Russian gas as a weapon

The announcement on Friday by Gazprom, a Russian company controlled by the Kremlin, of an indefinite suspension of gas supplies through the Nord Stream I pipeline came just hours after G7 finance ministers reaffirmed their determination to impose a cap at the price of Russian crude.

There is little room for doubt that the Kremlin's gesture is of a political nature and represents a new step in the escalation of confrontation with the West.

A deep and prolonged disruption of Russian gas supplies to Europe - the Nord Stream I connects Russia with Germany - is likely to continue in the near future with the aim of exacerbating the turmoil affecting the continent's economies and breaking their resolve in the future. support for Ukraine.

That's the baseline scenario we're heading towards.

The impact will be serious.

EU countries have made considerable progress in accumulating gas reserves in recent months.

It may be a reason for hope, but not for peace of mind, since they are not enough to guarantee supplies in the event that the cut by Russia is irreversible, nor do price dynamics allow any kind of inaction.

It is also possible that Gazprom's latest decision will cause a new flare in the markets.

In any case, the turbulence is already oppressive in scope, as evidenced by ArcelorMittal's decision, also announced on Friday, to close two energy-intensive steelmaking plants in Germany due to the level of prices.

The episode illustrates the multiple routes of contagion transmission of the problem that Europe faces,

while citizens have been suffering for months from cost increases and erosion of purchasing power.

Much has already been done, but much more will be needed: an enormous and unparalleled regulatory, diplomatic and infrastructural effort to meet the challenge.

In this context, it makes sense to explore in the oil market the option of putting a cap on the price of Russian exports, which the G-7 has been trying to build since the approval granted by the group's leaders at the summit in Germany at the end of June. , and which receives the support of the European Commission.

Many details are still missing to design a very complex mechanism to apply.

It is doubtful that other major Russian oil consuming countries will join and there is no guarantee of success.

But neither the leverage potential offered by the West's dominant position in transportation, insurance and financing services should be underestimated, nor the possibility that, even if they do not formally join, other countries take advantage of this Western scheme to pressure the Kremlin bilaterally. in search of new and strong discounts.

The scenario is grim, but the best way to avert catastrophism is to clearly communicate to the public the exceptional nature of the situation and its potential consequences.

The new ways of blackmail and intimidation practiced by Putin must not lead to anything different from what the EU has done so far: maintain unity in support of Ukraine and reject the brutality of the Kremlin, contrary to law and democratic principles.