According to Kneissl, who is also an energy analyst, there is no way out of the crisis in Russia-EU relations at the moment. In her exclusive interview with Sputnik, Kneissl also weighed in on Europe’s price cap on Russian oil, the role of Russian gas supplies in the European market, and on EU-Africa ties.
Sputnik: The International Energy Agency says that if Europe will lose Russia's natural gas pipeline supply completely, it will be facing shortages of 30 billion cubic meters. The IEA and the EU are basically figuring out ways to switch to renewables quicker and take other steps to avoid potential gas shortages next year. Do you think they will be able to succeed or is there no way around Russian gas supplies for Europe at this moment? And will the next year bring new challenges to Europeans in terms of gas supplies?
Karin Kneissl: Well, it's the question that has been debated ever since late February or early March, when it was clear, and particularly from the stance of Berlin [that there was] no way to renounce Russian energy supply. The German government accepted the coal boycott. That was one of the early sanctions. But they wanted to make sure, "please we cannot renounce Russian gas." And you really have to check from country to country. In the case of Germany, Austria, Italy, and some other Central European countries like Hungary, Slovakia, the reliance on Russian pipeline gas is heavy. And it's a different story for a country like Ireland or Portugal. So, it really depends on the energy mix and respective import situation. And there has been already a legal decision made by the EU as a whole, by the Germans in particular, to renounce fossil in general. And it's not only a moral obligation, it's a normative obligation that has been pushing investors out of fossil. So what we actually have been watching for the last, I would say at least three or four years, is what is called underinvestment. There is not enough investment into fossil: one of the factors why we have seen price hikes ever since spring 2021, when the economy was picking up again after one and a half years of lockdowns.
And to come back now to the situation, can you renounce Russian gas and oil? Yes, that's the decision that is made, because everybody wants to renounce fossil in general. The question is when. Not this year. Not next year, maybe in 10 or 15 years. And gas has always been presented as the energy of transition, of bridging the gap from the fossil age to a renewable age. That is what the narrative was. For many years, I've been following that topic. So what is happening now is a very hasty, self-imposed renouncement.
And for the first time in the energy markets, which are always political, which are always subject to geopolitics, but when we go back to the 1970s and maybe some of the audience will remember the price crises of 1973 and 1979, Iran, the Islamic revolution. In both cases, it was a crisis triggered by events in a producing country or several producing countries. Today we have the customers, so we have the demand side. It's not the supply side, we have the demand side that is boycotting so to say a certain part of the market. And this is special. This is weird, I would say. And the outcome remains to be seen now that China is somehow coming back to the demand, side because we know that the long lockdowns, and this actually helped the market not to go through the roof, because China is the number one oil importer, a very important gas importer, but with its constant lockdowns, the Chinese market was very phlegmatic. And now they are picking up and this will also have an impact. So the European reliance is there and the price uncertainty will be with us. Where [do we] get the gas from?
Karin Kneissl Opens Up to Sputnik on Death of Diplomacy, Energy Crisis, Grain Deal and Press Freedom
3 November 2022, 18:52 GMT
Sputnik: Fossil fuels are still in heavy use and when it comes to oil, there is a price cap coalition which was designed to limit Russia's profits from oil. It is falling apart, obviously, with many Asian buyers refusing to support the effort. Last week, when Europe introduced its embargo, Russia was shipping more than three million barrels of crude oil per day to Asia. Who are the winners and who are the losers in this situation?
Karin Kneissl: Well, I wouldn't like the category of winners and losers, because under current circumstances, I would say everybody is losing, to a certain extent. And we would be better off, all of us, if we had a real business relation like we had until 24 February. I remember very well at the beginning of the year we were still discussing ESG goals: environment, security, and governance. I mean, these were the topics that the Russian energy producers were cooperating with their partners, wherever they were, from Exxon to BP. And so right now, we are in a situation where everybody is losing to a certain extent. But the big "buts," I formulated it in an article a few months ago, to put it in a nutshell, you can print money, but you cannot print energy.
