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Putin's gas plan about to end: Russia's blackmail is unlikely to work

2022-09-25T03:04:22.966Z


Putin's gas plan about to end: Russia's blackmail is unlikely to work Created: 2022-09-25 04:56 By: Richard Strobl After military setbacks in the Ukraine war, Vladimir Putin's Russia is currently threatened with great economic failure. Berlin - Currently, one bad news follows the other for Russia's ruler Vladimir Putin. In the Ukraine war, Kyiv reports enormous gains in territory - there are a


Putin's gas plan about to end: Russia's blackmail is unlikely to work

Created: 2022-09-25 04:56

By: Richard Strobl

After military setbacks in the Ukraine war, Vladimir Putin's Russia is currently threatened with great economic failure.

Berlin - Currently, one bad news follows the other for Russia's ruler Vladimir Putin.

In the Ukraine war, Kyiv reports enormous gains in territory - there are also reports of fleeing Russians and dwindling combat morale.

In addition, there is rumbling in Putin's empire.

Local politicians, for example, publicly called on the president to resign.

And the attempt to blackmail Europe with gas supplies seems to be increasingly failing.

Officially, Russia continues to justify the gas supply freeze with technical problems caused by Western sanctions.

This position was also repeated in a phone call between Putin and Olaf Scholz on Tuesday.

However, Berlin openly considers this justification to be a pretense.

Rather, Putin is probably using a great deal of leverage to lower Europe's support for Ukraine.

Vladimir Putin, President of Russia, speaks with Oleg Kozhemyako, governor of Russia's Far Eastern region of Primorsky Krai around the port city of Vladivostok, upon his arrival in Vladivostok in Russia's Far East.

(Photo from September 6, 2022) © Gavriil Grigorov/dpa

Putin's gas pressure is falling: prices are falling

But this plan seems to be increasingly failing.

"Even if it gets really tight, we'll probably get through the winter," predicted Olaf Scholz at the beginning of September, before Putin's complete gas stop.

Now Commission President Ursula von der Leyen made it clear in her State of the Union speech: "Putin will fail".

And not only in the military field.

Economics professor Jan Schnellenbach from the TU Cottbus says about the

picture

: "Russia will lose this gas war".

Economics professor Moritz Schularick from the University of Bonn agrees and says: "Russia is also losing the economic war".

And in fact, a kind of turning point seems to have been reached - if you look at the gas prices that Putin drove up with his delivery freeze.

On Monday, the price of the TTF futures contract for Dutch natural gas (regarding the European price level) fell by eight percent to 189 euros per megawatt hour.

Just a week earlier - after Putin had announced the continued stop of deliveries via Nord Stream 1 - the price was still in the direction of 300 euros.

"I would be surprised if the prices would rise so much again," predicted energy economist Andreas Loechel from the Ruhr University Bochum to

ZDF

.

The paradox: prices are falling because it is now clear that Russia is not delivering.

According to Loechel, the uncertainty on the market had previously caused prices to rise.

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Nevertheless, the prices are currently still far above the normal level.

But that will probably change soon: According to the

FAZ

, the analysts at Goldman Sachs expect prices to fall below 100 euros in the first quarter of 2023.

Europe is reacting - and will probably fail Putin's blackmail

In addition, Europe has reacted.

On the one hand, new ways of getting gas and reducing dependence on Russia have been sought.

For example, the EU wants to purchase significantly more gas from the South Caucasus Republic of Azerbaijan in the future.

EU Commission President Ursula von der Leyen and Azerbaijan's President Ilham Aliyev signed a declaration of intent in July, according to which twice as much gas is to be delivered annually via the southern gas corridor within five years as in the past.

Just an example.

Norway is also supplying around eight percent more gas to Europe than before the Ukraine war broke out.

In addition, Europe is already successfully saving gas.

According to a survey for the Hans Böckler Foundation, the high prices are currently causing many German private households to save energy.

Industry has already significantly reduced its consumption in this country.

And the high memory levels in this country also give hope.

The filling level for Germany on September 11 was over 88 percent.

Analysts at Goldman Sachs assume that storage will still be more than 20 percent full by the end of March.

All of this now enormously reduces the pressure that Putin was able to build up on Europe.

Gas stop: How long can Putin's Russia hold out?

But in Russia, too, there could soon be reasons for Vladimir Putin to deliver more gas again.

Also, because so much less energy is exported, Russia's budget surplus is dwindling.

According to a calculation by the

Financial Times

, a deficit of 360 billion rubles (5.8 billion euros) only arose in August.

From January to July, Russia had a surplus of almost 500 billion rubles.

Now this has shrunk to 137 billion.

The increased energy prices would have brought Russia a thick cushion beforehand.

At the same time, however, exports have fallen sharply.

Lion Hirth, professor of energy policy at the Hertie School in Berlin, told the

Tagesspiegel

that Putin "cannot continue the gas cuts indefinitely".

The sanctions against Russia are also having an effect.

The Russian state's value-added tax revenue has also fallen by a quarter year-on-year - simply because less is imported into Russia, the

Berliner Zeitung

analyzes data from the Russian Ministry of Finance from August.

On top of that, because of the war, Putin is spending significantly more than before.

In this respect, it is at least questionable how long Putin can really keep the gas stop.

At least, according to Professor Hirth, Russia is paying an extremely high price.

Source: merkur

All news articles on 2022-09-25

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