On January 1, Ukraine can sever one of its last remaining ties with Russia if it ignores a last-minute campaign by Moscow’s friends in the West.
By Sergiy Makogon, Aura Sabadus, and Benjamin Schmitt
December 19, 2024
CEPA
Over the past 50 years, Russia has abused Ukraine and Europe’s dependence on gas supplies and transit revenues to extort political concessions, spread corruption, and exert malign influence. It cut off exports on numerous occasions, triggering disruption across Europe and freezing millions of consumers during exceptionally harsh winters.
Since 2022, it has waged not just a full-scale hot war against Ukraine but also sought to undermine Western support for Kyiv by weaponizing gas exports and generating an energy supply crunch of unprecedented proportions across Europe.
Furthermore, the Russian Federation has extended its long-term strategy of energy weaponization to its logical culmination in Ukraine – overt military strikes against Ukrainian civil energy infrastructure, which has exacerbated an already catastrophic humanitarian situation.
Putin’s Kremlin has also ratcheted up its sabotage against energy and critical infrastructure installations across NATO member states.
Despite reams of evidence that Russia uses gas exports to inflict harm on Europe, buyers in Moscow-friendly countries are now pressuring Ukraine to continue the transit from 2025. It is no exaggeration to describe this contaminated product as blood gas; like the African blood diamonds mined to fund wars, this gas will be funding Russia’s aggression against ordinary Ukrainians.
As Russia continues to kill, deport, and torture thousands of Ukrainians, seeking to transit Russian gas to Europe would be highly contentious and geopolitically dangerous. It would lead many, no doubt including the new US administration, to question European seriousness about aiding Ukraine.
To disguise their intentions, buyers in Hungary and Slovakia have been claiming the gas entering Ukraine from the east would be of non-Russian origin.
CEPA fellows including Benjamin L. Schmitt, Sergiy Makogon, and Aura Sabadus, have written extensively on this topic in recent months, demonstrating that gas transiting Ukraine to Europe and rebranded under any other label would be still Russian gas.
These have included analyses of the plans of blood gas consumers to untruthfully label supplies as non-Russian.
The purported benefits of continuing the export of “cheap” gas under any disguise would be far outweighed by the incalculable risks.
In Ukraine’s case, the revenue from transit would be a paltry 0.5% of the country’s annual GDP, or about $800m, but that would be dwarfed by the $6.5bn raked in by Russia annually, a flow of cash that helps replenish its war machine. Those inside Ukraine who argue for a new deal, both for the money and for peace with neighbors to their west, would be grievously mistaken.
It is meanwhile simply preposterous to argue, as some do, that the continuation of the transit would offer a security guarantee, as Russia would have a stake in preserving the flows to Europe. Russia always put itself first. “The transit was due to stop in 2020 when Russia planned to launch its Nord Stream 2 project to Germany to replace transit through Ukraine and isolate it politically,” said CEPA Senior Fellow Sergiy Makogon. “The negotiating team of which I was part (as CEO of the company shipping the gas), believed that maintaining the transit would protect Ukraine from a full-scale Russian war. We were wrong. The Ukrainian transit continued but failed to protect Ukraine from Russian aggression,” he added.
Cheerleaders argue the continuation of transit would allow access to cheap gas and restore Europe’s competitiveness. “In fact, Europe’s soaring cost of living since the start of the war was very largely caused by Russian aggression. The severance of gas without warning in 2022 provoked an energy crisis which forced the EU to fork out €850bn ($892bn) in consumer subsidies to mitigate the impact,” said Aura Sabadus, CEPA Senior Fellow.
To put these figures in context, the value of the subsidies to deal with the Russian energy crisis was nearly seven times higher than the total financial support disbursed by the EU to Ukraine since the full-scale invasion. “The stakes couldn’t be higher,” said Benjamin L. Schmitt, Senior Fellow at both CEPA and the University of Pennsylvania’s Kleinman Center for Energy Policy. “Continuing Russian gas transit in any form — whether through an overt contract extension with Kremlin-controlled Gazprom, or under any other name, but still de facto Russian — would be dangerous for Ukraine.”
Schmitt warned that “any extension of Russian gas transit by Ukraine would undermine the real need to send the message to (especially) Western European leaders that there cannot be a return to energy business as usual with Putin’s Russia. It would give a talking point that Ukraine can ill-afford — fair or not — to German and even US lobbyists calling for a resurrection of the Nord Stream pipelines, that if Ukraine won’t quit the Russian gas habit, why should they?”
As for the argument from Kremlin-friendly Slovakia that importing gas from alternative sources in Western Europe would incur an additional €220m in costs is both shortsighted and disingenuous.
For a country of 5.5 million people, this translates to an extra €3.30 per person per month — the price of a cup of coffee.
Ukraine is paying an incomparably higher price: the destruction of cities, energy infrastructure, loss of innocent lives, and a relentless battle for its sovereignty against Russian aggression. “Is the inconvenience of slightly higher energy bills truly more burdensome than the cost of freedom
and human dignity that Ukraine shoulders every single day?” Makogon said. “Supporting Ukraine by reducing dependency on Russian gas isn’t just a financial decision; it is a moral imperative. It’s a small price to pay for standing on the right side of history.”
Sergiy Makogon is a Non-resident Senior Fellow at the Center for European Policy Analysis (CEPA.) He is a seasoned executive and energy expert with over 20 years of expertise in the Ukrainian and Central and Eastern European (CEE) gas markets, as well as European security.
Dr. Benjamin L. Schmitt is a Senior Fellow at the Department of Physics and Astronomy and the Kleinman Center for Energy Policy at the University of Pennsylvania, a Senior Fellow for Democratic Resilience at the Center for European Policy Analysis, a fellow of the Duke University “Rethinking Diplomacy” Program, and a Term Member of the Council on Foreign Relations. (Twitter: @BLSchmitt).