Putin receives a daily check from the EU. enough already

We Europeans carry in one hand the banner against Putin's invasion that is destroying Ukraine and in the other, the check that we give Putin daily so that he can continue destroying it.

Can not be.

The European Union has reacted to the unjustifiable invasion of Ukraine with four packages of sanctions against the Putin regime.

Some are significant and unprecedented, particularly the blockade of Russian central bank assets.

Others, such as the expulsion of seven Russian banks from the SWIFT payment and transfer system, the suspension of the Kremlin's propaganda broadcast and the ban on exports to Russia of various goods have surprised the Kremlin less.

However, there is a decision that European leaders have avoided and that is essential to win the war with Putin: ban imports of gas, oil and coal from Russia.

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Since the beginning of the invasion, Europe has sent Putin 17,000 million euros in exchange for its fossil fuels.

17,000 million in less than a month.

In other words, we freeze the reserves that your central bank has accumulated in bank accounts (very good), but we send you the necessary money to be able to continue without using those reserves.

In this way, we render our own sanctions useless.

To defend the purchasing power of the ruble, Russia had accumulated large amounts of international reserves, around 630,000 million dollars.

The main Western countries agreed to block the reserves of the Russian central bank in their entities (about 350,000 million) to put the ruble in check.

But this measure is meaningless if at the same time the West sends money to support the value of its currency.

In addition, the money we use to buy gas and oil from Russia ends up in Putin's pockets and is used to finance his war against Ukraine.

Exports of these fuels account for around 40% of the Russian state budget in a normal year.

This year, it will be much more, given the economic collapse.

That's the money Putin makes by literally relying on these exports to pay his soldiers' payrolls and buy and produce weapons.

An example gives an idea of ​​the magnitude of these revenues: it is estimated that the Ukrainian army has eliminated some 400 Russian tanks.

Well, given that each T-72 costs less than two million euros, with the money we have sent him in payment for fossil fuels he can produce more than 7,000 tanks.

Financing Putin allows him to prolong the war and significantly increases the risk of a mistake (a bomb or missile in Poland, a lost plane, a mistake in detecting an attack) or a catastrophic escalation.

The longer the war lasts, the greater its economic consequences in the medium and long term for all.

For this reason, it is preferable to deal a single, devastating economic blow, and to deal it now, than to apply sanctions that allow it to continue and that will escalate little by little, thus prolonging this agony for months or years.

Cutting fossil fuel purchases would be lethal for Moscow.

Europe buys 49% of Russian oil and 74% of its natural gas.

It is difficult for Putin to find alternative buyers in similar conditions for his raw materials, so he would lose most of that income.

Russian gas requires an infrastructure to be exported, and that infrastructure leads to Europe.

As for oil, we have the example of Iran: when the United States imposed sanctions on Iran in 2018, both oil production and exports sank and revenues plummeted.

The conclusion is obvious to all experts: Europe could very significantly reduce the income that Putin needs for his war.

What some are hesitant about is the following question: how much will it cost the European economy to cut off Russian oil and gas?

The answer is that it will have a cost, of course.

But we have the necessary tools to deal with it.

Take Germany as an example, one of the countries with the highest energy dependence on Russia and, potentially, one of those that could be most affected.

Studies by a group of leading German economists suggest that the embargo would mean a reduction of between 0.2% and 3% of its gross domestic product.

Another study, by the American bank Goldman Sachs, has made an estimate with very similar conclusions: a cost would have to be assumed, but it would be manageable, and compatible with positive growth rates in 2022.

The key to blocking Russian oil, gas and coal imports without being disproportionately impacted is to ensure that the most vulnerable people and businesses are not impacted by this measure.

Governments must promote fiscal policies aimed at the most vulnerable groups, with direct aid.

This type of instrument is the most useful in ensuring that we help those who need it most.

Countries such as Austria and Belgium already apply measures along these lines.

In the case of Austria, the Government granted 95% of households a transfer of 150 euros.

In addition, we must respond at a European level, as we already did during the pandemic with SURE, the temporary support instrument in cases of emergency that served to pay for ERTEs, and with the recovery funds.

The invasion is a blow that Europe receives jointly, and we must respond to it together.

Europe also has tools to, in the short term, reduce its dependence on Russian gas and look for alternative sources of gas.

In Germany, as we know one of the most exposed countries, Russian gas imports represent only 8.4% of the total energy demand.

One of the alternatives is liquefied natural gas (LNG).

Up to two-thirds of Russian gas can be replaced by LNG, and Spain has a large storage capacity that it can use.

There are also precedents that show that we can also adapt to a reduction in energy consumption.

In 2011, Japan was able to continue operating despite an 80-90% reduction in its electricity production as a result of the Fukushima accident.

Even more so when winter is over and the demand for gas for heating plummets.

All this indicates that the EU has much more capacity to diversify its supply than Russia to diversify its export markets.

In short, the cost to Europe would not be unreasonable, especially when compared to the price of a war.

The economist Jean Pisani-Ferry has estimated the costs of reducing our energy dependence in the current context at 100,000 million euros, that is, seven times less than the historic Next Generation EU recovery plan.

In little more than the time it has taken you to read this article, we Europeans have sent another two million euros to Putin.

We know that stopping the import of Russian gas, oil and coal will have economic consequences, but we cannot look the other way while thousands of innocents are massacred in Ukraine and millions have to flee their homes and their country.

It is time to cut off the tap of money to the Putin government.

Luis Garicano

is head of the Citizens delegation in the European Parliament and vice president and economic spokesperson for the Renew Europe group.

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