European Economic Dependencies That Enabled Russia’s War Machine
Updated: Feb 11
On 3rd December, the support for Ukraine was re-highlighted by the European Commission’s commitment to phase out Russian oil. Liquified natural gas (LNG) imports are to be ended by 31 December 2026 and pipeline gas by 30 September 2027.
However, regardless of the effort that European officials are putting into ending the war politically, it’s crucial to recognise that the conflict between Russia and Ukraine that’s unfolding before our eyes is rooted in years of an economic lead up. Businesses across the European Union mispriced geopolitical risks of relying on Russian resources and based their operations around cheap Russian gas imports. Russian natural resources resulted in a stable supply with a lower input cost, appealing to business systems.
Divorcing Russian gas and oil
When the war started in 2022, Russia accounted for 80% of gas supply in countries such as Austria and Latvia. Dependence on Russian gas was established through years of free trade and an overall 45% contribution of Russian natural gas across Europe. Germany was the largest Russian gas importer and that was due to the increased competitiveness of the German industrial sector. Germany’s need for cheap energy initiated the construction of Nord Stream 1 and Nord Stream 2 pipelines that connected Germany to Russian energy through the Baltic Sea. After the sabotage in 2022, both of the lines are inactive.
The shift is already being introduced
The European Commission established that imports of Russian gas to the European Union will be banned by the end of 2027. In terms of Russian oil imports, they have already shrunk from 27% in 2022 to 3% in 2025. For business, this might mean significantly higher energy costs. The US LNG exporters may emerge as winners in this situation because business in Europe might choose to offshore as an alternative. Another opportunity can be identified in nuclear energy development in Europe as more than 14% of uranium was imported from Russia in 2024, and stepping away from it will open new market options.
Self-sufficiency of EU countries might help decrease dependency on another country’s resources. Supply chains in Europe need to be diversified and further investments will need to be made in order to achieve energy independence. According to the European Commission, gradual distancing from relying on Russian resources might be a way of fighting for peace and incorporate into business practices. The bigger challenge for companies in Europe, however, will be rebuilding a model that is no longer reliant on cheap energy, but instead strives for long-term security and independence.