Why Austria Is Struggling to Break Away From Russian Gas

Within the 17 months since Moscow ordered troopers into Ukrainian territory, international locations throughout Europe have moved with shocking pace to scale back their longstanding dependence on low-cost Russian fuel.

Germany, which obtained 55 p.c of its provide from Russia earlier than the battle, now imports zero. Poland, Bulgaria and the Czech Republic have halted or are near halting flows. And Italy has been steadily trimming imports, and pledges to be freed from Russian pure fuel by the tip of this yr.

In contrast, Austria, which acquired practically 80 p.c of its fuel from Russia earlier than the invasion, nonetheless obtained greater than half its complete from Russia in Could. And in March, when demand was increased, the determine reached 74 p.c. So long as Russia is promoting fuel, Austria will purchase it, the chief government of the Austrian power firm OMV Group stated this month.

The federal government’s difficulties in weaning itself off Russian fuel, which it has pledged to do, have drawn complaints from critics who say Austria’s fuel funds are serving to to finance Moscow’s battle machine.

“I don’t think they are doing enough,” stated Anne-Sophie Corbeau, a analysis scholar on the Heart on International Power Coverage at Columbia College’s Faculty of Worldwide and Public Affairs. “The government is among the friendliest toward Russia.”

Austria, the primary Western European nation to signal a fuel contract with the Soviet Union in 1968, has for many years been closely reliant on fuel piped in from Russia.

A significant cause the European Union has not initiated any formal sanctions in opposition to Russian fuel imports, like people who apply to Russian oil and coal, is that Austria and different large patrons have argued they want it. And a few European international locations stay patrons of Russian liquefied pure fuel, which arrives by ship, though the general quantity offered is a small fraction of the volumes that used to reach to the continent by pipeline.

A right away cutoff would result in financial spoil and mass unemployment, Chancellor Karl Nehammer of Austria warned final yr.

Leonore Gewessler, the power minister and a member of the progressive Inexperienced Get together in Austria’s coalition authorities, stated the federal government remained dedicated to ending imports of Russian pure fuel by 2027.

However “it’s not easy to undo years and decades of wrong policies in just a few months or in a year,” Ms. Gewessler added. And as a landlocked nation, Austria, in contrast to Germany, Italy or Greece, can’t merely construct terminals for ships to hold in liquefied pure fuel.

The query of whether or not the federal government in Vienna is working quick sufficient is as a lot a political downside as it’s a logistical and financial one.

Austria stays formally impartial — a precept written into its Structure since 1955, when the tip to its postwar occupation was in the end negotiated with the Soviet Union. Consequently, it’s not a member of the navy alliance the North Atlantic Treaty Group.

The nation has strongly condemned the invasion of Ukraine, taken in refugees and permitted weapons shipments to Ukraine to cross its borders. However whereas the Russian power large Gazprom abruptly stopped supplying many European international locations, Austria has continued to obtain its full allotment and secured approval from Russia to pay with euros as an alternative of rubles.

Prime Minister Viktor Orban of Hungary is clearly Russia’s closest ally within the European Union. However Vienna’s reluctance to change extra shortly to different power sources has prompted issues that Austria stays too intently tied to Russian pursuits.

“The political elite in Austria is, in my opinion, among the most sympathetic to Russia,” stated Grzegorz Kuczynski, director of the Eurasia program on the Warsaw Institute. “Therefore, I think Vienna will try to influence a less confrontational E.U. policy toward Moscow.”

Mr. Kuczynski referred to figures like Karin Kneissl, a former international minister who, at her marriage ceremony in 2018, brought on a sensation by dancing with Vladimir V. Putin, the Russian president, and accepted his reward of sapphire earrings value 50,000 euros. In 2021, she joined the board of Rosneft, Russia’s state-owned oil firm, although she left below strain after sanctions had been proposed in Could 2022.

A refinery in Moscow. Whereas the Russian power large Gazprom abruptly stopped supplying many European international locations, Austria has continued to obtain its full allotment.Credit score…Natalia Kolesnikova/Agence France-Presse — Getty Photos

Different Austrian political figures additionally had ties to Russia earlier than the invasion final yr. A number of former prime nationwide leaders served on the boards of Russian companies and organizations. Wolfgang Schüssel, a former chancellor, was on the board of Lukoil, the most important non-public company in Russia. He resigned a month after Russia invaded Ukraine in February 2022.

The far-right Freedom Get together, which has had shut hyperlinks to Mr. Putin’s United Russia occasion and has been gaining floor in public opinion polls, walked out of Parliament in March throughout a speech from Ukraine’s president, Volodymyr Zelensky.

“There are political players which are not fully on board” relating to denouncing Russian coverage or hastening the transition to renewable power, Ms. Gewessler, the power minister, stated.

The present take care of Gazprom, whose signing in 2018 was attended by Sebastian Kurz, the Austrian chancellor on the time, and Mr. Putin, requires Austria to purchase six billion cubic meters of fuel per yr, and stays in impact for an unusually lengthy interval — till 2040. The corporate was additionally a monetary backer of the now-defunct Nord Stream 2 pipeline between Russia and Germany,

For the reason that invasion started, OMV, the Austrian power firm, has spent €7 billion, about $7.7 billion, on Russian fuel.

Alfred Stern, the chief government of OMV, stated in a current interview with The Monetary Occasions that “we will continue to take these quantities from Gazprom” so long as they’re accessible.

OMV didn’t reply to repeated requests for remark. However on Friday the corporate introduced a 10-year settlement to purchase fuel from the power large BP starting in 2026, to “drive forward our ongoing diversification of supply source,” Mr. Stern stated in an announcement.

The Austrian authorities owns roughly 30 p.c of OMV. The United Arab Emirates owns 25 p.c.

Georg Zachmann, a local weather and power knowledgeable on the Bruegel suppose tank in Brussels, stated strategic selections in regards to the nation’s power provide needs to be made in authorities workplaces, not boardrooms.

“OMV is a private company, and they’re trying to make as much money as possible for their shareholders,” Mr. Zachmann stated. “It would be in the interest of the Austrian government and European policymakers to constrain their ability to do business.”

He acknowledged that lowering provides from Gazprom would inevitably imply increased costs.

Official selections could also be overtaken by occasions in any case. The present five-year contract, which has allowed Gazprom to proceed transport pure fuel from Russia to Europe in pipelines that run by Ukraine regardless of the battle, expires on the finish of subsequent yr, and the federal government in Kyiv has indicated it is not going to renew that deal.

The Ukrainian pipelines carry about 5 p.c of the European Union’s fuel imports, in line with Ms. Corbeau, from the Heart on International Power Coverage. Ending their use would depart TurkStream, the direct hyperlink between Russia and Turkey, as the one entry level for piped fuel into Europe.

“The clock is ticking,” Ms. Corbeau stated in regards to the Ukrainian transit association. In terms of fuel provides from Russia, Austria “has been living on borrowed time.”

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