EU plans Russian gas price cap despite Putin threat

    European Commission President Ursula von der Leyen attends a news conference on the energy crisis, in Brussels, Belgium September 7, 2022
    Ursula von der Leyen

    The European Union’s executive body has proposed capping the price of Russian gas, within hours of Russia’s leader condemning the idea as stupidity.

    Energy prices have soared in the wake of Russia’s invasion of Ukraine, forcing the EU’s 27 states into action.

    “We must cut Russia’s revenues which Putin uses to finance this atrocious war,” said European Commission chief Ursula von der Leyen.

    But Mr Putin said Moscow would react to a cap by halting supplies completely. “We will not supply gas, oil, coal, heating oil – we will not supply anything,” he said, if it went against Russia’s interests.

    European leaders have accused Moscow of “weaponising” its gas exports in response to Western sanctions on Russian individuals and businesses. While the Kremlin denies that is the case, the big Nord Stream 1 pipeline into northern Germany has been shut indefinitely, with Moscow directly blaming sanctions.

    Last week, the G7 group of nations announced a price cap for Russian oil – a move it said would reduce both Moscow’s revenue for its Ukraine invasion, and inflation in the West.

      Speaking to an economics forum in the far eastern city of Vladivostok on Wednesday, Russia’s leader condemned sanctions as economic aggression, and a “fever” posing a threat to the entire world.

      The quality of life for Europeans was being sacrificed while poorer countries were losing access to food, he argued: “Now we are seeing how production and jobs in Europe are closing one after another.”

      Although he acknowledged inflation in Russia was rising, he minimised the effect that sanctions were having on Russian companies: “I am sure that we have not lost anything and we will not lose anything.”

      Russian companies have struggled to source much-needed imported parts. But Mr Putin asserted that confidence in the dollar, euro and pound was being lost before people’s eyes – while Russia was emerging from the war with its sovereignty strengthened.

      Russian President Vladimir Putin attends the plenary session of the 2022 Eastern Economic Forum on Sept 7 2022

      Russia launched its invasion on 24 February and now occupies around a fifth of Ukrainian territory. Six months on, it has been pushed back from areas around Kyiv and the north and now faces a Ukrainian counter-offensive in the south and east.

      Western nations responded to the war with several rounds of sanctions. The European Union has attempted to cut its reliance on Russian gas and oil and Moscow – and on Friday EU energy ministers will try to decide how to protect consumers and businesses from the threat of enormous bills over the winter.

      Ahead of the meeting, Ursula von der Leyen said Europe had weakened Russia’s grip on its gas requirements. Gas storage was already up to 82% and supplies had increased from the US, Norway, Algeria and other countries.

      Before the invasion, Russia accounted for 40% of the EU’s imported gas, but today that proportion was now down to only 9%, she said. As well as a price cap on Russian gas, EU ministers have been looking at how to separate the cost of gas from the price of electricity, which are linked in Europe’s market.

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