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Ukraine War Throws the Eurozone Not Ready to Go Green into a Stagflation Energy Crisis

Special to Climate Depot 

Ukraine War Throws the Eurozone Not Ready to Go Green into a Stagflation Energy Crisis

By Jerome R. Corsi, Ph.D.

Despite the nearly universal agreement in Europe that burning hydrocarbon fuels cause global warming, Russia’s invasion of Ukraine makes clear how dependent the Eurozone yet remains on oil and natural gas.  The most significant impact of the EU sanctions against Russia has been to cause a dramatic increase in Eurozone inflation while simultaneously triggering a downturn in EU economic growth.

In a sixth sanctions package on Russia since the invasion of Ukraine, the European Union (EU) agreed on Monday, May 30, 2022, to ban 90 percent of Russian crude oil by the end of 2022.  

In a typical loophole, the EU agreement made another “temporary exception,” primarily to accommodate Hungary, allowing EU nations to import crude oil from Russia by pipeline for the immediate future.  But even with the loophole, the EU’s newly imposed sanctions reduce the flow of Russian crude oil to the EU to a trickle.  

Russia delivers some 70 to 85 percent of the crude oil exports to the EU via tankers and ports.   Russian ships carry crude oil to the EU from ports on the Baltic Sea and the Black Sea, with smaller volumes from Russia’s Artic terminals.  Approximately 36 percent of the EU’s oil imports come from Russia.

Ten days earlier, on May 20, 2022, Germany and Italy opened Gazprom bank accounts in rubles.  Reuters reported that Brussels left the EU guidance on the natural gas purchases from Russia “intentionally vague” to create a level of “creative ambiguity,” leaving the door open for “business as usual” with Russian energy giant Gazprom.  European Commission updated written guidance in April and made no mention of whether rubble accounts would breach EU sanctions.

Russia supplies the EU with 40 percent of all the natural gas the EU imports, and Germany depends on Russia for almost half the natural gas the country needs.  The EU sanction policy has called to end Russian coal and natural gas imports by year-end 2022.  Still, realistically the EU has admitted it cannot wholly break energy dependence on Russia before 2027.

Eurozone inflation registered 8.1 percent in May 2022, up from April’s record high of 7.4 percent and above expectations of 7.8%.  The May Eurozone inflation rate set a new high for the seventh month in a row.  In the wake of the EU announcement to cut imports of Russian crude oil by 90 percent by the end of the year, Brent crude oil futures jumped up 1.44 percent to $123.42/barrel.

European Commission economic forecasts published on May 20, 2022, cut Eurozone growth expectations to a likely 2.7%, down from the previous expectations of 4 percent.  The European Commission remained optimistic that Eurozone inflation would not surge much past 6 percent in 2022 while admitting that some central and eastern European countries will likely see double-digit price rises in 2022.

“Russia’s invasion of Ukraine is causing untold suffering and destruction, but it is also weighing on Europe’s economic recovery,” said EU Economic Commissioner Paolo Gentiloni in a statement issued May 30 with the economic forecasts.  “The war has led to a surge in energy prices and further disrupted supply chains, so that inflation is now set to remain higher for longer.”

Responding to the European Commission’s decision to cut Russian oil imports, Michael Ulyanov, Russia’s permanent representative to international organizations in Vienna, said Russia would find “other importers “to replace the European Union.  

Meanwhile, Putin has used the EU sanctions as an opportunity to move the ruble to a gold standard, requiring payments for coal, oil, and natural gas exports.  “What the Russians did was genius, I hate to say it,” Jack Bouroudjian, former president of Commerce Bank in Chicago and now chairman of Global Smart Commodity Group, told Forbes.  “It forces people to go to the Russian central bank and pay gold to get rubles to make the [oil and natural gas] transactions.”  

Forbes noted that the rubble had been trading in the range of 70 to 80 for a U.S. dollar.  After the sanctions, it plummeted to 120.  “Now the ruble basically recovered, trading 80 rubles to the dollar,” Bouroudjian explained.  “And it’s because of the way they pegged the ruble to gold.”

On May 31, 2020, Gazprom suspended natural gas supplies to the Netherlands after Dutch trader GasTerra refused to pay in rubles.  In neighboring Denmark, Orsted may be next after Danish power company Orsted suggested the Gazprom contract to supply natural gas had no provision requiring payment to Russia in rubles.


Since 2004, Jerome R. Corsi has published 25 books on economics, history, and politics, including two #1 New York Times bestsellers.  In 1972, he received his Ph.D. from the Department of Government at Harvard University.  He currently resides in New Jersey with his family. His next book, entitled The Truth About Energy, Global Warming, and Climate Change: Exposing Climate Lies in an Age of Disinformation, will be published on June 28, 2022.