the incredible hoard of Russia to finance its war in Ukraine

At the end of this painstaking work in the accessible databases, the conclusions of the independent research institute, based in Helsinki, Finland, are overwhelming: the whole world is funding with the help of billions the ruthless war that Vladimir Putin is waging in Ukraine. And, behind the curtain of sanctions and rhetoric marked with firmness, the European Union and its economic players are paying price on the fingernail for the rain of missiles falling on the Ukrainians.

A 60% increase in export prices

In the time interval studied, Russia derived 93 billion euros from its fossil energy exports (gas, oil, coal), or almost a billion euros per day. The order of magnitude is not a revelation. It has already been mentioned by informed observers. But the detail of the generous funders and the evolution of the flows were perhaps not approached with precision. We now know that buyers (public and private) located in the 27 member countries of the European Union (EU) are the main contributors, with 57 billion euros. Using figures from military analysts, Créa recalls that its military operations in Ukraine impose a financial burden on Russia estimated at 840 million euros per day. The sale of its fossil fuels abroad does more than fill this chasm.

The jackpot stems from both a windfall and a strategy: the fear of energy shortages and the frenetic increase in demand which overwhelmed the international markets this winter, and the scarcity of supply – particularly on gas – that Russia put it into practice. As a result, “export prices for Russian energy were on average 60% higher than those practiced during the year 2021”, improved Crea analysts. The Russian power is only slightly worried. The Créa recalls that Anton Silouanov, Vladimir Putin’s Minister of Finance, has publicly shown that the country will allow the proceeds of its energy sales of 14 billion euros this year.

Russia to increase revenue from energy sales by 14 billion euros this year

Disparate efforts in Europe

The reactions of the international community are disparate. The United States has indeed closed the door to Russian fossil fuels. The 27 members of the EU are also making efforts to reduce their addiction. In May, on a recorded drop in their imports of 16% compared to the first times of the invasion in Ukraine, in February/March. It is unequal after the countries. The fall reached 56% for Spain and 51% for Poland. The dip in the curve is limited to 13% for Italy and 8% for Germany.

The descent is more marked when we examine the purchases of Russian gas, whose pipelines tie the EU into dependence: -23% between the end of February and the beginning of June, -30% in monthly accumulation in May 2022 compared to May 2021. This is due to the will of the west, but also to the cuts decided by Russia in the place of Poland, Bulgaria and Finland. Cuts offset by the rerouting of Russian gas to these three countries from their neighbours… The about-face should be more brutal on oil. The European Union is supposed to deprive itself of 93% of its black gold flows from Russia by the end of the year.

France pounced on Russian LNG

The Crea experts did not disobey the angry subjects: the countries which took advantage of the first hundred days of the war to expand their purchases. They cite India, China and… France among the main ones. The tricolor economic players have especially thrown themselves on Russian liquefied natural gas. According to the institute, twelve LNG carriers with bunkers inflated with Russian LNG unloaded at the Montoir-de-Bretagne terminal, in the Loire estuary. Five others to that of Loon-Plage, near Dunkirk, in the North. LNG deliveries were paid for in cash, “apart from pre-existing contracts”, supports Crea. This analysis applies to France but also to Belgium and the Netherlands for oil purchases on the “spot” market, with immediate payment for cargoes.

Twelve LNG carriers with bunkers swollen with Russian LNG unloaded at Montoir-de-Bretagne

The use of Russian fossil fuels is part of a clear intention in China and India. During the first hundred days of the war, China passed in front of Germany to become the first customer. The opportunism of India and its companies is particularly visible. Only 1% of Russian crude oil went to the subcontinent before the attack. In May, it was 18%. “Indian refineries have become major importers of Russian crude,” notes Crea. He notes that once refined, much of this oil is re-exported. 20% of the total takes the route of the Suez Canal towards the United States, France, Italy or Great Britain.

Leave a Comment