Following the launch of Russia’s military operation in Ukraine on February 24, the United States and its allies made several unsuccessful attempts to cripple the Russian economy through economic sanctions.
As western sanctions seemed to do more harm to the economies of the very countries that imposed them rather than to their intended target, leaders mulled trying to hamper Russia’s revenue by imposing a cap on Russian gas.
During this week’s summit in Brussels, however, European Union leaders failed to agree on the issue of the gas price cap.
In an interview with Sputnik, international relations analyst Gilbert Doctorow offered his take on the current situation with the gas price cap issue.
Sputnik: Why, in your view, has the US-led agenda to impose a price cap on Russian gas failed to prevail again?
Gilbert Doctorow: The 'agreement' on price caps presented to the public at the closing of the meeting of European heads of state in Brussels is an achievement of Public Relations which presents a consensus without the all important details of content. The mechanism for imposing a price cap was left intentionally vague to satisfy German opposition that the cap will not result in LNG shipments being diverted from Europe to other markets where buyers are willing to pay more.
Gilbert Doctorow: The 'agreement' on price caps presented to the public at the closing of the meeting of European heads of state in Brussels is an achievement of Public Relations which presents a consensus without the all important details of content. The mechanism for imposing a price cap was left intentionally vague to satisfy German opposition that the cap will not result in LNG shipments being diverted from Europe to other markets where buyers are willing to pay more.
Sputnik: In the event that a gas price cap had been agreed upon, what effect would the measure have on electricity bills in the EU?
Gilbert Doctorow: The effect of a price cap on electricity prices in Europe varies from country to country, since each country has its own energy mix. France, for example, relies heavily on nuclear power plants so that the price of gas has little effect on electricity prices to consumers. Belgium also gets a large share of its electricity from nuclear plants. Other countries are more heavily dependent on gas.
Sputnik: Given that Russia has repeatedly said it would not sell gas at its own expense, what circumstances would the price cap entail for the socioeconomic situation in Europe?
Gilbert Doctorow: The effect of a price cap on the socio economic situation in Europe would depend on what exactly is the price set - would it still attract supply to Europe or not. That is at present unforeseeable, because the agreements reached in Brussels by government leaders were intentionally vague for the sake of reaching some kind of consensus.
Sputnik: What practical alternatives to Russian gas supplies does the EU have on its table?
Gilbert Doctorow: Europe has no practical alternatives to Russian gas, though few government leaders want to admit that.
Gilbert Doctorow: The effect of a price cap on electricity prices in Europe varies from country to country, since each country has its own energy mix. France, for example, relies heavily on nuclear power plants so that the price of gas has little effect on electricity prices to consumers. Belgium also gets a large share of its electricity from nuclear plants. Other countries are more heavily dependent on gas.
Sputnik: Given that Russia has repeatedly said it would not sell gas at its own expense, what circumstances would the price cap entail for the socioeconomic situation in Europe?
Gilbert Doctorow: The effect of a price cap on the socio economic situation in Europe would depend on what exactly is the price set - would it still attract supply to Europe or not. That is at present unforeseeable, because the agreements reached in Brussels by government leaders were intentionally vague for the sake of reaching some kind of consensus.
Sputnik: What practical alternatives to Russian gas supplies does the EU have on its table?
Gilbert Doctorow: Europe has no practical alternatives to Russian gas, though few government leaders want to admit that.
Sputnik: Do you believe it is possible to convince existing gas suppliers, such as Norway, to sell gas at a reduced price?
Gilbert Doctorow: Norway will not lower its prices to satisfy European colleagues. That door has been closed already.
Gilbert Doctorow: Norway will not lower its prices to satisfy European colleagues. That door has been closed already.
Sputnik: What are the positive aspects for Europe in the EU leaders’ inability to agree on the gas price issue?
Gilbert Doctorow: The positive consequences of the failure of European leaders to reach detailed agreement on implementation of a price cap are that this highlights the different national interests that are in conflict and compels the EU commission to turn away from its ideological bubble to the real world outside its doors.
Sputnik: The EU roadmap on solving the gas crisis suggests establishing a market correction mechanism to "limit episodes of excessive gas prices." How do you assess this agreement; is it a breakthrough? Will the initiative help the EU cope with the crisis?
Gilbert Doctorow: The 'market correction mechanism' is just nice but empty words that European Commission bureaucrats use to paper over the failure to reach agreement on a real price cap. The EU Commission is out of its depth. It is led by a person whose professional training was as a gynecologist. Von der Leyen hasn't a clue about economics, just as she was a failed Minister of Defense in Germany. Regrettably most of the 27 heads of state are also out of their depth and share only one characteristic - conformism born of cowardice.
Gilbert Doctorow: The positive consequences of the failure of European leaders to reach detailed agreement on implementation of a price cap are that this highlights the different national interests that are in conflict and compels the EU commission to turn away from its ideological bubble to the real world outside its doors.
Sputnik: The EU roadmap on solving the gas crisis suggests establishing a market correction mechanism to "limit episodes of excessive gas prices." How do you assess this agreement; is it a breakthrough? Will the initiative help the EU cope with the crisis?
Gilbert Doctorow: The 'market correction mechanism' is just nice but empty words that European Commission bureaucrats use to paper over the failure to reach agreement on a real price cap. The EU Commission is out of its depth. It is led by a person whose professional training was as a gynecologist. Von der Leyen hasn't a clue about economics, just as she was a failed Minister of Defense in Germany. Regrettably most of the 27 heads of state are also out of their depth and share only one characteristic - conformism born of cowardice.