WHY DOES EUROPE NEED RUSSIA?

1. Europe needs Russia is needed because the entire history of international relations is moving away from Europe. It’s played out in Asia. Where are the huge countries that will play the big roles located? In Asia. And Latin America.  Now what’s the current state of European-Asian relations? Europe is of no interest to Asia. If we view Europe as a landmass that reaches the Pacific Ocean – Russia and Europe are not a whole. But if we picture them as an alliance then we can say Europe reaches the Pacific. This is the reason Europe needs Russia. I am not sure if Russia needs Europe but Europe, at the moment, needs Russia.

2. Europe depends on Russian gas and there is no viable replacement in sight. All talk of one is nonsense, and moreover costly nonsense for which Europeans consumers will ultimately have to pay a high price. Whatever rationalisations the European bureaucracy comes up with to justify its campaign against Gazprom, the simple fact is that in economic terms it is counterproductive and makes no sense. What it is doing is not “reducing Europe’s dependence on Gazprom”. Rather, it is driving Gazprom away, forcing it to look for new customers and to redirect the flow of its gas away from Europe.

What that in turn will mean is that Europe will have to pay a significantly higher price for its gas and its energy than its competitors will, or than it would otherwise need to pay.

Unfortunately if the events of the last year have proved anything, it is that economic realities are never allowed to get in the way of the anti-Russian obsessions of many of Europe’s leaders.        

Europe will remain dependent on Russian gas for years to come. European leaders have scrambled to try to cut reliance on imports from Russia since the Ukraine crisis but whatever Europe we might want, it needs to be very careful about being pragmatic about the realities of it and it’s unrealistic to think that Russian gas is going to be replaced in the near-term. Russia supplies… about a third of Europe’s gas. That cannot be switched off easily without huge consequence. There is no way the United States can supply that volume of LNG to replace it.