Daily Hurriyet: Calling Putin’s energy bluff
New European energy commissioner Maros Sefcovic was treated to a blunt and rude welcoming in Moscow. No more gas through Ukraine for Europe, he was told by Gazprom boss Alexey Miller. Is the Russian energy capo serious? After all, Russia’s President, Mr. Vladimir Putin, not so long ago introduced the idea of a Russo-Turkish energy alliance. Compounded with the conflict in Ukraine, sanctions and a falling ruble, this latest Russian ultimatum may be more a call from a position of desperation rather than strength.
Let’s consider what the Russians are actually saying. They are saying that they will no longer sell natural gas to Europe through Ukraine. They are also saying that if Europe wants Russian gas, they have to pick it up at the Turkey-Greece border. They are further saying if Europe doesn’t agree to these conditions, they’ll sell their gas to someone else. A tall order of demands, and surely, Mr. Sefcovic was not inspired by his first meeting in Moscow, and let’s hope that he was also not too impressed by these empty Russian threats. Yes, empty!
For starters, the Russian economy, in total freefall from the decline in oil prices and the fall in the value of the ruble, is insanely dependent on gas and oil exports. Oil and gas revenues make up more than 50 percent of the Russian government’s total revenue. And most of it comes from Europe. In numbers it looks like this: Russia’s 2013 GDP was $2.1 trillion, of which 50 percent is $1.05 trillion. The Russian National Stabilization fund was $88 billion before they spent at least $10 billion on pointlessly defending the ruble. The $70 billion or so that is left is a far cry from what the Russian state would need to cover the fall in revenue if they were to stop exporting gas to the European Union.
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