MOSCOW: The European Union proposed a price cap on Russian gas on Wednesday hours after President Vladimir Putin threatened to halt all supplies if they took such a step, raising the risk of rationing in some of the world’s richest countries this winter.
The escalating standoff threatens to send sky-high European gas prices higher still, adding to already eyewatering bills EU governments are paying to stop their energy providers collapsing and prevent cash-strapped customers freezing in the cold months ahead. Europe has accused Russia of weaponising energy supplies in retaliation for Western sanctions imposed on Moscow over Ukraine invasion. Russia blames those sanctions for causing the gas supply problems, which it puts down to pipeline faults.
EU energy ministers are due to hold an emergency meeting on Friday to discuss how to tackle the energy crisis. “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 said. The Commission will also put forward other measures including a mandatory cut in electricity use during peak hours, and a cap on revenues of energy generated from other sources.
Speaking earlier at an economic forum in Vladivostok,Putin anticipated the move, warning that supply contracts could be ripped up. “We will not supply anything at all if it contradicts our interests,” Putin said. “We will not supply gas, oil, coal, heating oil — we will not supply anything. ” Europe usually imports 40% of its gas and30% of its oil from Russia. Putin also rejected Western claims that Moscow was using gas as a weapon to break opposition to its invasion of Ukraine.
However, there were signs of division among EU members over the cap plan. Czech industry minister said it should be taken “off the agenda for Friday’s meeting”. The Czechs are helping to guide discussions as holders of the EU’s rotating presidency. “It is not a constructive proposal. It is more another way to sanction Russia than an actual solution to the energy crisis,” Jozef Sikela said.