So a commodity-based economy might most probably sail through these unchartered waters maybe in a better equipped way than the arms, the weaponry that the northwestern hemisphere is using. Financial sanctions, insurance sanctions - they have their limits.
Sputnik: It seems that some countries did put business first. Turkey, Saudi Arabia, the United Arab Emirates, India, and many others have chosen economic interests over politics and they are continuing to do business with Russia after the beginning of Moscow's special military operation in Ukraine. Has such an approach paid off for them? How long will these countries be able to withstand the pressure from the West to impose sanctions?
Karin Kneissl: This is a crucial question. And when we take Turkey in particular, for instance, let's take the issue of the Mir card. The Mir card was introduced, inter alia, for Russian tourists going to Turkey. I think it was in use only for a few months, maybe three or four months, and then there was tremendous pressure by US authorities that the Mir card, as an alternative to American-based credit cards, may not be used by Turkey anymore. That happened sometime in October. So there is tremendous pressure on real estate agents in Turkey, "don't sell apartments to Russian customers" and so on. So the pressure is there. It is evident. We will see how the Turkish authorities, the Turkish government handles all that, but it's for sure that the pressure is there.
Sputnik: My next question is about Africa. Before the Libyan crisis in 2011, there was an attempt by the African Union to find a peaceful solution to the situation. France, the UK, and the US chose military strikes instead. There have been a lot of other happenings, like disagreements on vaccine rollout, which have kind of angered many Africans. They expected more from Europe as help in this situation. Now France, Italy, and other countries are trying to approach Africa and trying to talk about business as well. Do you think African leaders and African people would believe in the sincerity of such efforts by the Europeans? Or do they perceive these efforts as the continuation of kind of old-time colonialist rhetoric?
Karin Kneissl: Well, I lived in France last year, and then I moved to Lebanon only in the spring because I had to. But I was in France more or less most of the time, ever since September 2020, when I left Austria. And a huge topic in debate in the media, but also public debates, was all about the topic of France and Africa, and changes, and Russian interventions in Mali, Burkina Faso. So it's a hot topic in France, "are we losing Africa?" and so on. So this is what I can contribute from my side observing the debate in France, for instance, which still considers itself as a powerhouse on the African continent. But when you take it from the larger angle, the EU as a whole, we have had a series of EU-Africa summits. And many of those summits were still, in my assessment, marked by the “mercy business,” you know. "We give you money, we tell you, we will provide you with technology" and it's mercy business. And really to a large, large extent, it's still underestimated to what extent China, India, and other actors like [the United Arab] Emirates are on the African continent already.
I have seen throughout my teaching, I was teaching a little bit in Angola, I've had classes of students from the African eastern region in some institutions, there's is a very strong self-confidence. There's a new view on the world also from that generation. And I always cherish the moments of interacting with these young colleagues, because my observation was they don't comment all the time like students from the Anglo-Saxon world, it was my experience, but it also happens in Germany, Austria.
Everybody has an opinion, nobody is really informed, but they have an opinion, they comment. While the young colleagues I met in Angola, I met in Mozambique and in Tanzania, they are more reflective. They would wait, adjust it in their minds, and then have a position. And this I cherished a lot. So it's a different attitude of dealing with information, making an opinion.
Now, I'm not one of those who says the future lies on the African continent, but one thing is for sure that there is more self-confidence and there are new generations who are not shaped by the independence struggles of the 60s and 70s that we still had going on. Not shaped by the Cold War that also marked the African continent. There's a new generation of business community, people with self-confidence.
Sputnik: On Tuesday, Indonesia filed an appeal against the WTO panel decision, the ruling, which was in favor of the EU in a dispute over Jakarta's nickel ore exports. In 2019, Indonesia prohibited these exports to boost its own processing and the EU insisted on these exports. Last week, an Indonesian politician, Cak Imin – the Vice Chairman of Peoples Representative Council, called for alternatives to the WTO itself, because he wants to have economic alliances with Russia and with Kazakhstan on natural gas, on coal with South Africa and with Russia as well. Do you think the WTO's policies like this one reflect the true needs of emerging superpowers? Are there any hints of the same neocolonialism in their decisions?
