Putin Responds to G7 Oil Price Cap Plan: Europe Will ‘Freeze’ This Winter Without Russian Energy

Dimitri Simes | September 7, 2022 | 6:29pm EDT
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Russian President Vladimir Putin speaks at the Eastern Economic Forum in Vladivostok on Wednesday. (Photo by Contributor/Getty Images)
Russian President Vladimir Putin speaks at the Eastern Economic Forum in Vladivostok on Wednesday. (Photo by Contributor/Getty Images)

Moscow (CNSNews.com) – Russian President Vladimir Putin has warned that Europe will “freeze” this winter if Russia decides to completely shut off its energy supplies to the continent.

The threat on Wednesday came amid an escalating energy showdown between Russia and the West, directly linked to the military campaign in Ukraine.

Last week, G7 finance ministers agreed to impose a price cap on Russian crude oil in a bid to squeeze the Kremlin’s revenues from energy sales. Soon thereafter, Russian state gas conglomerate Gazprom announced an indefinite halt to gas flows to Germany through the Nord Stream 1 pipeline, citing technical difficulties.

Addressing an audience of foreign investors in the Far Eastern port of Vladivostok, Putin called the G7 move an “absolutely stupid decision” and promised to retaliate by stopping all energy deliveries to Europe if the proposal goes ahead.

“We will not supply gas, oil, coal, heating oil – we will not supply anything,” he said.

Putin at the same time rejected accusations that Russia was trying to weaponize Nord Stream 1 for political purposes. He reiterated Moscow’s prior claims that the pipeline’s turbine had broken down and that Gazprom was unable to perform necessary repairs due to Western sanctions imposed because of the war.

The Russian president also suggested that Gazprom was prepared to begin supplying Germany with gas through the Nord Stream 2 pipeline. That project, designed to double the amount of Russian gas flowing to Europe under the Baltic Sea, was completed late last year but was scrapped by Berlin after Russia sent troops into Ukraine.

Putin was speaking at the Eastern Economic Forum, an annual business conference aimed at attracting foreign investors to the Russian Far East. According to the Kremlin, this year’s event was attended by businesspeople from 68 countries, including the U.S. and several other Western nations that have imposed sanctions against Russia over its actions in Ukraine.

Among high-profile foreign guests, Putin was joined on stage by China’s top legislator Li Zhanshu, Burmese military junta chief Min Aung Hlaing, Armenian Prime Minister Nikol Pashinyan, and Mongolian Prime Minister Luvsannamsrain Oyun-Erdene.

Meanwhile, Indian Prime Minister Narendra Modi, Vietnamese Prime Minister Pham Minh Tinh, and Malaysia Prime Minister Ismail Sabri Yaakob recorded video addresses for the plenary session.

In his speech, Putin asserted that the Russian economy had overcome the worst of Western sanctions and was gradually returning to normalcy. The ruble’s exchange rate had stabilized, the inflation rate was beginning to decline, and the unemployment rate was at a historic low of less than four percent, he said.

“Back in the spring, many foreign corporations raced to announce their withdrawal from Russia, believing that it was our country that would suffer from this more than others,” Putin said. “But now we see how, one after another, production and jobs are being closed in Europe itself – and one of the key reasons is, of course, the severance of business ties with Russia.”

Putin’s optimistic assessment of the state of the Russian economy runs contrary to those of many Western economists, who predict that sanctions will squeeze the country’s production capabilities in the long run by depriving it of access to key components, advanced technologies, and capital.

They have also expressed skepticism that Russia will be able to easily replace the European energy market, since most of the country’s oil and gas pipelines are directed towards the West.

The Kremlin is betting that it can ease the burden of sanctions by reorienting its economy to Asia, however. According to the Izvestia newspaper, Russian import levels began to recover in July following several months of steep decline thanks to a surge of goods from Asian countries.

Russia is also sending an ever greater share of its energy exports to Asia instead of Europe. In a study published last week, the Finnish Center for Research on Clean Air and Energy found that although Europe still accounted for more than half of Russia’s energy sales, China and India had rapidly gained ground since the start of the Ukraine conflict.

The two Asian economic powers have imported more than $41.5 billion worth of Russian energy products over the past six months, it said.

So far, both China and India have declined to endorse the G7’s proposed price cap on Russian oil, likely indicating that their importance as energy customers for Moscow will continue to rise.

“Of course, the European market has always been considered premium, but the situation in the world is changing very quickly, and quite recently, at the beginning of the crisis around Ukraine, it ceased to be premium,” Putin said on Wednesday.

He also revealed that Russia and China had agreed on the main parameters, including price, for the “Power of Siberia-2” pipeline. The route would pass through Mongolia and provide China with 50 billion cubic meters of Russian gas per year – more than double the current amount supplied.

See also:

Russian State Gas Giant Releases Video Showing Europe Freezing Without Russian Gas (Sept. 6, 2022)

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