London: Who’s paying for Russian President Vladimir Putin’s jet fighters and tanks? The same EU countries say they want him to stop his assault on Ukraine, a country that is supposedly their ally.
It’s a crazy paradox that Polish Prime Minister Mateusz Morawiecki raised at an EU leaders’ summit on sanctions against Moscow that ran into Friday morning. The bloc was unable to agree on measures against the SWIFT international payments system because so many countries use it for their all-important gas payments to Moscow.
“We are buying as European Union lots of Russian gas, lots of Russian oil. And President Putin is taking the money from us, from the Europeans. And he is turning this into aggression, invasion,” he said.
Russian gas made up 42 percent of Europe’s gas imports via pipeline alone. Shutting that off would create painful economic fallout for European countries that are already grappling with the specter of high inflation.
At €60.1 billion in 2020, energy makes up around two-thirds of Europe’s imports from Russia. While the reliance on Russian gas is often highlighted, this is dwarfed in value by imports of petroleum oils.
The trade, both domestic and international, in energy commodities is also very significant for Russia’s economy and the state’s finances, making up nearly one-fifth of the national budget, according to provisional figures for 2021.
“The current state of the global oil market and the current very, very high price that we are seeing are definitely benefitting Russia a lot,” said Mario Bikarski, Russia analyst at The Economist Intelligence Unit. “This is all really beneficial for Russia’s foreign exchange reserves because Russia has these fiscal rules according to which all revenues above $43 per barrel of oil go into the national sovereign wealth fund.”