Europe must confront Russia’s weaponization of oil and gas, say energy leaders

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H.E. Belinda Balluku
Minister of Infrastructure and Energy, Albania

Anatol Feygin
Executive Vice President and Chief Commercial Officer, Cheniere Energy, Inc.

Amb. Wolfgang Ischinger
President, Foundation Council of the Munich Security Conference Foundation

Frederick Kempe
President and CEO, Atlantic Council

H.E. Alexander Nikolov
Minister of Energy, Republic of Bulgaria

Maxim Timchenko
Chief Executive Officer, DTEK


Hadley Gamble
Reporter and Anchor, CNBC

HADLEY GAMBLE: Panelists, welcome. Thank you so much for joining us. It’s fantastic to have all of you. We’re going to do a deep dive, as Randy said, on the European situation today. I’ve been in Brussels. I was there on the sidelines of that historical agreement between the United States and EU countries, talking about the potential to wean these countries off of Russian gas, what that’s, really, going to mean, frankly.

Fred, I want to kick off with you, though, and get you to sort of set the scene for us in the sense of the politics, because a lot of the conversation that we’ve heard over the last 24 to 48 hours, obviously, has been about the NATO response to potential use of chemical and biological and even nuclear weapons in Ukraine, and one wonders at what point even Germany might have to say, we have to forego Russian energy as a direct result of having to pay a significant price for freedom and democratic values.

FREDERICK KEMPE: Yeah. So let me lay out four scenarios because I think one of these four scenarios will play out, and there are greater energy experts than myself on this panel but maybe I can lay out these broad scenarios.

And the first is Ukraine wins and, broadly, what that means is somehow, through this—the courage of the Ukrainians, the resilience of the Ukrainians, the arming of the Ukrainians, the failure—military failure, in many respects, of the Russians, Ukraine survives as a sovereign, independent, maybe neutral—you know, Wolfgang, you and I have talked about that—maybe neutral entity. So that’s scenario number one.

Number two is a quagmire and that means this just goes on for a long period of time. Russia has sufficient weaponry, sufficient capabilities, that, despite the difficulties it’s had on the field—its loss of generals, its loss of soldiers, that it can keep throwing things from a distance, as we’ve seen, and it can destroy Mariupol. It can even hit, you know, a fuel storage in Lviv, as we saw while President Biden was speaking not so far away in Warsaw, clearly, a message that Putin, I think—clearly, a message that Putin was sending.

HADLEY GAMBLE: But they walked that message back. Was that a mistake, in your view?

FREDERICK KEMPE: Oh, you mean the Biden message?

HADLEY GAMBLE: As in the Poland message from the president of regime change.

FREDERICK KEMPE: Oh, I have my own view on that. Watch the tape. That was not a mistake. Watch the tape. So it may not have been on his original talking points but it also, I don’t think, was ad-libbed. I think he was planning to say what he said, and he wasn’t saying—he wasn’t saying my view. I don’t speak for the government. You know, lucky when they let me speak for the Atlantic Council. But he wasn’t saying we want regime change. He was saying this kind of person cannot be allowed by his own country to be a leader. I mean, that—between the lines. But I don’t think that was a mistake.

But what I was speaking about is the decision of the Russians to hit Lviv while the president was speaking. I mean, that, to me, was, certainly, a message as well.

So the first is Ukraine wins. The second is quagmire, where, I think, you have to assume that Russia would keep taking more territory, would keep destroying more cities, but would never really absorb Ukraine.

The third is Russia wins, and that’s a misnomer because it’s—Russia could put in a compliant government. It could reduce violence down to an acceptable level. In the quagmire, I think, the insurgency just keeps boiling over…

And the third, Russia wins. But Russia doesn’t really win even if that happens because it’s out of the financial system in the world. For the first time in history, the G-7 has sanctioned a G-20 central bank, has frozen its assets. That’s really remarkable taking $350 billion out of their reserves so they can’t really touch them.

And so—and then the fourth is war between NATO and Russia, which we’re all trying to avoid.

So if you’re trying to push this needle toward Ukraine wins, you ramp up sanctions. You strengthen Ukraine. Energy fits into this in some way. I’m very interested to hear what Wolfgang and other people will say about there’s some new calls for even Germany to stop taking oil imports, and so I’d really like to hear about that.

But I think what I’m watching right now is we’re in quagmire, what pushes it more toward Ukraine wins unless toward Putin wins because it’s not going to be a clear victory in any direction and the sooner this ends—the sooner this ends, the better.

HADLEY GAMBLE: I want to bring in Wolfgang on this specifically.

And it’s wonderful to see you, sir, and it was wonderful to be in Munich, my favorite security conference, a few months ago. But it feels like it was a year, given everything that’s happened since we were sitting all together there.

