As Europe and the rest of the world battle a slowing economy in the wake of the Covid 19 pandemic, its energy supplies from Moscow have actually increased last week even after Russia’s invasion of Ukraine attack. And expectations are that the supplies would further increase in the coming days. Besides, growing apprehension and uncertainty among a section within Europe that Russia, in retaliation to the sanctions, could look at choking energy flow has added to the worries.
According to the European Commission, in 2019, the dependency rate of the EU was equal to 61 per cent which means that more than half of the region’s energy needs were met by net imports. A disruption in energy supplies naturally would severely jeopardize its recovery process.
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The region is dependent on Russia for supplies of crude oil, natural gas and even solid fuels.
The Wall Street Journal wrote, “Russia’s invasion of Ukraine threatens to set back Europe’s economic recovery from the Covid-19 pandemic, as sanctions, tensions and energy prices weigh on businesses and households in parts of the continent at a time when growth is slowing and inflation rising.”
The scale of the shock will depend on how far tit-for-tat sanctions escalate the economic side of the conflict, it added.
Even as several stringent sanction measures including barring several Russian banks and financial institutions from the SWIFT international payment system, all important energy sector has been carefully kept outside the purview. But that is not all. The SWIFT payment system is used by European countries to pay Russia for the natural gas supplies.
While European countries have started looking at diversifying their energy sources and reducing dependence on Russia, it will take time. Analysts also said that negotiations over the Iran nuclear deal are now key to ease supply. The deal could come through soon leading to additional supply of oil.
“In spite of this, we are looking at tough and uncertain times and this is worrying Europe,” one of them said.
