Russian President Vladimir Putin delivers a speech throughout a ceremony honouring the nation’s Olympians and Paralympians on the Kremlin in Moscow, Russia April 26, 2022.
Maxim Shemetov | Reuters
DAVOS, Switzerland — Russian President Vladimir Putin‘s bargaining place is “not as sturdy as he pretends” and Europe has leverage towards him, in keeping with billionaire investor George Soros.
In a letter to Italy’s Prime Minister Mario Draghi, Soros mentioned Putin was “clearly blackmailing Europe” by threatening to — or truly — withholdinging fuel provides.
“That is what he did final season. He put fuel in storage quite than supplying fuel to Europe. This created a scarcity, raised costs and earned him some huge cash, however his bargaining place is just not as sturdy as he pretends,” Soros wrote Monday.
Russian officers weren’t instantly obtainable for remark when contacted by CNBC Wednesday.
Russia has just lately reduce fuel provides to Finland arguing the nation is just not paying for it in rubles. The transfer got here after Helsinki introduced its intentions to affix NATO — the protection alliance that Putin opposes.
Bulgaria and Poland also stopped receiving Russian gas supplies a few weeks in the past. Within the wake of Russia’s invasion of Ukraine, Moscow introduced that “unfriendly” nations must pay for Russian fuel in rubles — a coverage that permits the Kremlin to prop up its personal foreign money.
Nevertheless, the message from Soros is that European nations have leverage towards Putin too.
Hungarian-born US investor and philanthropist George Soros.
Fabrice Coffrini | AFP | Getty Photos
The EU, which incorporates 27 nations, receives about 40% of its pure fuel provides from Russia, making it troublesome for the bloc to cease shopping for it in a single day.
However, in keeping with Soros, the EU can also be an important marketplace for the Kremlin and Putin wants the fuel income to help his economic system.
“It’s estimated that Russian storage capability will likely be full by July. Europe is his solely market. If he would not provide Europe, he should shut down the wells in Siberia from the place the fuel comes. Some 12,000 wells are concerned. It takes time to close them down and as soon as they’re shut down, they’re troublesome to reopen due to the age of the tools,” Soros mentioned within the letter.
He added that Europe must undertake “pressing preparations” earlier than utilizing its bargaining energy. “With out it the ache of sudden stoppage could be politically very onerous to bear,” he mentioned. “Europe ought to then impose hefty tax on fuel imports in order that the value to the buyer would not go down.”
Leon Izbicki, an affiliate at Power Features, agrees that Russia’s fuel storage is near being full.
“Russia went into final winter with file excessive shares of round 72.6 billion cubic meters and goals for a good greater underground storage goal for winter 2022 of 72.7 billion cubic meters,” Izbicki added by way of electronic mail. “Whereas we don’t have visibility on Russian underground storage, it appears believable that Russia may attain this goal this summer time already.”
He added that that Russia lacks flexibility in its fuel storage and doesn’t have the means to divert fuel from Europe to, for instance, Asia on account of an absence of pipeline infrastructure.
In the meantime, European nations have been scrambling for options to Russian fuel since the invasion of Ukraine. The EU and the United States, for instance, signed a deal in March to make sure the area would obtain not less than 15 billion cubic meters extra of liquefied pure fuel (LNG) this 12 months.
This, coupled with the current cuts in provide to Poland, Bulgaria and Finland — together with worldwide sanctions — implies that Russia is inevitably already promoting much less fuel to Europe.
“We anticipate fuel flows to Europe to come back in at round 98 billion cubic meters this 12 months in comparison with 141 billion cubic meters final 12 months,” Izbicki mentioned.