Interview with Janis Kluge: "It is clear that Russia wants to provoke an energy crisis in Europe"

No one knows whether Russia will restart gas supplies once maintenance on Nord Stream 1 ends.

Interview with Janis Kluge: "It is clear that Russia wants to provoke an energy crisis in Europe"

No one knows whether Russia will restart gas supplies once maintenance on Nord Stream 1 ends. In principle, however, it is clear: "As soon as the situation eases with us, Russia would continue to throttle," says Russia expert Janis Kluge in an interview with ntv.de. When asked why Moscow hasn't done so long ago, the economist says: "The earliest point in time is not necessarily the hardest. If Russia had turned off the gas in March, there would long have been a completely different crisis policy with much more massive austerity measures."

The fact that Russia is gradually cutting back gas supplies also has something to do with developments in the war in Ukraine: "It is now clear that Russia will not succeed within a few weeks or months. That also means that the conflict between Russia and the West is permanent, and with it the economic separation." Kluge does not believe that the war will end anytime soon. "Putin opened Pandora's box with this war. He can only achieve his goals if he can influence the Ukrainian state as a whole in one way or another."

ntv.de: In Germany, there is speculation as to whether the Russian state-owned company Gazprom will resume deliveries after maintenance work on Nord Stream 1. What do you think is likely to happen on July 21st?

Janis Kluge: Nobody can predict that. Of course, maintenance can be a reason to find a technical problem that completely prevents deliveries from resuming. But Russia has already greatly reduced the volume of gas supplies. Since mid-June, only a third of last year's output has been delivered to Europe. It is therefore quite possible that deliveries will resume at this low level.

But?

I don't think what happens on July 21 is that important. It is important to look at the past few weeks. From a distance, you can see quite clearly where the journey is headed: Russia is continuing to throttle deliveries. As soon as the situation eased in our country, Russia would continue to throttle. It is clear that Russia wants to provoke an energy crisis in Europe.

Can Russia afford to forgo the revenue?

Of course, the price for Russia is high, especially in the long term. Gazprom is about to lose most of its European market. So far, Europe has been Gazprom's most important market. This is where the high prices are achieved and thus the income that Gazprom needs to be able to supply Russia with cheap energy. In addition, Gazprom is also important for Russia's domestic political development: The company passes on funds to people from the Russian elite, many of them from Putin's immediate environment. Gazprom recently surprisingly announced that it would not pay out dividends. Shortly before, a record dividend had been announced. Gazprom's role in Russia will change: the company will no longer be a foreign exchange earner, but a cost factor. But Russia can afford it for the time being because it still has high income from the oil business.

If Russia wants to provoke an energy crisis in Europe, why hasn't it turned off the gas in Europe long ago?

On the one hand, there is the strategic question of which point in time causes the greatest damage. The earliest time is not necessarily the hardest. If Russia had turned off the gas in March, there would long have been a completely different crisis policy with much more massive austerity measures. There was no doubt that without Russian gas we would have to get through the winter and we would have had half a year to prepare. The current situation extends the uncertainty. There are still people in Germany, including politicians, who hope that things won't get that bad. That is why we are politically less prepared than we would be if Gazprom had stopped supplying it in March, even though the storage facilities are now full.

And on the other hand?

What is taking place is also a massive change for Russia. Russia has repeatedly used gas politically, not least against Ukraine. But to do that now for the most important market, for Germany, for Uniper, where there has been close cooperation up to now, that's certainly something for Gazprom that won't work from one day to the next. The fact that this is happening gradually also has something to do with the developments in the war in Ukraine: it is now clear that Russia will not achieve success within a few weeks or months. It also means that the conflict between Russia and the West is permanent, and with it the economic separation. The EU announced in May that it would become independent of Russian gas in the long term. I assume that Russia is convinced that it makes sense to anticipate Europe. In this way, Moscow can prevent the separation from taking place under conditions that are comfortable for Europe.

Can you estimate how important the gas turbine repaired in Canada actually is for the functioning of Nord Stream 1? Ukraine says Russia can supply gas to Germany entirely without the turbine because the compressor station in Portovaya, Russia, is equipped with multiple turbines.

This station has eight turbines, three of which have been running recently. There are differing opinions as to whether the other turbines needed throttling for safety reasons or not. Russia says turbines had to be shut down. The federal government says we don't believe that. From a distance it's just another skirmish within a larger game. We already had that a few weeks ago with the ruble payments. Here, too, the EU had to ask itself whether it was violating its own sanctions. Of course I can't say exactly how this game will end either, but it's clear in which direction it's going: there are always new pretexts. We don't know when and under what pretext Russia will cut off our gas. But we know enough to be clear about where the journey is going.

Is it a breach of sanctions that Canada supplies the gas turbine to Germany and Germany then passes it on to Russia?

Legally, it is not a breach of sanctions. Canada has created a legal basis for delivering the turbine to Germany. And in any case, the European sanctions regulation excludes exports that are necessary to secure Europe's energy supply. The question that the federal government must ask itself is: Do we want to jump through every ring that Russia is holding in front of us?

The Chancellor was recently confronted with a master baker at Maybrit Illner who said that Germany "cannot impose such sanctions against a state on which it depends and keep stoking the fire". In his reply, Scholz argued legally that gas deliveries were not affected at all by the western sanctions. That probably didn't convince the master baker.

