Alan Crawford
Energy shortfalls were always part of the equation in the response to Russia’s invasion of Ukraine. But few were prepared for gas becoming a second front in President Vladimir Putin’s wider conflict with the US and its allies.
In less than five months of war, Moscow has retaliated against successive waves of international sanctions by tightening its supplies of natural gas to Europe. That’s contributed to a spike in prices, stoking inflation that’s hitting consumers and governments from the UK to Bulgaria.
It’s also triggered a free-for-all as Europe competes on the global stage to secure alternatives to Russian gas. With no time to build pipelines, countries from the Americas to the Middle East and Africa are being courted for shipments of liquefied natural gas.
But there isn’t enough to go around. The result is that gas now rivals oil as the driver of geopolitics.
Who’s Dependent?
Share of imported natural gas in total energy consumption
Source: Bloomberg calculations based on 2021 data from BP Statistical Review of World Energy
Plans to tackle climate change are falling victim as a result, even as a record drought in Italy highlights the costs of inaction.
A tighter squeeze is still to come.
At the outbreak of the war, Germany put on ice the Nord Stream 2 pipeline that was due to start gas flows from Russia. Now, the first Nord Stream is about to undergo maintenance and Berlin is warning that Moscow may not bring it back online, risking the collapse of industries as Putin blackmails Europe’s largest economy.
Chancellor Olaf Scholz’s government, already in talks with gas giant Uniper over a possible bailout of as much as 9 billion euros, is preparing legislation that would enable the state to take stakes in further struggling energy companies.
Ukraine is suffering the frontal assault in this war. The rest of Europe, in aligning with Kyiv against Moscow, is straining with the repercussions too.
Storage tanks at the Leuna refinery and chemical industrial complex in Germany, on June 7.
Photographer: Krisztian Bocsi/Bloomberg
Global Headlines
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Trade talks | Senior US and Chinese officials discussed American economic sanctions and tariffs today amid reports the Biden administration is close to rolling back some of the trade levies imposed by Trump. China said Vice Premier Liu He and Treasury Secretary Janet Yellen discussed stabilizing global supply chains, while the US said Yellen raised the issue of Russia’s war against Ukraine and “unfair” economic practices from Beijing.
Losing Steam
China’s new Covid vaccine doses administered have tapered off
Source: National Health Commission
China’s elderly are an exception to the one consistent silver lining to Covid-19 outbreaks. While more cases usually trigger a surge in vaccinations, the number of fully immunized people in Shanghai aged 60 or above increased just one percentage point after a two-month lockdown ended in mid-June, despite hundreds of deaths.
Spending support | Ukraine has indicated it needs $60 billion-$65 billion this year to meet its funding requirements including emergency budget assistance and logistics infrastructure projects, billions more than its allies have so far pledged. The figure, which excludes defense and security spending, is part of a larger blueprint for reconstruction that’s estimated to exceed $750 billion over the next decade.Employees killed and displaced, infrastructure seized by force and relentless cyberattacks are only a few of the wartime challenges facing Kyivstar, Ukraine’s largest mobile phone operator.
Assessed Control as of July 3
Piling up | UK Prime Minister Boris Johnson is facing another scandal after a former Foreign Office chief civil servant wrote a letter contradicting Downing Street’s defense that the premier was unaware of complaints against a Conservative MP before he appointed him to the government. Christopher Pincher resigned last week as deputy chief whip, one of Johnson’s political enforcers, in the wake of newspaper allegations he groped two fellow guests at a private club.
Rising doubts | After a year of debate and wrangling, Chile’s Constitutional Convention presented its final version of the charter to President Gabriel Boric, marking a shift away from the current document implemented under the 1973-1990 military dictatorship. As Eduardo Thomson explains, with a referendum set for Sept. 4, polls suggests voters are starting to question the broad changes it would enact on everything from social rights to political rules.
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