Oil-and-gas exports make up 70% of Russia’s $515 billion annual exports, and 52% of the federal budget, according to America’s Energy Information Administration. In theory, Russia’s gas exports to Europe are a weapon that points the other way. If Russia were to push farther into Ukraine, or to try its chances in Moldova, Georgia or the Baltic states, and Europe to take strong action in response, it could shut down exports completely, thus doing huge damage to the EU. But barring immediate, permanent and total victory, that would also doom Russia as a gas exporter. China already has worries about Russia’s dependability as a supplier. Even with $475 billion in foreign-exchange reserves, the Kremlin cannot continue to run Russia’s ramshackle and uncompetitive economy without its most important export revenues. The shock of the Crimean annexation should speed up sluggish European decision-making on storage, interconnection, diversification, liberalisation, shale gas and efficiency. And though the decision-makers may detest Mr Putin, in private they will admit that he may thus have done them a favour. They already knew what to do. They just didn’t want to do it. economist/news/briefing/21600111-reducing-europes-dependence-russian-gas-possiblebut-it-will-take-time-money-and-sustained
Posted on: Sun, 06 Apr 2014 12:28:21 +0000
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