Federica Calissano, Martyna Dobrowolska, Pètra van de Gevel, EUCOM Team
Week of Monday, December 6, 2021
Major Russian gas pipelines to Europe
The 2021 energy crisis in Europe is characterized by the high demand for natural gas as national economies seek to recover from the COVID-19 pandemic. In recent months, European energy prices have risen to multi-year highs; the price of gas has increased by 250% since January 2021. It is likely prices will increase further during the winter, as decreasing temperatures will prompt individuals and businesses to activate their heating systems. Russia, which is Europe’s biggest natural gas provider, has been accused by both the EU and the US of using energy as a weapon against Europe during its energy crisis by intentionally withholding supplies. Russia has denied such claims, stating that European countries did not replenish gas reserves during the summer and that higher prices are a result of declining gas production in Europe. Europe will likely continue to rely on Russian gas supplies. It is very likely that Russia will use this advantage to advance their geopolitical interests, such as the construction of the Nord Stream 2 pipeline, and their current military presence on the border of Ukraine. Russia will likely do this by refusing to increase gas deliveries to Europe, likely resulting in security threats that specific countries, such as Ukraine, will face, as they heavily depend on Russian gas. Despite Russia being the main energy supplier, Europe would likely benefit from diversifying future energy suppliers to mitigate the risk of its energy market being controlled by Russia.
Russia being Europe’s dominant energy provider likely poses a threat to European economic stability. Russia will likely try to exploit the European dependence on Russian natural gas to broaden its geopolitical interests, such as the construction of the Nord Stream 2 pipeline, which aims to transport natural gas from Russia into the EU internal market via the Baltic Sea with Germany as the arriving point. Russia would very likely benefit from a fast completion of the Nord Stream 2 as the new pipeline will increase Russian gas exports to Europe, very likely strengthening their finances and the Russian monopoly over the energy sector in Europe. Russia will almost certainly pressure Europe into accelerating the Nord Stream 2 pipeline’s certification process. This will very likely be done by influencing Europe’s gas market and leveraging a severe energy crisis on the continent, very likely resulting in an exponential rise in energy prices, as well as the risk of not having access to Russian energy flows. Europe will likely seek to gain access to alternative energy flows at potentially higher costs, likely having negative consequences for European citizens and energy prices.
Russia’s potential leverage of energy over Europe will likely broaden Europe’s reliance on Russian energy. Russia will likely further weaponize energy resources to achieve its political objectives. Russia will likely follow the principle of preferences and allies, giving selective access to energy to countries that align with them politically and militarily. Accordingly, if EU representatives do not respect Russian demands, Russia will likely deny them access to energy.
The EU’s internal gas production is in rapid decline and in need of reliable, affordable, and sustainable new gas supplies. These demands are almost certainly being fulfilled by the provision of energy coming from Russia. The interdependence between Europe and Russia in the energy industry will likely threaten European energy security. European economic activity would likely be paralyzed and interrupted if Russia decides to stop supplying European countries with its energy.
Since the Russian economy also relies heavily on energy exports and the EU is the main customer, the current European energy crisis will very likely maintain the Russian position as a global economic power. If European countries stop buying Russian energy commodities, this will very likely have a negative impact on the Russian internal economy. If Russian revenues from energy sales decline as a result of European countries seeking alternative energy suppliers, the country would likely experience a loss in the gross domestic product (GDP) and be unable to sponsor domestic consumption. This would likely have an impact on internal societal well-being. Russian citizens would likely live in a state of economic uncertainty. If income from energy exports declines, it is unlikely that Russia will be able to properly redistribute resources among the population, and levels of inequality and poverty will likely increase. It is also unlikely that Russia would be able to finance its military sector. Russia will very likely weaponize energy supplies to Europe in order to avoid financial losses.
In recent months, Russia has increased its presence near the Ukrainian border through the buildup of Russian military troops. Tensions between Russia and Ukraine have escalated, and the Russian military enlargement along the border has alarmed Ukrainian, EU, and US officials, who fear a potential advance into Ukraine. The EU and the US will almost certainly impose sanctions on Russia if it decides to enter Ukraine. The new economic sanctions would aim to target different sectors, including energy producers and Russian banks. International sanctions would very likely inflict a significant negative impact on the Russian economy, very likely contributing to its collapse. Russia will very likely use the advantage it has over the European energy sector to halt the imposition of international sanctions. International actors are also discussing a so-called nuclear option intent to disconnect Russia from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), an international payment system used by banks around the world. As a result, Russia will very likely deprive the EU and/or Ukraine of gas imports to deter the US and the EU from intervening in the Russian-Ukrainian conflict, as well as to stop them from imposing sanctions on Russia.
To avoid the Russian weaponization of energy, it is likely that European countries will start acquiring natural gas from other countries, such as Saudi Arabia or the US. European countries will likely start diversifying their energy market by purchasing renewable energy sources, likely further decreasing the dependence on Russia. However, if Europe were to increasingly rely on the Russian energy market with the Nord Stream 2 pipeline, Russia would likely use the threat of turning off the gas flow to Germany as a tool for achieving its foreign and political interests. This would almost certainly be done to prevent the EU and the US from imposing future economic and energy sanctions against the country.
The Counterterrorism Group (CTG) and the EUCOM Team will continue to monitor the developments between the EU and Russia in the energy sector, especially in regards to the approval of the Nord Stream 2 pipeline. The CTG’s Worldwide Analysis of Threats, Crime, and Hazards (W.A.T.C.H.) Officers will remain vigilant to any concerning developments that could have any short or long-term impact on the EU's political and economic security.
________________________________________________________________________ The Counterterrorism Group (CTG)
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 Europe’s energy crisis is making the market nervous. And analysts expect record-high prices to persist, CNBC, September 2021, https://www.cnbc.com/2021/09/16/europes-energy-crisis-is-making-the-market-nervous-ahead-of-winter.html
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