“We need to cut the revenue from Russia that Putin is using to fund this atrocious war in Ukraine,” European Commission President Ursula von der Leyen told reporters on Wednesday.
The European Union has proposed a cap on Russian gas prices just as Russian President Vladimir Putin warned that such a move would cause Moscow to cut off all energy supplies.
Europe is in the midst of an escalating standoff with Russia that could push already skyrocketing European gas prices higher ahead of the cold months ahead.
Brussels accuses Moscow of militarizing energy supplies in retaliation for Western sanctions imposed on Moscow following its invasion of Ukraine.
Russia continues to insist that sanctions are to blame for supply problems, which it blames on pipeline defects.
Russia’s Gazprom on Friday completely suspended gas supplies through the Nord Stream 1 gas pipeline to Germany after it said it discovered an engine oil leak during maintenance work.
Putin has warned that contracts could be scrapped if there is a price cap.
“We won’t provide anything if it contradicts our interests,” Putin said Wednesday at an economic forum in Vladivostok.
“We won’t supply gas, oil, coal, fuel oil – we won’t supply anything,” Putin said.
Europe typically imports around 40% of its gas and 30% of its oil from Russia.
Despite the warnings, the EU plans to move forward with a price cap on Russian gas and also a cap on the price paid for electricity from generators that do not run on gas.
“We will propose a price cap on Russian gas… We need to reduce the revenue from Russia that Putin is using to fund this atrocious war in Ukraine,” European Commission President Ursula von der Leyen told reporters.
EU energy ministers are due to hold an emergency meeting on Friday.
The Netherlands, which has always opposed a gas price cap, would support one that targets Russian gas, a source familiar with the matter told Reuters news agency on Wednesday.
However, a Czech minister said earlier that it should be removed from Friday’s meeting agenda. The Czechs are helping to shape the discussions as holders of the rotating EU presidency.
Reduce production and spend billions
On Wednesday, Ukrainian President Volodymyr Zelenskyy thanked the EU for confirming five billion euros ($4.97 billion) in macro-financial assistance. He also added that the country needed a “full-fledged” financing program from the International Monetary Fund.
Had a phone conversation with 🇩🇪 Chancellor @OlafScholz on a wide range of topics. Thanked for the confirmation of macro-financial assistance of 5 billion euros from the EU, stressed the need for a full-fledged IMF program. Discussed plans to further strengthen defense capabilities 🇺🇦.
— Volodymyr Zelensky (@ZelenskyyUa) September 7, 2022
Zelenskyy made the comments in a Twitter post following a conversation with German Chancellor Olaf Scholz, who he said discussed plans to further strengthen Ukraine’s defense capabilities.
Europe is also spending billions of dollars in support to protect consumers from the impact of soaring energy costs.
Britain’s new Prime Minister Liz Truss is expected to unveil her plans on Thursday, with the bill for a price freeze expected to rise to 100 billion pounds ($115 billion).
Many European companies have already been forced to cut production.
Eurelectric, a body representing the European electricity industry, has criticized plans for an EU cap of 200 euros per megawatt hour on the price of electricity from generators that do not run on gas.
“The root cause of the problem is a shortage of gas supply and our reliance on imported fossil fuels,” said Kristian Ruby, secretary general of Eurelectric. “Governments should seek to address this issue rather than resorting to ad hoc and distorting interventions in the electricity market.”
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