Russia is losing a pillar of its economy!

The end of the Russian-Ukrainian war appears in sight, with Donald Trump calling for a quick resolution as resources dwindle on both sides. At the same time, a historic event is shaking up the energy scene: Russia will no longer transit its gas via Ukraine. This halt puts an end to a paradoxical cooperation and promises harsher winters for Eastern Europe.

Russia: the end of a gas reign under pressure

Since the 1990s, Russia has relied on Ukraine to transport its gas to Europe, a cash cow that still brings in 5 billion dollars per year in 2024. But now, kyiv has decided to turn off the taps.

Ce energy divorce is much more than a simple breach of contract: it is a direct blow to Vladimir Putin, whose regime depended on these revenues to finance its military ambitions.

As a reminder :

• In 1991, more than 130 billion cubic meters of gas transited through Ukraine;
• By 2024, this figure has fallen to zero;
• Moldova and the separatist region of Transnistria, heavily dependent on this gas, are facing an unprecedented energy crisis.

For the Kremlin, this loss of earnings adds to an economy already weighed down by international sanctions and the decline in energy exports. The consequences will also be felt at the geopolitical level, because Europe will have to, more than ever, turn to other suppliersnotably the United States and Norway, to secure its gas needs.

A difficult winter for Europe: consequences of an energy and economic divorce

With the end of Russian gas transiting through Ukraine, Europe must deal with staggering increases in energy costs. In 2023, the price of gas would reach 130 euros per megawatt hour, an increase of 240% compared to 2021.

This inflation hits households hard, including the annual bill increased by 1,200 euros.

The shock is particularly felt in industry, where sectors such as metallurgy are struggling to absorb these costs. It is estimated that more than 500,000 jobs are at risk across the European Union. Furthermore, massive investments are necessary: ​​Germany has allocated 200 billion euros to diversify its supplies via liquefied natural gas (LNG) terminals.

However, this energy transition also has its paradoxes. Part of the gas imported in the form of LNG comes from Russiarefined in India then resold at a high price in Europe. This detour fuels a disguised dependence, while inflating costs for European consumers.

To deal with this crisis, the European Union is exploring new avenues, such asincrease in Norwegian gas imports or the establishment of infrastructure for green hydrogen. But in the short term, the exit of Russian gas remains a costly and complex operation.

Thus, a thousand days of conflict have propelled the Russian economy to the brink of asphyxiation. Without European gas consumers, finding the 17,000 billion rubles needed to finance his military budget becomes a headache for Vladimir Putin. An economic asphyxiation that could redefine the global geopolitical game.

Micaiah A.

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