One of the important strategies for NATO counties for conducting the economic war against Russia could be to hit Russia below the belt by stopping the buying of crude oil and natural gas from Russia, which is a big source of income for Russia to sustain the Russian economy.
by N.S.Venkataraman
During the last several years, a number of global deliberations have taken place between the countries and experts about the increasing use of energy source such as fossil fuel ( natural gas, crude oil and coal ) and consequent rise in the level of emissions of carbon dioxide , methane , nitrous oxide etc. which cause global warming and other adverse consequences. The latest of such deliberation was the Glasgow Meet , when the leaders from different countries announced targets for achieving zero emission .
Further, a Glasgow Financial Alliance for net zero emission was also announced, when bankers and fund managers announced as to how they are committed to fight climate change due to emissions.
However, when Russia launched cruel and barbaric military attack on Ukraine , the tall targets about reducing global emissions went haywire , with Russia bombing Ukraine relentlessly, with least consideration for the noxious fumes and poisonous gases being emitted. There are even suspicions that chemical weapons in one form or the other could also have been used.
Now, the focus of the world is not anymore so much about global emission due to use of energy ( fossil fuel ) source , compared to the focus on ongoing energy war between Russia and NATO .
Fund managers keeping faith on fossil fuel :
While there are many reports in the media about research and development efforts underway to curb the use of fossil fuel by optimizing production technology for hydrogen gas, promotion of renewable energy like wind power and solar energy etc., the ground reality indicates that nothing much has been done so far to reduce the use of fossil fuel nor it looks that reduction in emission would be achieved at any significant level in the foreseeable future. Production and use of fossil fuel is only showing signs of increase all over the world.
it is reported that together, 30 of the biggest asset managers in the world have invested in the recent months atleast 550 billion US dollar in oil, gas and coal companies that have expansion plans. Further, several asset managers are continuing to provide fresh cash support to companies that are ignoring climate goals. By such process, obviously, several fund managers are adding fuel to the fire that is threatening the global climate. Several countries like China, India , Russia, Australia, Indonesia and so many others have not taken any adequate steps to reduce the production of fossil fuel such as crude oil, natural gas or coal or curtail the export trade, though they have announced some plans to reduce the fossil fuel consumption, which are few and far between.
It appears that the world would depend upon crude oil, natural gas and coal for energy and feedstock source for long time to come.
What has led to energy war ?
Aggressive onslaught by Russia against Ukraine and the cruel war by Russia is continuing to destroy infrastructure and human lives in Ukraine, inspite of the world wide condemnation against Russia.
In such circumstances, the NATO countries are alarmed at the aggressive behavior of Russian President Putin and now are devising various strategies to control Russia’s aggression and save Ukraine from collapse. Many NATO countries fear that if Russia were to be successful in Ukraine, then Russia would target NATO countries by adopting similar merciless and aggressive strategies. Checkmating Russia is now a matter of survival for NATO countries .
As a full fledged war against Russia is not an option for the NATO countries as it could end up in a nuclear war and World War III, the alternate option is to launch an economic war against Russia .
One of the important strategies for NATO counties for conducting the economic war against Russia could be to hit Russia below the belt by stopping the buying of crude oil and natural gas from Russia, which is a big source of income for Russia to sustain the Russian economy.
Is energy war an option for NATO ?
NATO countries are now realizing that a full fledged energy war against Russia may not be an option for them.
Russia has around 24% of world natural gas reserves and Europe presently procures 40% of it’s natural gas requirement from Russia. Europe also procures 53% of it’s crude oil requirement from Russia. Obviously, NATO countries cannot suspend the procurement of crude oil and natural gas from Russia at anytime soon , since suspension of supply of crude oil and natural gas from Russia would paralyse the economy of the NATO countries.
The other option for NATO countries for procuring crude oil and natural gas from USA and middle east countries may also be counter productive for NATO countries , in view of the freight cost involved and several infrastructure facilities required in Europe for transportation, which are not presently adequately available.
The procurement from USA and middle east countries are not likely to make big headway to reduce the import dependence of energy source from Russia in a significant way in the near future.
Is energy war an option for Russia ?
While NATO countries depend on Russia for it’s energy resources, Russian economy too depends considerably on the export of crude oil and natural gas to NATO countries, which are the nearest destinations for export.
As NATO countries continue to buy energy requirement from Russia inspite of the Ukraine war, as NATO countries have no immediate and economic alternative, Bloomberg Economics expects that Russia will earn nearly $321 billion from energy exports this year, an increase of more than a third from 2021. Even with current sanctions in place, substantial inflows of hard currency into Russia look set to continue for sometime due to the export of crude oil and natural gas to NATO countries
However, if the NATO countries would gradually reduce the import of crude oil and natural gas from Russia by developing alternate energy source, certainly Russian economy would suffer severely which Russia cannot afford.
The option for Russia of selling crude oil and natural gas to China in a big way, since China is a large consumer, is a risky proposition for Russia, , as this would make Russia excessively dependent upon China and Chinese government is known for greed and expansionist ambitions.
Further, it has to be kept in view that Russia’s oil exports and output have been gradually falling in recent time , with the International Energy Agency predicting that Russia may lose nearly a quarter of its crude production in the near future.
Under the circumstances, an energy war against NATO, where NATO countries may gradually reduce purchase of crude oil and natural gas from Russia , is not an option for Russia.
Reluctant trading partners :
In such situation, the trade of crude oil and natural gas between the two trading partners namely Russia and NATO countries are likely to continue, as one cannot do without the other for both the stakeholders.
Who will have the last laugh ?
It is difficult to predict at this stage as to how Russia Ukraine war would end. Whatever may be the end, certainly , several trade and economic embargo measures by NATO countries against Russia will have serious adverse repercussions on Russia, which Russia cannot face for extended period .
As far as the energy war initiated by NATO countries against Russia, for NATO countries, it would be the case of cutting the nose to spike the face.
In the case of Russia, the energy war would amount to hurting it’s economy and growth profile by breaking it’s relations with it’s largest crude oil and natural gas trading partner namely the adjacent NATO countries , which will have grave short term and long term consequences for Russia.
Finally, when this war would end, the bitterness generated by this war would not go away anytime soon . Neither Russia would have the last laugh nor the NATO countries would have the last laugh in the energy war.
The real sufferer :
Ukraine has suffered enormously due to this Hitler like attitude of Putin and may end up as a smaller country than it was before the war. The biggest loser of the war would be Ukraine in terms of infrastructure and economic collapse and loss of valuable human lives.
However, Russia would lose it’s face in the eye of the world as a responsible country committed to the cause of world harmony and would stand condemned in the eyes of the world for long time to come. In the history book, Putin’s image would be similar to that of Hitler.
Perhaps, NATO countries would have the last laugh at the plight of Russia with tarnished image . This would be so, in spite of the fact that NATO countries would not be less sufferers economically , due to this foolhardy war launched by Russia.
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