“United against megalomania” was how one German newspaper succinctly put it.
Jake Sullivan, the US national security adviser, explained at one briefing that the west was facing a dilemma. It had through its own measures cut the amount of Russian energy it was purchasing, but due to the rise in the price of oil, the revenues reaching Putin had not correspondingly declined. Russia is, according to business intelligence company Rystad Energy, due to secure at least $180bn . That is 45% higher than in 2021 and 181% higher than in 2020.
Francesco Giavazzi, the economic adviser to the Italian prime minister, explained Draghi’s plan to the Guardian. He said: “Russia’s gas pipelines essentially go in two directions: to Europe and – for the moment with much smaller capacity – to China. A gas producer can slow the flow of gas, but it cannot stop it. Ultimately, if there is no flow, one will have to start burning gas in the air – which means burning dollars in the air.
There are multiple drawbacks to the oil plan. First, it is possible the insurers will say they are being deprived of legitimate business for no valid reason. Second, the EU might have to reopen painfully agreed existing oil sanctions packages to endorse the idea. That would require unanimity, and Hungary might again block progress in favour of cheaper oil. The EU is also due to phase out oil purchases by the end of the year.