Now, public tracking shows that none of Norway's five Alta-class ships were in the region during the exercise. Further, Hersh claims that a Norwegian P-8, that's an aircraft that does marine tracking, dropped a sonar buoy on the day of the explosion that triggered the explosives. But none of the five P-8s that Norway operates were in the area that day per flight tracking. That these don't show up on public tracking is critical because Hersh's whole claim is that the reason that the Norwegians were used is so that the flights and ship activity wouldn't need to be covert. This doesn't align with the data. The other thing I would say is that Hersh's own anti-establishment and specifically anti-intelligence community bias should draw some skepticism.
As I mentioned, Hersh, the work he's done on Mỹ Lai was extraordinary and a true public service, and he got a Pulitzer for it. But more recently, he's done work claiming that the Osama bin Laden killing was a coverup, that the Syrian government didn't use chemical weapons. And they're both notable for being unbelievable and designed really to rebut specific claims made by the US intelligence community. And unfortunately, this article really lines up with that ideologically, and also without having the information to back it up. So, what then is really going on here? Who was behind it? I mean, the fact that Hersh is wrong doesn't mean that that NATO wasn't in some way behind this. And it's, by the way, not inconceivable that Hersh's anonymous source, gave him details that are disprovable in order to undermine the central argument in the piece. I mean, if you dismiss it as "I'm doing right now" as clearly factually wrong, it colors future claims that the United States was responsible that are potentially more credible.
I personally think that the Ukrainians are the most likely culprit. I mean, in the sense that they're the ones that have the most to gain. And they're also the ones that are the most risk acceptant. I mean, this war is an existential risk to them, and they're willing to do almost anything to ensure that their country still exists. And if the NATO alliance starts to break, that's an utter disaster for them. They need to make sure that that energy can't go to the Germans going forward. They don't want that to be a possibility because it's their future, literally their future as human beings that's on the line. Now, the main problem with the Ukrainian argument is, do they have the capabilities, the technical capabilities? And six months ago, I would've been very skeptical. But I also wouldn't have thought they'd be able to blow up the Kerch Bridge connecting Russia to Crimea, and they did. And that was pretty sophisticated operationally.
They also, of course, attempted to assassinate Alexander Dugin, ended up killing his daughter just outside Russia. Also pretty sophisticated assassination just outside Moscow. They also have been involved in shelling the Zaporizhzhia nuclear plant that was occupied in Ukraine, the largest nuclear plant in Ukraine, but occupied by the Russians. I mean, if those shells had gone awry, you could have had a nuclear accident. So the willingness of the Ukrainians to take big risks is significant. I suspect they're the most likely. Could it have been with some NATO support, for example, Poland? Who knows that, if it wasn't for the Ukrainians fighting, they'd be fighting themselves.
They're therefore by far the most hawkish in orientation towards Russia. That is plausible. They're the ones that have been pushing the hardest for getting fighter jets to the Ukrainians to fight the Russians, for example. It's certainly possible. The Americans, of course, would have the most operational capability to pull off such an attack. And that is at face what makes Hersh's article very interesting. But again, at least, as he's argued, it strikes me as completely wrong, and frankly very irresponsible. So that's why I wanted to use my platform to go through the facts as they stand.
I hope everyone finds this useful. I look forward to talking to everybody real soon.
- What a mysterious pipeline attack says about European unity ›
- Who blew up the Nord Stream pipelines? ›
- Russia cutting Nord Stream 1 gas to undermine European leaders ›
- Nord Stream explosion mystery: We need proof, says Estonia's PM Kaja Kallas - GZERO Media ›
- Did Ukraine blow up Nord Stream pipelines? - GZERO Media ›