Karin Kneissl: The WTO served a certain purpose in the EU-US steel problems, those issues I've been following. But on the whole, my observation about the WTO, the World Trade Organization, which entered into force only in the late 1990s, as of 2002 you had a stalemate, the so-called Doha Development Round was stopped, and all the noble ideas of multilateral trade agreements had to cede to bilateral agreements. And I've been teaching for years that I see a breakdown of multilateralism and I see more bilateral tendencies. And this has proved right. So the World Trade Organization, I would say, is a mirror of a larger development that there is a tendency to go towards bilateral agreements. And in those bilateral agreements, of course, a country like the US is stronger than Indonesia or the EU, which still wants to conduct these agreements stronger than some other countries. But on a whole, I would say trade, especially commodity trading, is entering a very new age with lots of uncertainties.
Sputnik: German Chancellor Olaf Scholz said on Tuesday during his meeting with the German Committee on Eastern European Economic Relations that ties with Moscow "are being reduced, reduced, reduced," but added that "Russia-Germany cooperation may be resumed if Moscow ends the conflict in Ukraine." We see that Russia is forging alternative alliances in the east right now. Do you think Moscow would even consider going back to the old relations with Germany after things are settled?
Karin Kneissl: Things are settled, you said. But I don't see yet how things could be settled, because trust is broken. I mean, what is happening now is opening up deep scars. And I don't think that these scars can be overcome within a short period of time.
And I also believe that we are only at the beginning of very, very deep changes. And what one has to add to the whole thing, I mean, I've been saying for at least 20 years that pipelines and airlines move to the east. The big airports today, it's not Paris or Milano, which used to be one of the big airports. No, today it's Abu Dhabi, it's Doha, it's Shanghai. I mean, these are the real big airports.
It's, of course, Istanbul, which is the gate to the world and which is one of the biggest and nicest airports. And the same holds true for pipelines. And on a demographic level, we, if I still may consider myself while my passport and so on is part of this European Union, we are demographically irrelevant and this has already had an impact on the automotive sector.
I wrote a book two years ago about the transition in mobility, and the automotive industry is also going east and south. Why? Because that’s where you have your customers, the baby boomers of the 50s and 60s, in a few years they won't be driving around in a new car. They won't buy a next new car. So where do you find your clients? You find them on the African continent.
Sputnik: You've been interviewed by Sputnik several times. In your opinion, how does Sputnik contribute to informing people in the EU and elsewhere in the world about topics which are being ignored by other media outlets? Is it important in this day and age to keep telling the untold?
Karin Kneissl: Well, I think everybody should have a free choice to listen to the channels, to watch TV, to read the websites you want to, that you're interested in, to forge your own opinion. And we ended up in a very regrettable situation that you cannot do that inside the EU anymore. You cannot open the Sputnik website anymore. You cannot retrace it on your satellite dish. So this is a very regrettable situation. And to put it in a nutshell, I experience now, as somebody living in Lebanon, we have more freedom of speech in the Middle East. This is Turkey. This is Lebanon. These are the Emirates, the other Gulf countries. You have more freedom of press, in your choice and your personal choice that you can make, than you have in the European Union.
Sputnik: When speaking about freedom of expression and freedom of speech, you’re working on the book "Requiem for Europe," what is it about? Why are there problems with publishing it in Europe?
Karin Kneissl: Well, I wouldn't even think of publishing it, because I've seen that my last two books, which I wrote in 2021, one on diplomacy and one on the transition of mobility, there was not a single book review, not a single book review. My books were boycotted. And then, yes, there was also the pandemic, but other books had book reviews, had presentations. So I won't find a publisher inside the European Union. Maybe one, but I wouldn’t like, maybe, their ideological stance. So I see how I'll continue with publishing, but the Requiem for Europe book, it's a very personal approach, in which I tried to explain why the Europe I grew up in and I've always been grateful for – I always considered it as a blessing that I could grow up in Central Europe in the 80s, that I could travel, that I could open up my mouth, which is not the case today anymore. So I saw that as a privilege. And this Europe has ceased to exist. It's not there anymore. I'm trying to find out where the tipping point was.