No leverage over Russia? Anders Aslund, an economist and Ukraine expert, knows better
No leverage over Russia? Anders Aslund, an economist and Ukraine expert, knows better:
“The West has mainly four means to do so. First, due diligence is an underestimated force. With its great economic power, Europe can have great impact just by applying existing rules more rigorously. By normal standards, many big Russian state companies would be considered organized crime syndicates—notably Gazprom, because its management and state top officials tap some $30 billion from that company each year. According to current legal standards, European financial institutions should not be allowed to deal with the big Russian state companies. To a large extent, the United States has already implemented such rules.
Second, both the United States and the European Union have rigorous rules against money laundering. Many Russian state officials have bank accounts in EU countries. That is against the rules, and rules should be followed.
Third, the European Union has already sanctioned Belarusian and Ukrainian authoritarian kleptocrats. Why not go for the worst kleptocrats in Moscow? The routines are in place, and this would hurt the Kremlin kleptocrats the most. Essentially such a step would be a matter of properly applying existing legislation on money laundering.
The fourth and truly nuclear option would be an EU gas boycott. One quarter of Russia’s exports consist of gas that is almost exclusively exported through pipelines to Europe at excessive prices and under dubious contracts. But the energy landscape has changed in recent years, notably because of new technologies that have opened up new sources of natural gas in North America and elsewhere around the world. As a result, Europe can turn the tables on Gazprom. After its prior gas supply cuts in 2006 and 2009, Europe has expanded its liquefied natural gas (LNG) imports from other sources. Europeans have also constructed gas converters and built up months of gas storage. The European Union can easily and cheaply replace Gazprom’s gas with LNG and gas from Norway, while Gazprom cannot export its gas anywhere because of its neglect of alternative infrastructure. If the European Union sanctions Russia’s gas supply to Europe, Russia would lose $100 billion or one-fifth of its export revenues, and the Russian economy would plunge into crisis.”