The United States leads the world by an incredibly wide margin in financial aid
to Ukraine. As of the writing of this script, America has given approximately 50 billion in
aid to Ukraine. This has bought much needed military equipment, helped pay salaries,
and provide vital relief for millions of Ukrainian refugees.
As incredible as this staggering amount is, it pales in comparison with the financial
aid that Europe gives Russia, equaling to about 22 billion Euros every single month.
Shortly after the start of the invasion, the world levied heavy sanctions on Russia in a bid
to seriously economically damage it and hopefully force it to end its invasion of Ukraine. However,
right off the bat the European Union refused to take steps necessary to truly hurt the
Russian economy: ban all Russian banks from the SWIFT international payment network.
This highly secure payment network connects banks all over the world.
The Society for Worldwide Interbank Financial Telecommunications, or SWIFT, allows for the
sending and receipt of international payments. With over 11,000 banks in the network, over 33
million transactions happen every single day on the most massive, and secure, banking network in
the world. But SWIFT itself isn't a bank, merely an in-between that allows different banks to
connect with each other. Thus the consumer can easily pay from his bank account to a member on
the other side of the world using a different bank altogether. Without access to SWIFT,
a nation would be extremely hard-pressed to interact financially with the world,
and have to take on the additional time and expense of directly transferring funds
from one bank to another in order to receive or give out payments.
Being removed from SWIFT would be a catastrophic blow to the Russian Federation, and yet many
European states lobbied hard for Russia to be spared this most damning of sanctions. In the end,
most, but not all Russian banks were removed from the network, and while this did have a
significant impact on Russian businesses' ability to conduct international business, the banks that
remained connected allowed Russia to mitigate any of the damage to its all-important energy sector.
And with Russia, it's all about energy. The Russian economy is poorly diversified,
with as much as 40% of the economy relying on the production of energy.
This makes the Russian economy extremely vulnerable to disruption, and it's exactly
why Ukraine pushed so hard for Russia's energy sector to be targeted directly with sanctions.
With energy exports making up around 60% of the Russian budget, a ban on Russian oil
would be a death knell to the Putin regime. So why in the world hasn't Europe acted yet?
After sanctions against it, the ruble crashed and threatened to take the Russian economy with it.
Yet almost immediately it bounced back to pre-invasion levels. This was foreseen by
anyone who understood that energy is Russia's biggest lifeline. Sure, pulling McDonalds out
of the country cost thousands of jobs, and ADIDAS’ exit from Russia has put the country
into a full-blown tracksuit emergency, but energy is what keeps the most important
parts of the Russian economy moving. With the bounce-back of the ruble, Putin was able to
mock western sanctions and point out to his own citizens that the ongoing sanctions have little
effect on Russia. This allows him to continue garnering domestic support for his invasion.
Lithuania was the first European country to pull the plug on Russian natural gas,
with its foreign minister, Gabrielius Landsbergis, tweeting out, “Dear EU friends,
pull the plug. Don't be an accomplice.” But while the European Union is mulling over restrictions
on coal imports from Russia, gas remains a hot button topic for most European countries.
Via just pipelines alone, Russia provided 42 percent of Europe's gas imports,
a staggering amount of vital energy to fuel modern cities. In 2020 alone the EU spent
60.1 billion in Russian energy, making energy two-thirds of all Europe's imports from Russia.
But petroleum absolutely dominates the import figures for Europe.
With 8 billion Euros in natural gas imported, Europe also imports just over 48 billion in
petroleum and petroleum products from the energy super-state. And thanks to Russian
law allowing only the government-owned Gazprom to operate pipelines into Europe,
most of this money is going straight into the checkbook of the Kremlin,
which in turn uses it to continue supporting its war in Ukraine. But who are the worst offenders?
