NICK BUTLER: EUROPE’S ANSWER TO VLADIMIR PUTIN’S THREATS Date: 16/03/14 Nick Butler, Financial Times This week’s meeting of the European Council in Brussels will be a significant test of the EU’s relevance and unity in dealing with the consequences of what is happening in Ukraine. Over the years as indigenous production, especially of gas, has declined Europe has allowed itself to become more and more dependent on Russian supplies. Last year Europe imported 160bn cubic metres of gas – a quarter of its total requirements. Even if Russia were a normal country that level of dependency would look high. Now, with Russia ignoring the strong messages from the German and American governments urging restraint in Ukraine, and massing troops on the border, reducing that degree of dependence is a matter of urgency. It is important to be realistic. While oil imports can be substituted on the international market, there is no way of replacing Russian gas in full in the short term. If supplies were cut tomorrow Europe would turn to Norway and other international suppliers and it would increase the use of coal. That would cover some but not all of the shortfall. Prices would rise uncomfortably and rationing would be required. In the very short term Europe has to rely on the fact that the dependence is mutual. Russia needs gas revenue – to fund the state and the private needs of the leadership. A cut-off of supplies is almost inconceivable. But a reduction in dependence over time is still sensible, economically and politically, to ensure that Europe can never be held captive. That should be the focus of this week’s discussion. What could be done? Here are five practical suggestions. First, Europe should develop its own gas supplies. [...] Secondly, the EU should limit Russia’s ability to control strategic supply lines [...]. Thirdly, there must be a strengthening of the infrastructure across Europe so that if supplies to any one country are put in jeopardy there are alternative sources and lines of supply [...]. The fourth step is about energy efficiency [...]. The fifth step is more controversial but still practical. The German government, which is at the heart of Europe’s problem of dependence, should make clear that its planned gradual shutdown of old nuclear power stations will be delayed until the EU as a whole has at least halved its current level of dependence on Russia. Full comment
Posted on: Mon, 17 Mar 2014 08:05:01 +0000
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