EU Gas Proposal for Moldova: Reasonable Alternative or Economic Suicide?

Moldova’s pro-European leadership has long been burdened by total energy dependence on Russia and eagerly accepted the EU’s proposal to join the platform for joint gas purchases. But this venture has enough risks and dark spots.

Vladimir ROTARI, RTA: Even before February of this year, the gas issue was one of the hottest and most burning, and after the outbreak of the war in Ukraine, its severity only increased. It was the energy supply of Europe that became the main topic of the day after the direct hostilities. So far, despite the totally wrecked relations between the European Union and Russia and a flurry of mutual sanctions, supplies of Russian blue fuel in the western direction are proceeding in the same mode, even through the territory of Ukraine at war. Brussels recognizes that the abandonment of importing gas from the Russian Federation could cause great damage to the latter, but the consequences for the Union itself could be devastating. Russia has a share of about forty percent in the European gas market, and in recent years it has only increased. It is hard to imagine the scale of the EU’s economic losses and the subsequent protest wave. Moscow is well aware of this weak spot and is trying to put pressure on it by offering to pay for its gas in Russian rubles. Such a step should allow the Kremlin to somewhat reduce the negative effect of sanctions and revitalize Russian economy. It is already clear how this maneuver has strengthened the Russian ruble. Western politicians speak in unison about blackmail and violation of the terms of contracts – which is really the case. On the other hand, the EU itself violated all conceivable rules when it imposed sanctions on the Russian Federation and de facto requisitioned the gold and foreign exchange reserves of the Russian Central Bank for $ 300 billion. Anyway, reducing dependence on Russian gas now, judging by the attention paid to this issue, is almost the number one task for European officials. But no one knows how to do it quickly. The authorities of many European states, for example, simply urged fellow citizens to save gas – but such proposals from politicians cause obvious irritation among the population. However, there are more efficient measures. So, the EU countries at the summit in Brussels agreed to create a platform for joint gas purchases, similar to those that operated for purchasing vaccines. It should work like this: the EC’ special group will collect data on the EU member states’ needs for blue fuel and on this basis negotiate with suppliers. The idea is that the EU, as a large buyer, will be able to achieve a lower price as a result, and the mechanism itself will avoid competition between EU members for the same volumes of gas, which previously also led to a rise in price. This is an interesting initiative, but there’s still the problem of shortfall in volumes. Brussels is counting on other importers to the European market – Norway, Qatar and Algeria. But these countries have been signaling that it is impossible to talk about a sharp increase in production and supplies – and one of the Qatari ministers recently said that it is simply impossible to replace Russian gas in Europe in the foreseeable future. However, at the same summit, a new energy agreement was concluded with the United States. We have long drawn attention to the fact that one of the goals of the US-provoked severance of ties between the EU and Russia is the liberation of the European market for American liquefied gas. Its imports to the EU are growing each year and will also be increased in 2022 – which, in fact, was agreed upon. But, again, this will not radically change the situation. Russian volumes are too large to be compensated only by the US natural gas. Moreover, firstly, the growth of American production is not limitless, and, secondly, the construction of terminals for receiving liquefied gas will take years. Besides, it is quite obvious that American gas, even due to logistics, will cost much more expensive than Russian gas, which European officials recognize, apparently prepared to accept a higher payment in exchange for avoiding political risks. And here, joint purchases alone are unlikely to help much. It is curious, by the way, that not only members of the Union, but also candidates for membership and even an Association Trio were offered to adopt this mechanism. This caused particular enthusiasm in our republic, because its pro-European authorities have long been burdened by more than a close energy link with Russia. Immediately, many politicians and experts loyal to the authorities began to talk about the huge prospects for diversifying gas imports, reducing dependence on Russia, increasing supplies reliability, et cetera. The only problem is that no one knows how this mechanism will work, whether some countries will try to outflank it for their own benefit – as happened with vaccines. And most importantly, will there be enough gas for everyone and at what price it will still be available. There is an opinion that, to put it mildly, not cheap. In general, the EU proposal is one of those that should not be accepted rashly. However, judging by the almost enthusiastic reaction, the country’s leadership is already planning to use this platform as a trump card in the upcoming negotiations with Gazprom. Especially in light of the obviously difficult dispute over the audit, although, in my opinion, Russia will be ready to agree to postpone, given all the circumstances. I assume that political and ideological motives, one way or another, will push the authorities to “diversify” supplies and purchase at least part of the required volumes of gas on this new European platform. I can even see that this will be presented as a loosening of the Kremlin’s gas “stranglehold” and an increase in energy security, for which, of course, one has to pay a certain price. But what rich Europeans can afford, we hardly can. We have already lost billions of lei in the government’s frankly ridiculous attempts at “diversification” last year without much result. At the same time, it turned out that Brussels was not ready to provide serious financial support– and even more so now. Can we pay more for gas at a time when the national economy is collapsing and the budget is showing a record deficit? You know the answer. I have already said this once and I will repeat again that, no matter how much we like it, there is objectively no more profitable option for Russia’s gas supplies, and at least the Transdniestrian factor makes them more or less stable, even despite recurrent crises. Our delegation’s failure of at the negotiations last year led to a noticeable increase in the price, but it is still lower than the European ones, and, as we know, one can always negotiate discounts with Moscow. It’s just that no one does it, because, as Maia Sandu admitted, there are no contacts with Moscow after February 24. And I really don’t know who is better off from this. Definitely not Moldova, which, instead of gas dependence on Russia, can get exactly the same dependence, but on the EU. And more expensively.