By Sankalp Wadhwani
Abstract
The Ukraine war has fundamentally reshaped the global energy landscape, precipitating a profound East-West dynamic shift. As Russia, a pivotal energy supplier to Europe, faced stringent sanctions, the resulting economic fallout led to soaring unemployment and inflation in Europe. The war expedited the West’s transition to sustainable energy, with wind and solar power anticipated to surpass fossil gas in the EU’s electricity output in 2022. Despite these strides, emerging East economies remain tethered to Russian oil and gas due to existing fossil fuel infrastructure. This evolving energy landscape underscores a growing divide between the West and East, with the Russia-China nexus fortifying and Europe coalescing against Russia on multiple fronts. In essence, the Ukraine conflict has catalysed seismic shifts in global energy geopolitics, underscored by the intricate interplay of energy security and geopolitical dynamics.
Introduction
The Ukraine war has changed global dynamics due to its massive impact on energy security. Due to the war, Russia which has been a major energy supplier to Europe came under heavy sanctions, leading to unemployment, and high inflation in Europe, in addition new suppliers like Norway, the Middle East, and the United States to fill the void in the Western energy supplies. From the beginning of the war, it was predicted by various organisations that Russia would be using its energy diplomacy due to its past actions and Europe’s growing dependence on Russia for energy supplies. In Europe, the COVID-19 pandemic slowed the increase in demand for natural gas leading to Europe’s gas stockpiles being 10 years low.
Using energy supply to its advantage and to achieve the ultimate aim of maintaining its dominance has been Russia’s old tactic of diplomacy. Russia had planned for a long time to use energy blackmail as a means of influencing European politics, forcing Ukraine back into its area of influence, and eliminating Ukraine as a vital transit state for Russian energy exports. More importantly, in 2006 and 2009, Russia stopped exporting gas to Ukraine due to disagreements over prices and debt. However, during this war, the Russian gameplay backfired, ultimately leading to drastic changes in the East-West energy dynamic.
East-West Divide
Europe for the longer run, aims to become self-reliant by using renewable energy, and for the short run, using alternate supplies from the U.S., Norway, and the Middle East. Ursula von der Leyen, President of the European Commission, stated that switching from Russian fossil fuels to renewable energy was the right course of action, “not only for the climate but also… to gain independence and to have security of energy supply,” when she announced a new energy security financing drive in October 2022. Furthermore, as Europe will not deal with Russia for energy in the future, this will damage Central Asia and the Caucasus region the most. As this region is closely associated with Russia, and if Russia becomes economically weak due to sanctions on Russian energy, it will have negative consequences for the Central Asian and Caucasus regions. Inflation, external and fiscal accounts, and economic growth can all be hampered by close trade and payment system links. Government subsidies aimed at containing inflation could put a strain on already fragile fiscal accounts. A worsening of external financing conditions could lead to capital flight and create additional growth obstacles for highly indebted nations. Price increases could intensify social unrest.
In response, Russia deepened its ties with its neighbour China and old friend India which are emerging economies and heavily dependent on fossil fuel to compensate for the loss it faced due to sanctions. Moscow has declared its intention to increase eastern sales with the proposed Power of Siberia 2, adding another 50 billion cubic meters to export capacity annually in that direction. However, the Kyiv Institute estimates that since February 2022, Russia has lost $40 billion in gas revenues and $100 billion in oil export revenues. That exceeds Russia’s annual defence budget. With Russia, the other developing nations will also face issues as, despite Russia building strong partnerships with the developing nations for energy supply, the developing nations could still face challenges for energy supply. With Russia’s piped gas supply collapsing, Germany and many of its neighbors are now forced to look elsewhere for energy, possibly in Asia, the Middle East, or Africa. According to Froggatt ( deputy director of the Chatham House Environment and Society programme), “these two things—Europe consuming all of the world’s energy and the worry about becoming overly dependent on China for the supply of renewable energy materials—have had knock-on geopolitical implications.”
The developing economies will not only face economic competition with Europe for energy which will make developing economies get attracted to Russian energy but will also have security issues due to this divide. This is evident as the West in efforts to cut the dependence on Russia’s blackmail has increased the competition for gas and opened up new political avenues for Israel and its neighbors. Still, these political opportunities also give rise to conflict, as in the cases of Algeria and Morocco and Cyprus and Turkey.
Altogether this energy divide between the West (developed countries) and the East (developing countries) could lead to disagreements or difficulties between both sides on issues like climate change, and sustainable energy. This will damage the efforts toward sustainable goals like the Paris Climate Accords. Due to this tussle between both sides, no one will win, and all will lose as climate change is one of the most challenging issues which requires global cooperation.
Conclusion
In conclusion, this war has led to the West embracing sustainable energy, as securing green energy has become a matter of energy security not only climate change. Aiming to reduce imports from Russia, has caused a surge in wind and solar power generation, which is expected to record 22.3% of the EU’s electricity output in 2022, overtaking fossil gas, which is expected to account for 19.9% for the first time. On the other hand, the emerging economies in the East are still dependent on the oil and gas from Russia since they are still having fossil fuel-dependent infrastructure. To some extent, it has succeeded. China has inked a new 30-year gas agreement and is currently the second-largest importer of Russian oil, after India. Altogether, this also showcases the growing disparity between West and East, where the Russia-China nexus is strengthening and Europe has unified against Russia on multiple fronts.
Author’s Bio
Sankalp Wadhwani is third year B.A. (Hons.) Global Affairs student at Jindal School of International Affairs. His key interest areas are counter-terrorism, international relations, defence strategies, foreign policies, etc.
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