A new tremor hits the energy market in the world, after Russia announced the suspension of gas supplies to Bulgaria and Poland, due to the two countries' refusal to pay the gas bill in the Russian local currency (ruble).

The Russian reaction was like an economic earthquake that hits all of Europe, opening the door wide to a new energy war, or what Europe calls "energy blackmail."

The European Union is trying to reduce the amount of losses that European countries can incur due to Russia’s decision to cut off gas from countries that do not pay in rubles, as European Commission President Ursula von der Leyen confirmed that the bloc has taken this step into account and prepared for it, and is making every effort so as not to No European country is affected.

Poland imports 45% of its gas needs from Russia, and a long-term agreement with Moscow links it with "Gazprom", but this agreement will expire this year, which made Poland prepare for this moment by negotiating with other countries and developing its infrastructure to obtain gas from Non-Russian sources.

Each year, Bulgaria and Poland import about 13 billion cubic meters of gas, which represents 8% of Europe's total gas imports.

Complicated Relationship

The question posed by the Russian decision to cut off gas to two European countries is: How far can the Russian escalation reach?

Is it to the extent that Moscow stops gas for all European countries?

The answer is that if Moscow decides to do so, this means that it will enter into a war of destruction for its economy and for the European economy, meaning that no one will emerge victorious from this war.

In numbers, it appears that the European Union has allocated about 35 billion euros to pay the bill for Russian energy supplies, a situation that must change, according to European Council President Charles Michel, who stressed that the abandonment of Russian gas will come sooner or later.

European countries pay about 450 million dollars a day to Russia in exchange for gas and oil, through 3 gas pipelines, which cover about a third of the European need for gas.

These numbers show the extent of European dependence on Russian gas, but they show the amount of money that enters Russia's treasury daily from Europe, and if these incomes stop, this means a significant decline in the state's incomes because energy revenues constitute more than half of the state budget.

Nevertheless, countries such as Germany and Hungary are trying to find solutions to pay in Russian rubles because they are unable to immediately abandon Russian gas.

There are countries such as Germany and Hungary that are trying to find solutions to pay the Russian ruble for their inability to give up Russian gas (Reuters)

German dilemma

The Financial Times has warned of the worst energy crisis in Europe since World War II if Russia stops supplying Germany with gas.

The German case appears to be the most complex and difficult given the size of Germany's dependence on Russian gas, which is estimated at more than 55%, and given Germany's position as the largest economy within the European Union, and therefore the damage to its economy means the damage to the economy of the whole union.

The German Industry Federation (BDI) warned that the consequences of any sudden stop to the flow of Russian gas would have "disastrous" consequences for the German economy, and even expected that the German economy might experience the biggest contraction in its history if the import of Russian gas was stopped without finding alternatives.

A report by the Kiel Institute for the World Economy predicted that Germany's boycott of Russian gas would lead to a 2.2% drop in growth, and would lead to the loss of 400,000 jobs.

According to the same institute's forecasts, the German economy will incur losses amounting to 230 billion dollars in 2022 and 2023, which is equivalent to 6.5% of German gross domestic product.

Germany is adopting a plan to gradually reduce dependence on Russian energy. Since the start of the war in Ukraine, Russia’s imports of coal have fallen from 50% to 25%, oil imports have fallen from 35% to 25%, and gas imports from Russia have declined from 55% to 40%. The German plan aims to almost completely eliminate Russian energy imports by mid-2024.

4 European countries agreed to pay the energy bill in Russian rubles (French)

saving the ruble

4 European countries agreed to pay the energy bill in Russian rubles, while a Bloomberg Agency report revealed that 10 European countries opened accounts in rubles to pay for their access to Russian gas and oil.

However, the impact of this step on the value of the ruble remains minimal, as Gazprom is obliged to sell 80% of its foreign profits in rubles, which is why many economic estimates believe that the step of cutting gas from Poland and Bulgaria is a political step intended to demonstrate Russia’s ability to impose Its conditions are imposed on European countries, especially through Russia's requirement for European countries to open accounts in "Gazprombank", which is subject to many Western sanctions.