Despite warnings against it by President Barack Obama, Germany basically went all-in
on Russian energy imports, and in 2020 Germany dominated natural gas imports from Russia,
with 45.8 billion cubic meters pumped straight into the country from Gazprom. Next was Italy
with 20.8 billion cubic meters, Turkey with 16.4 billion cubic meters, Austria with 13.2,
France with 12.4, Netherlands with 11.9, Poland with 9.7, Hungary with 8.6, Slovakia with 8.6
as well, and the UK with 6.0. After this, imports fall off steeply, with the Czech
republic importing 5 billion cubic meters and the rest of Europe coming in far under that figure.
Europe is clearly a big customer for Russia, and exports to Europe of all minerals- including
oil- makes up half of all Russian exports. Couple this with current sky-high oil prices
and Russia is being enriched at a rate that far surpasses any amount of financial aid to
Ukraine. According to Russian law, all revenue above $43 per barrel of oil goes straight into
the government's pockets. Currently as of the writing of this script oil is at $110
per barrel, which means that over half of the price of each barrel of oil paid to Russia
goes directly into government coffers. Naturally, through taxes Russia scoops
up another few percentage points of anything below $43 per barrel. Just Europe's energy
imports alone is more than enough to pay for Russia's entire military- which highlights the
precarious situation that Russia would find itself in if Europe weaned itself off Russian energy.
But Russia has worked hard for years to ensure this didn't happen, cozying up to its biggest
energy buyers and infiltrating political movements across the EU. Russian clandestine activities have
targeted environmental movements that sought to wean their nations off non-renewable energy,
and at the same time used those same movements to protest against the current operation of,
and building of new, nuclear power plants. This was all done with one goal in mind:
keep Europe sucking on the petroleum and natural gas teat of Russia. As we have now seen,
Europe's reliance on Russian energy has allowed the nation to do as it pleases in Ukraine.
Yet now there's a growing movement to end all dependence on a nation utterly hostile
to western civilization. Poland's Prime Minister Mateusz Morawiecki was one of
the leading figures of this movement, stating that Europe needed to end its dependence on Russian oil
and natural gas so that the nation would not use those funds for further aggression.
Some progress has been made, with Germany shutting down the Nordstream 2 pipeline
that ran from Germany to Russia- yet another project opposed by two American presidents.
The pipeline was not yet operating though, so while it denied Russia some income,
it was largely a symbolic move that Germany would at least not seek even
further energy ties between itself and Russia. Yet Europe as a whole-
and specially Germany- has been extremely reluctant to directly target Russian energy.
Putin however has been proactive, and he has cut off natural gas exports to both Poland and
Bulgaria, and is now threatening to do the same to other nations. Prior to this Putin
had demanded that all future payments for energy be made in rubles so that
the value of the currency could be propped up and further economic collapse contained.
Europe had denied this out of hand, as current contracts stipulate that gas
and other energy products are to be paid for in either dollars or euros.
Yet just a single day after Putin shut off the gas to Poland and Bulgaria, German and Italian energy
companies practically tripped over themselves to open up accounts with Russian bank Gazprombank
in order to comply with Putin's orders that purchases be paid for in rubles.
With $850 million a day being paid by Europe to Russia, sanctions are not hitting Russia
nearly as hard as they should be, and subsequently the war continues to rage.
Yet Putin's threats have galvanized Europe to become energy independent, and have inadvertently
led to a resurgence of a green movement on the continent. Facing the reality of being
unable to effectively confront Russia as long as it provides for its energy needs, Europe has
taken to looking at all sources of new energy, including renewable, with increased vigor. In the
coming years we should see an expansion of green energy across Europe, as many European nations are
reluctant to turn to the Middle East for energy needs due to political concerns in the region.
Now the European Union is working to phase out Russian oil by the end of the year, and they are
hoping to do the same with natural gas either by the end of this year or within a few years.
This will be a serious hit to Russia's coffers, but the biggest benefit will be freeing Europe
from the influence of a state that is overtly hostile to it. As long as Russia controls European
energy, the European Union will never be able to effectively oppose Russian foreign policy.
And as the shut down of exports to Poland and Bulgaria have shown, some European countries are
so dependent on Russian gas and oil that they threaten the very unity of the EU.
Now go watch What Is Wrong With Russia's Military, or click this other video instead!