Europe could probably do without its Russian energy imports quickly. But this would be accompanied by an unevenly distributed economic cost, the magnitude of which is debatable.
The feeling of anger and horror at the Russian invasion of Ukraine has risen a notch in recent days with the discovery of the abuses allegedly suffered by the inhabitants of the occupied territories. Several governments felt pressured to do more to sanction the aggressor, including by hitting its economy even harder, if not directly involved in the conflict on the ground. The fact that we still buy Russian oil and gas is getting worse and worse, in particular. Especially since the Ukrainian crisis has had the effect of inflating prices on world markets, to the point that Russia should see its revenues in this area increase this year by more than a third, to 321 billion American dollars, estimated Bloomberg Economics experts last week. However, the government of Vladimir Putin draws 40% of its budgetary income from this source.
Europe is particularly in the hot seat. Not only because the Ukrainian drama is unfolding in its backyard, but also because, until recently, it bought about 50% of Russian coal exports, 60% of those of oil and 75% of those of natural gas, according to the FinancialTimes and the International Energy Agency.
However, this business relationship with Russia is not the same for everyone. While, overall, Russia accounts for around 40% of the European Union’s gas imports, 30% of those of oil and 46% of those of coal, it accounts for 46% of gas imports in Italy, 64% in Austria and 94% in Finland, against only 24% in France, 11% in the Netherlands and nothing at all in Ireland.
The German malaise
The largest economy on the European continent, Germany, has also become one of the most dependent on Russian energy since it decided, in its transition to renewable energies, to simultaneously abandon coal and nuclear, and to recover heavily while waiting on Russian gas. Before the crisis, Russia thus accounted for 55% of its gas supply, 34% of its oil and 26% of its coal, for just under a third of its total energy consumption, recalled two weeks ago. , a group of German economists on the site of the European research center CEPR.
This caused German Chancellor Olaf Scholz to say that an immediate embargo on Russian energy imports “would plunge the country and the whole of Europe into recession. […], resulting in the loss of hundreds of thousands of jobs. Thus endorsing the position of the major German industries, he argued that efforts were being made to find new sources of supply, particularly natural gas, from other producing countries such as the United States, Qatar and the United Arab Emirates, but that it will take time to develop new production, processing and transport capacities capable of replacing the pipelines that came from the East.
Already, Russia’s share of German energy imports has fallen from 35% to 25% in oil, from 55% to 40% in gas and from 50% to 25% in coal, its minister reported last week. Economy Minister Robert Habeck. Germany now promises to be able to completely do without Russia’s coal by the end of the summer, its oil by the end of the year and its gas by 2024.
These arguments are only half convincing, even the German population, where there is now a majority (55%) in favor of an immediate embargo on Russian energy imports, against 39% of opponents concentrated in the former Germany of the East, according to the latest ZDF barometer quoted this week by The echoes.
“Manageable” impact
Economists who have ventured to make estimates arrive at conclusions that are both less clear-cut and often less catastrophic than the German leaders. For our CEPR experts, for example, the shock for the German economy would be “substantial, but manageable”, with a decline in gross domestic product of 0.5%, to 3%, or, in the worst case, a significant impact, but less than that of the COVID-19 pandemic (-4.5%).
Their French colleagues from the Economic Analysis Council arrive at a similar conclusion for Germany (-0.3%, to -3%), even more severe for countries more dependent on Russian energy, such as Lithuania (- 5%), Bulgaria (-3%) and the Czech Republic (-1%), but much lighter for the others, with an average decline of barely 0.2% to 0.3% in the Union European, or 100 euros per adult. “The relatively small impact of an embargo is explained by the fact that even in the short term, companies and the economy as a whole can substitute energy sources for other [et que] this substitution, even very partial, makes it possible to very significantly attenuate the impact of the shock”, he explains.
If the Europeans want to give themselves a little more time, they could start by paying for their imports of Russian gas into an escrow account to which Moscow would only have access if it met certain requirements in terms of, for example, Ukrainian population, explained last month the Ukrainian Deputy Minister of Energy in an interview in The world. Russia will be sure to threaten to close the valves on its pipelines, he said, but it would still rather be paid later than stay stuck with its gas.
But Europe is not there yet. On Thursday evening, the European Union unanimously decided to impose an embargo on Russian coal. Unthinkable barely 15 days ago, the gesture remains largely “symbolic”, noted the next day an expert in The world, European imports of Russian coal amounting to 15 million euros per day, against 850 million for Russian gas and oil. And the measure will only take full effect in mid-August, at Germany’s request.