Energy experts have warned of serious economic consequences if Russian gas supplies are halted in response to the war in Ukraine. “A complete embargo would cause an immediate recession in Europe, inflation would continue to rise and domestic politics would become even more difficult,” said economist Simone Tagliapietra of Brussels think tank Bruegel. He proposes to introduce tariffs on Russian energy to put further pressure on Russia.
Raphael Hanoteaux of the organization E3G said of a gas embargo: “For example, German industry would lose its competitiveness.” The reason for this is industry closures and even higher prices.
From the beginning of August, there will be an embargo on Russian coal, on which the EU countries agreed this week. Tagliapietra estimates that the EU currently spends €15 million a day on coal from Russia, but much more on Russian gas – about €400 million a day – and €450 million on oil from the country. That is why, for example, Poland and the Baltic countries are arguing for more far-reaching measures.
Experts advise to stop import duties instead of oil deliveries
A cessation of the oil supply would have consequences for the world market, according to the experts. “That would have an effect on the global price, because much of the volume would simply be unavailable, but the demand would not decrease,” Hanoteaux said. About half of the oil shipped from Russia to Europe comes via pipelines or ships across the North Sea, which would be difficult to divert, he said. A higher oil price due to lower supply would affect not only Europe, but also developing countries, which are already struggling, said Bruegel’s Tagliapietra.
“Instead of these embargoes, it would be best to immediately impose a tariff on all these oil and gas imports,” Tagliapietra said. According to him, this would reduce Russia’s revenues while limiting the effects on the European economy. Since Russia can only sell part of its oil and gas to Europe, companies like Gazprom would be forced to pay such a rate.
According to Tagliapietra, the money could be used to absorb high energy prices for consumers or to finance the reconstruction of Ukraine. “One advantage of the tariffs is that we can put pressure on the Russians: if they continue as they are, you can increase the tariffs over time,” Tagliapietra said. According to him, the European Commission and the EU countries are investigating how such tariffs can be designed.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
