One of Europe’s biggest economic fears since Russia invaded Ukraine has been a cut-off in Russian natural gas supplies. This week such a threat seemed more real. G7 ministers rebuffed Vladimir Putin’s demand to switch to paying in roubles, not euros, for gas; Moscow warned it would not continue deliveries “for free”. Germany, Austria and others began preparations for rationing. Despite further verbal threats from Russia’s president, and European warnings that they were preparing for all contingencies, a face-saving solution appears in prospect. After much smoke and mirrors from the Kremlin, what the episode may highlight is Russia’s difficulty in imposing “counter-sanctions” that do not inflict still greater harm on its own economy.
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