British newspaper: What will happen to Europe if Russia cuts gas from it?

The British Independent newspaper published an article on the repercussions of what he called the Russian invasion of Ukraine and its impact on European countries, especially with regard to energy security in light of the dependence of many European countries on Russian gas.

Journalist Hamish McCray began his article by asking a question he described as difficult, "What would happen if Russia cut off gas from Europe?"

He stressed that, based on what happened during the last four months, Europe should plan to face the worst scenarios, including the possibility of Russia cutting off the gas supplies from the old continent.

The article explained that if this scenario occurred, it would constitute a major dilemma for the countries concerned during the coming winter, as these countries used to accumulate gas stocks in the summer and then begin to decline with the onset of cold weather.

The extent of the problem and the solutions taken to overcome it

The author adds: The extent of the problem becomes clear if we know that Europe as a whole imported in 2020 about 40% of its natural gas needs from Russia, while some countries, such as Latvia, relied entirely on gas from Russia, while Germany imported 65% of its gas needs from Russia. Despite its recent attempt to reduce its gas imports, Germany is still the largest importer of gas, which makes its response in this context very important, according to the article.

As part of Berlin's efforts to limit the import of Russian gas, Economy Minister Robert Habeck announced that his country will move to the second phase of its three-phase emergency plan to reduce gas demand.

The stage announced by the minister - according to the Independent article - includes the use of more coal to generate electricity, and allowing the competent authorities to impose higher prices on energy to encourage customers to reduce consumption.

While the third stage, if the plan reaches it, will focus on rationing gas consumption and forcing factories to reduce gas demand so that families will be able to continue heating during the winter season.

The article pointed out that the European Union is also planning to find ways to enable the countries of the continent to weather the winter with less gas supplies, and will announce details of its plans next month.

He cited a comment by European Commission President Ursula von der Leyen on the subject, in which she said: "The best is always, we hope for the best and we prepare for the worst."

Challenges

The writer asked, "Can Europe pass this winter without Russian gas?"

He explained that in theory, the answer is yes, but in practice this would mean entering Europe into a serious recession.

He pointed out that it was fortunate for Europe that it sought to diversify its sources of gas import to reduce dependence on Russian gas, and obtained liquefied natural gas imports from countries, the most important of which is the United States, whose natural gas exports rose in 2021.

But the bad news for Europe - according to the writer - is simply that the continent does not have specialized ports with sufficient capacity in European countries to import liquefied natural gas.

For example, there are no liquefied natural gas facilities in Germany, despite a proposal to establish 3 stations in the country to store liquefied gas, but they face opposition, not to mention that establishing them before winter this year is not possible due to time constraints.

Therefore, the writer believes that Germany, and indeed Europe as a whole, will have to use less gas this winter.

Serious repercussions

But reducing the use of gas is accompanied by economic risks, as it means reducing industrial production and entering into an economic recession.

In this context, the writer mentioned what was stated by a study by the German Institute for Economic Research (DIW Berlin), which stated that reducing gas demand is in Germany’s long-term interest, and concluded that “according to optimistic assumptions, the provision of natural gas by 18 to 26% of demand It is possible. While it is possible to replace natural gas in the electricity sector with alternative energy sources in the short term, the provision of energy in the industrial sector will be accompanied by a decrease in production."

The writer comments that the study recognized the need to reduce production, and that taxpayers would have to compensate companies for this reduction, which means that Germany will lose part of its production, which in turn will lead to a combination of lower wages and higher unemployment rates.

The writer also raises another possibility is that some factories may never be able to open their doors if they are forced to close, and some may move their production abroad.

Therefore, he believes that if Russia cuts off gas supplies to Europe, this step will undermine the German economic model.

The article concludes that we do not need to believe the frightening stories of the collapse of confidence such as what happened in the case of the collapse of the American bank "Lehman Brothers" to realize the very serious challenges that Europe in general, especially Germany, is facing now.