Ban on Russian gas risks reviving populism in Europe

Last week, Vitali Klitschko, the former champion prizefighter and current Kyiv mayor, told a delegation of European parliamentarians and think tankers that instability in Ukraine means instability for the whole region, and urged European nations to stop trading with Russia.

“You have to decide,” he said, “you support Russia or you support Ukraine.”

Even as the European Union negotiates the final details of a phased-in embargo on Russian oil — part of its harshest punitive package yet — Ukrainians are already calling for more action, saying Brussels and member countries should not stop short of unleashing their most potent economic weapon: sanctioning Russia’s natural gas.

But while most European leaders accept that the destinies of Europe and Ukraine are inseparable, eschewing Russian oil is one thing, natural gas entirely another. And as a cost-of-living crisis buffets the Continent, there could be political trouble ahead.

In its call for more severe measures, Kyiv already has support — Poland and Bulgaria both back a natural gas embargo, as does the European Parliament, which voted for an immediate and “full” embargo on imports of Russian oil, coal, nuclear fuel and gas in April, ratcheting up pressure on member countries.

But just the fact that a gradual embargo on crude and oil products is being wrangled over already marks a major shift — it was only two months ago that the bloc had declined to join the United States in a full-blast embargo on Russian energy products.

As far as Ukrainians see it, however, any trade at all helps fund Vladimir Putin’s war effort; and they maintain that a gas embargo will significantly aid in crippling the Russian economy, which in turn might sap the Kremlin’s will or ability to fight — or, perhaps, prompt ordinary beleaguered Russians to turn on Putin for an ill-conceived and barbaric war. 

Others have also joined in the hue and cry over gas imports. Putin’s former economic adviser Andrey Illarionov, who broke with the Russian leader in 2005, told the BBC last month that an effective embargo could force an end to the war against Ukraine within weeks. If Western countries “would try to implement a real embargo on oil and gas exports from Russia . . . I would bet that probably within a month or two, Russian military operations in Ukraine probably will be ceased,” he said. 

But several European leaders ruled out the possibility that the EU would move quickly to disconnect from Russian natural gas only last month, with Italian Prime Minister Mario Draghi saying no embargo of Russian natural gas was up for consideration. Finding new suppliers for oil is easier than for gas, and for many countries — especially landlocked ones — alternative supplies such as liquefied natural gas will not be easy to come by, with a gas disconnection only adding to already record-high inflation. 

Although, Draghi did add that “the more horrendous this war gets, the allied countries will ask, in the absence of our direct participation in the war, what else can this coalition of allies do to weaken Russia, to make it stop.” And as the war has already become more horrendous — it has officially put gas on the agenda. 

But to try to get an agreement on a gas ban now will be especially politically risky – that is, until how to source and develop alternative supplies and what the costs for businesses and householders will be becomes much clearer.

Europeans are already tightening their belts, struggling with spiking inflation and soaring energy and food prices every day. Britain’s Chancellor of the Exchequer Rishi Sunak talked of “anxious times,” warning Thursday that inflation is taking a toll on an economy struggling to recover from the pandemic.

Even higher energy prices would mean more economic hardship and likely more political anger — the kind that roiled European politics in the wake of the 2008 financial crash.  

In their humanitarian determination to shorten a war where civilians are targets, do member governments now risk losing touch once again with their own voters, inviting the kind of populist backlash that was triggered by the 2015 migration crisis, or just recently buffeted French President Emmanuel Macron over hikes in fuel taxes when he faced Yellow Jackets anger, which rapidly morphed into broader protests? 

There are already warning signs at the ballot box that frustration with inflation and rising household costs is mounting across Europe. 

Macron’s far-right challenger Marine Le Pen focused her presidential election campaign on the rising cost of living, and while defeated, she gained significant ground from previous electoral performances, coming closer to securing the French presidency than at any point in the past. 

Sinn Féin latched on to cost-of-living issues too in this month’s elections in Northern Ireland. Helping the Irish nationalist party capture the largest number of seats in the Northern Ireland Assembly for the first time ever, it is an historic win that will likely complicate power-sharing politics amid tussles between Britain and the EU over post-Brexit arrangements. 

Elections aside, polling data from some parts of Europe also hint at trouble.  

At the moment, around 62 percent of Slovaks are against disconnecting from Russian gas and oil if the consequence will be higher energy prices. Just 7 percent of respondents said they back immediate embargoes, with 25 percent backing gradual ones, according to a survey published last week by the Focus polling agency. 

And while Poland and Bulgaria are backing a gas ban — a reflection of the conviction in both countries that it’s in Europe’s best interest to, first and foremost, support Ukraine in any way possible — how will both countries’ voters react when household energy bills start soaring even higher?  

And how will voters and businesses in other countries react when they’re already exhausted and broke by the economic, social and political costs of the pandemic? Will those who feel left behind or who are struggling to get by thank their governments for adding to even higher energy costs?

Goldman Sachs estimates a total embargo on Russian gas could see the eurozone’s GDP plunge by 2.2 percent this year. And with energy prices already sky-high, public reaction across Europe could turn ugly — something populists are already anticipating.