15 March 2022, NIICE Commentary 7704
Dr. V. Lenin Kumar

The US President, Joe Biden, banned the import of liquefied natural gas, and coal from Russia. It is one of the major steps taken by the US to punish Russia for the latter’s invasion of Ukraine. In the same statement, he also added that the US understands its European allies “may not be in position to impose a similar ban on Russian oil”. One has to closely watch the fallout of the oil ban from Russia because it has three important outcomes for the world to face. Firstly, the global price of crude oil is going to increase manyfold. Secondly, this will have clear political consequences for Europe and the US. Thirdly, it will bring forth the question of hegemony in Europe and the relevance of NATO.

According to the American Fuel and Petrochemical Manufacturers (AFPM) trade association, last year (2021) the US imported around 8 percent of oil and refined products from Russia. Out of this, only 3 percent crude oil was imported from Russia, which represented just 3 percent oil export from Russia to the US. This ban will nonetheless reflect on the international level, where barrels have reached 132 dollars since 2008. This is the toughest call taken by the US President despite knowing it will trigger inflation and price rise across the globe, affecting the US economy as well. In a press conference he noted that gas prices will increase further, blaming the Russian President Vladimir Puntin for it- “Putin’s price hike here at home, hurting American families at the gas pump”.

Politically, this move will have huge repercussions everywhere, especially in the US and Europe. The midterm elections in November are very crucial for the Biden presidency. If the Democratic party doesn’t perform well in the elections, then the control of the Senate and Congress will go back to Republicans, keeping Joe Biden in the Presidency unable to bring any policy level changes to mark his legacy. Many conservative politicians and Republican supporters still believe that President Joe Biden is doing all this to hide his second son Hunter Biden’s financial involvement in Ukraine which was investigated by the US Justice Department. Such campaigns are not new in US politics but if the war goes on and the oil prices go up alongside inflation rising, then anger of the public will be turned against President Biden. Many voters might, in that case, turn to Donald Trump who has been of the opinion that the “NATO is BAD” for the US. Also, in his entire state of the union address, it must be noted that President Biden mentioned Russia 18 times, China only once and Asia once. This underlines him using Russia and NATO as a trump card to boost the November elections. Biden also appealed for support for his tough stance against totalitarianism, working towards a free world, according to him, based on the liberal order.  One has to wait and watch for people’s support for this, especially with the cost of increasing inflation and oil price.

European politics is clearly in the crossroads. The people have the precarious option of choosing between the US domination over the security matters of Europe on the one side and Russian aggression on the other. The oil and energy ban by the US might not affect the US but it will surely affect Europe due to their dependency on energy imports from Russia. 40 percent of Europe’s energy comes from Russia. Banning them will create mayhem for the EU economy. The image shows how much the EU countries depend on Russia’s energy. Thus, saying no to Russian gas is not an option for the EU countries. Major EU countries like Germany and Italy nearly depend on Russia’s oil for meeting fifty percent of their energy needs. France, one of the leading forces in the EU, is going through an election year. French President Emmanuel Macron, who is running for a second term, will face a hard choice: an over inflated economy and NATO security. Macron called Putin within a few days of the invasion to stop the war. France does not want to antagonise Russia for its own economic interests. Germany, another key for the EU economy, is also heavily dependent on Russia’s gas. Saying no to these energy imports will have dramatic economic consequences for the country as well. Also, Germany is on the way to closing three of its nuclear power plants in Emsland, Isar and Neckarwestheim by 2022, enhancing the need for undisturbed energy supply from Russia. Thus, the EU and other European countries cannot say no to Russia’s energy. All the grandstanding on renewable energy will take years to materialise, till which they have to depend on Russia. Until now, US and European countries have not engaged with Russia directly on the military front. Despite a consistent request from Ukraine for a No-Fly Zone (NFZ), the US has refused to even go for negotiations and has continued pushing Ukraine to fight it out on its own.

In the light of the above, the outcomes that can be expected; i. Ukraine President Volodymyr Zelenskyy has agreed to the Russian terms on – No to NATO membership and Crimea being a part of Russia. These two are big gains for Russia, contributing to complete face loss for the US and NATO. ii. Russia will emerge as a strong military state and regional power. iii. In future, the rest of the former Soviet countries will be reluctant to join NATO. iv. Russia will suffer economically for a time. However, due to its vast oil, gas and energy resources, Russia will eventually overcome. v. The sanctions on Russia were a political move the EU had to make for justifying the security measures to its member states. Increase in oil and gas prices will also eventually force the EU to relax the sanction. Germany is eagerly waiting for the resumption of the Nord Stream 2 gas pipeline which will reduce gas prices in Germany by a large margin.

This war on Ukraine will be a testimony to the limits of military support superpowers can yield when it comes to war, and the underlying unfinished security issues of Europe. The security concerns of Russia have to be resolved collectively. The Cold War approach of containment and encirclement results in further conflicts. The war in Ukraine will be a costly one for the West, both politically and economically. Since Putin has ruled Russia with an iron fist, he doesn’t have to worry about facing the electorate like the US and European countries. The price of the war is being paid by the common citizens of the world. Given the background of economies already struggling from the effects of COVID-19, inflation will further make their lives difficult.

Dr. V. Lenin Kumar is an Assistant Professor at MIT School of Government, MIT World Peace University, India.