EU proposes price cap on Russian gas following threats from Putin to terminate all energy supply transfer

AP Photo/Virginia Mayo

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The European Union has proposed a price cap on Russian gas, hours after Russian President Vladimir Putin threatened to terminate all energy supplies if they took such a step, which raises the strong possibility of rationing in European countries this winter. 

Apparently refusing to back down from existing sanctions, the economic bloc is playing a game of chicken with the Russians as winter nears, and reserves of oil and gas continue to dwindle in Europe. 

The standoff is threatening to drive up already skyrocketing prices even further, which is being passed down to working and middle-class citizens, who have already seen their electricity bills more than double over the past month. 

Some citizens have already begun taking to the streets in Germany and the Czech Republic to protest the soaring prices and demand that their governments step back from the brink with Russia and commit to neutrality in the ongoing conflict in Ukraine by lifting sanctions on their resource provider – Russia. 

Amid the escalating standoff, European leaders accused Russia of weaponizing its energy supplies in retaliation for Western sanctions. Russia, meanwhile, blames the sanctions for causing problems with the gas supply, and says that it will only resume the flow of the Nord Stream 1 pipeline if the West collectively agrees to ease its sanctions. 

Addressing the public, Putin said in a speech that all its existing trade agreements with European countries could be ripped up should Europe impose price caps. He warned that Europe risks being frozen like a wolf’s tail in a famous Russian fairy tale, the Washington Post reported. 

“Will there be any political decisions that contradict the contracts? Yes, we just won't fulfil them. We will not supply anything at all if it contradicts our interests,” Putin stated at an economic forum in Vladivostok. “We will not supply gas, oil, coal, heating oil - we will not supply anything.”

“We would only have one thing left to do: as in the famous Russian fairy tale, we would sentence the wolf's tail to be frozen,” he added. 

Despite Putin’s threats, the EU plans to go ahead and impose a price cap on Russian gas, as well as a ceiling on the price paid for electricity from generators that do not run on gas, Reuters reported. 

“We will propose a price cap on Russian gas... We must cut Russia's revenues which Putin uses to finance this atrocious war in Ukraine,” European Commission President Ursula von der Leyen told reporters.

Despite the EU’s push for a unified move to cap gas prices, some member nations like the Czechs are calling for the proposal to be scrapped. 

“It is not a constructive proposal, according to me. It is more another way to sanction Russia than an actual solution to the energy crisis in Europe,” said Czech Industry Minister Jozef Sikela. 

The move has also faced criticism from Eurelectric, which represents the European electricity industry. “The root cause of the problem is a shortage of gas supply and our addiction to imported fossil fuels. Governments should seek to tackle this rather than resorting to distortive, ad-hoc interventions in the electricity market,” stated Kristian Ruby, Secretary General of Eurelectric.