I think it's important to note that the gas isn't being shut off because we imposed sanctions on Russia. The gas will be turned off because we support Ukraine. This is the root of our problem with Russia. The sanctions are only one instrument. Now one can say that we should leave Ukraine to its fate. But there is no alternative reality in which we help Ukraine to oppose the Russian invasion and still have Russia continue to supply us with gas.

In everyday life, many Russians do not yet seem to notice the consequences of the sanctions. How badly will the sanctions hurt Russia?

The sanctions will work gradually, but the crisis will be tough for Russia. Financial sanctions work rather quickly, the technology embargo works more slowly because Russian companies still have Western components in stock. However, this does not apply to all industrial sectors: the Russian automotive industry has collapsed by 97 percent and has actually been completely idle since May. It's about 600,000 jobs. In general, this crisis only develops over time. However, as of May, Russia's economy was 6 percent smaller than in February. This is already a massive recession.

To what extent does this limit Russia's ability to act or even end the war earlier?

Russia will still be able to finance this war in the next two years because the Russian national budget depends primarily on energy supplies and these energy supplies will only be gradually reduced over the next two years. The US already has the means to turn off Russian oil exports much more far-reaching now, through secondary sanctions against oil buyers. But we don't want that in the West at the moment, because that would have a major impact on the world market price. Nevertheless, one can assume that Russia's ability to act will gradually be restricted. Since many sanctions are yet to take effect, it is clear that Russia is facing a deep economic crisis. Most analysts expect gross domestic product to fall by 10 percent this year. After that, no recovery will follow, but stagnation at a low level.

Who should you scold when you are angry about rising energy costs?

Russia started this war, Russia is pursuing this imperialist and aggressive foreign policy. One should therefore immediately scold Putin. But of course the question is justified as to why we made ourselves so dependent on him. Much of what is happening now was already partially visible in recent years. We've known for years that Russia uses energy as a weapon. A war has been going on in Donbass for eight years. Why didn't we change course sooner anyway? This is of course a question we must ask ourselves.

What's your answer?

I would say there are two or three perspectives on this. First, it is fair to point out that Russia has changed in recent years. So far, Russia has only gone into wars that involved manageable risks. It has attempted to subtly weaken the West through hybrid warfare. Russia was extraordinarily successful in this. And the gas kept flowing, Gazprom presented itself to the German economy as a reliable partner. But secondly, something has gone wrong in Germany in recent years. A false image of Russia and a false image of Putin has been formed, fed by old experiences, partly from the days of the Soviet Union, and by the belief that Russia can be contained through close economic ties and interdependence. Large parts of politics have stuck to this fallacy, although all Eastern Europe experts have been saying for years that this is wrong. And in the case of gas, it is now evident that this dependency is not so mutual in the short term. There was already a certain resistance to advice.

Was it just resistance to advice?

That is the third point: There was an intertwining of politics and economy that led to the emergence of a bubble in which the same narrative was repeated over and over again: that Russia supplied gas even in the worst phases of the Cold War and was a reliable partner be. Contradicting voices were not heard in this bubble, nor was there any interest in critically reflecting on whether this fatal dependence on Russia was the right path.

Some military experts believe that Russia has more weapons resources than the West. Is that so?

Of course, the West could provide Ukraine with many more weapons, even more than Russia has at its disposal. The crucial question here is how many weapons the West wants to make available. Of course there are limits to the capacities. But they are far from being reached. It's more about the West fearing a further escalation of the war.

Does that seem like a sensible approach to you?

We are moving in an area that is difficult to predict. Of course, it makes sense to think about what weapons you supply, and also to proceed with caution. But at the same time you have to ask yourself again and again whether you are not misjudging Russia. If we overestimate the risk of escalation, that's a gift to Putin. Will Putin really attack the Baltics if things aren't going well in Ukraine? Will he really use nuclear weapons if Ukraine retakes territory? In my view, Putin is still a very rational actor. The moment this war becomes too costly for him, he will at least try to return to the negotiating table. That's why I think that it would be better to deliver even more powerful weapon systems to Ukraine so as not to delay this point in time too much.

Do you have a prognosis on how to proceed?

I think it is very likely that the conflict between Russia and the West will escalate in the next few years. And I fear that the war in Ukraine will go on for a very long time. It won't always have the same intensity, but I don't see a real end - unless the Russian side decides at some point that the war is too expensive, but that would probably require a new president in Russia. It's hard for me to imagine that Russia would stop threatening the very existence of Ukraine while Putin is still in office, even though there may be quieter phases in this war from time to time. Of course, even a Russian victory would not bring peace.

With this war, Putin opened Pandora's box. He can only achieve his goals if he can influence the Ukrainian state as a whole in one way or another. Under no circumstances will he be satisfied with a part of Ukraine: A free western Ukraine, which, like a large Israel after the experience of war and under constant threats from outside, is developing into a well-fortified state is exactly what Russia fears. Putin must continue this war until Ukraine as a whole is under Russia's control. Therefore, the war will continue until either Russia gives up on this goal - or until the West gives up on Ukraine. In my view, there are no permanent interim solutions. I certainly hope that sovereign Ukraine will survive this conflict. Our own safety also depends on it. We in the West must therefore also ask ourselves how we can best manage the coming years of conflict with Russia. And we have to measure what we ourselves can accept in terms of economic costs.

Hubertus Volmer spoke to Janis Kluge

(This article was first published on Sunday, July 17, 2022.)

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