Reliance on Russian Energy

Any war impacts the world’s economy, but Russia’s war in Ukraine has economic effects that significantly impact Europe because of its reliance on Russian energy. “In 2021, the European Union imported 155 billion cubic meters of natural gas from Russia, accounting for around 45% of EU gas imports and close to 40% of its total gas consumption.” (IEA) That’s almost half the total energy consumed in Europe last year; it takes more time for countries to replace that much power without causing harm to everyday life. By contrast, the United States relies more on other countries and its own resources for natural gas. This crisis has hastened the need for governments to find ways to switch to green, renewable energy, which would untether Europe, in particular, to Russia and have a less destructive impact on the planet.

Sanctions Imposed on Russia

NATO and the European Union sanctions have been in place since 2014. Since Russia invaded Ukraine in February 2022, the following have been added:

• Travel ban on Russian state-owned airline Aeroflot
• Ban and/or phasing out of Russian imports, especially gas
• Targeted sanctioning of oligarchs with ties to Putin, including seizing assets (yachts, houses, cars, etc.)
• Banning major Russian banks from SWIFT (Society for Worldwide Interbank Financial Telecommunication). SWIFT is a system that allows banks to communicate globally with each other for messages and transactions. In this case, Russia has created an alternative, but experts have deemed it not to be nearly as good or valuable as SWIFT.

(Reuters)

Departure of Major Companies from Russia

Several well-known brands have also cut ties with Russia, such as:

• McDonald’s, Burger King, Starbucks, Ikea, Nike, Airbnb, Proctor & Gamble (Tide, Bounty, Head & Shoulders), Gillette, Johnson & Johnson
• Apple, Nokia, Samsung, Spotify, Google, Microsoft, TikTok, Netflix,
• BP, Equinox, TotalEnergies, Exxon, Siemens Energy, Shell
• FIDE (International Chess Federation), FIFA (International Football Association), Formula 1
• Heineken, British American Tobacco (One of the biggest cigarette makers worldwide), Canada Goose
• Boeing, Airbus, Toyota, BMW, Mercedes, Volkswagen
• American Express, Mastercard, Visa

(Reuters)

The current refugee crisis is most likely the biggest test for the European Union since its creation. Navigating its way through this emergency while still reeling from the economic throes of the coronavirus pandemic is an enormous task. Europe has had its fair share of needing to accommodate people searching for asylum. The most notable was the 2015 Migrant Crisis that saw more than 1.3 million refugees arrive in Europe, mainly from Syria. (UNHCR)

Italy has also adapted to migrants seeking asylum from North Africa. However, the current Ukrainian refugee crisis is on the order of a situation not seen since the Second World War. Ukraine is a country of 44 million people, and four weeks into the war, more than 4 million people had fled the country. More than half to Poland. (BBC)

These are the countries that have not yet condemned the Russian invasion of Ukraine. China has extensive ties to the West and, at the same time, very close ties to Putin, so it has not condemned the war but has remained neutral. The West is worried that China will help arm Russia even further and allow it to circumvent sanctions, which have had a direct impact on its economy.

India is the country walking the tightest rope. As one of the most populous nations outside of China, it is considered a very close ally of the West. Still, like Israel, India receives a lot of its defense equipment from Russia; it is under the most pressure from the US and the West to condemn the invasion.

The Gulf States are the source of gas that Europe has been going to, attempting to secure deals and start importing gas from. Up to now, the Gulf States don’t seem to be making it easy for the Western countries.

Technology plays an enormous role because it documents the war instantaneously on various platforms. It is also helpful in recording war crimes, which will be used later to hold perpetrators to account. But because the war coverage is so diffuse, it has promoted certain countries–Russia and China– to impose censorship.

Russia banned many Western news outlets and imposed a new law that bans what they deem as “fake news.” (BBC) China has banned and removed content that promotes a Western media view of the war in Ukraine.

The chart below provides some perspective on the imbalance between the military power and arsenals of the two countries:

[GRAPHIC HERE]

Source: CNN

NATO has not entered the conflict since Ukraine is not a NATO member. Putin has threatened war with the West if NATO intervenes. However, individual NATO countries have provided the following military support to Ukraine:

• Anti Tank Missiles
• Anti Aircraft Missiles
• Helmets
•  Ammunition
•  Technology
•  Weapons

Among many other things (BBC)

A no-fly zone is something President Zelensky has been asking for for a while. It calls for the patrolling by NATO of the airspace over Ukraine and not allowing Russia or Ukrainian aircraft to fly in that airspace. A no-fly zone would drastically help reduce Russian attacks from the air, where they have a distinct advantage. NATO has so far ruled this out because it would directly involve NATO shooting down Russian planes, which would place them in direct conflict with Russia. (New York Times)

There are no easy answers to this question; however, if the West can continue to ramp up its military support of Ukrainian troops and sanctions against Russia lead to the destabilization of the economy and government, then perhaps an end will be in sight to this war. In the meantime, it will continue to test Europe’s ability to reduce its reliance on Russian energy and, at the same time, manage a widening refugee crisis.