I do want to ask you about that specifically in terms of Germany. I spoke with the chancellor of Germany just a couple of days ago and asked him specifically if there was any scenario, A, in which he could see paying Russian rubles for Russian gas and he said, absolutely not. That’s not how these contracts are done.

But he also said to me, when I asked him specifically about energy sanctions on Russia, he’s, like, listen, we’re working at this point as fast as possible to put more LNG terminals, get them up and running in Germany, because we know we’ve got a huge problem. We know we’ve got to find some way to be less reliant on Russia.

Is what we’re seeing today a direct result of failed policies? And I’m talking about Angela Merkel allowing the security of Europe to, basically, be handed to Vladimir Putin and I’m talking about Nord Stream 2.

WOLFGANG ISCHINGER: Well, first of all, thanks for having me in this panel and at a historic moment, and I hope I’m not repeating something which has been said too often already. This is—what has started to happen a month ago in Ukraine or between Russia and Ukraine is the most serious challenge to the international order, to international law, to European security, to fundamental assumptions which, for example, my government has had for decades about how we want to build a stable European security environment.

So this is fundamental, and I can only remember two events in my rather long career that come close to the almost revolutionary meaning of this. The first one was the events of ’89, ’90, ’91, and German unification, disappearance of the Soviet Union, disappearance of the Warsaw Pact, et cetera.

The second was, of course, 9/11, and this is hugely significant. It challenges—it has challenged almost all relevant assumptions by my government, and Chancellor Scholz took a surprising step on February 27 when he slaughtered—I have no better way of saying it—when he slaughtered a huge number of sacred cows of German foreign policy.

We had worked on the assumption that we would never want to deliver weapons to a, quote/unquote, “conflict area.” Now we’re doing it. We’re, now as we speak, among the major contributors of small arms and all sorts of anti-tank weapons, et cetera, et cetera, to Ukraine.

 The problem is the energy reliance and, Hadley, of course, I’m not a spokesman for Angela Merkel but this goes far beyond Angela Merkel. This goes back to the 1970s and ’80s. Germany has been repeating, you know, like a mantra that even during the culminating periods of the Cold War the Soviets never used the oil as a weapon against us and we thought—and I don’t exclude myself from this—we thought this is going to be like this forever and they will never, you know, use this relationship.

So it’s not just Angela Merkel. Angela Merkel and her government failed to hear the shot of 2014. Of course, we should have never—now in hindsight we’re all smarter. In hindsight, we should have never signed this Nord Stream 2 thing, but that’s what happened.

It took and it continues to take a huge effort for us in Germany to wean ourselves off this established Russian-German relationship. Remember, there are approximately 6,000 German companies—small and large, very large ones, very small ones—doing business in Russia and with Russia.

So this is not nothing to totally change course and understand that all of a sudden we are not at war with Russia but we are almost at war. I mean, Russia is now our adversary, and as recently as—even after 2014 we thought that partnership with Russia could be reestablished because we could negotiate our way out of this. This is why Angela Merkel spent so much time—and I really admire her for this—talking and talking and talking to Putin about the Minsk Accords, about the Normandy Format, even though she knew that she was being lied to all the time. But she made this effort, which I applaud, but it was a failed attempt. It has failed.

HADLEY GAMBLE: Yeah. Yeah. I mean, there are limits to political discourse, unfortunately.

I want to bring in Their Excellencies, the ministers, to talk about this a little bit more broadly. Albania and Bulgaria, you are front seat to Vladimir Putin’s aggression, if you will. As Wolfgang was saying, Europe really missed the boat on what was happening over the last six to 12 months and even prior to that, and the policies that Europe put in place as the EU, as the leaders of Europe, Germany, were not the right ones.

Your Excellency, I’d like to kick off with you about where you see us headed in terms of this energy transition and how worried you are about the politics in Europe getting it wrong, and I’m talking about the failure to sanction Russia’s energy at this point.

MINISTER BELINDA BALLUKU: So thank you very much for having me.

Well, I will not go into geopolitics because already the panel have done this. But I will give a concrete example regarding Albania. Albania is a small country. It’s a NATO member country. We are applying all the sanctions. We are hosting people from Ukraine to live in our country. And the story with Albania it’s like having a hundred percent renewable energy produced in our country and why our example it’s very concrete and very important in those moments.

Having a hundred percent production of renewable energy it’s not the solution because the energy have—as equation have three variables, which are security of energy, affordability, and, of course, sustainability. And what happened in my country? We have a cascade—the big cascade producing electrical energy from hydro plants. But in meantime, we are in great dependency from the weather. This is a very difficult year, this year for Europe, because it’s a dry year and we are obliged to go to imports—to import energy. And by the case, through the geopolitics this year is the year with the highest price of the energy in the market.

So in the beginning of March we have experienced price 10 times higher that the last year. So through the imports, we have faced price, like, 550 euro per megawatt and one year ago we used to buy with 52 euro per megawatt. So being into renewable it’s not exactly the solution. And, of course, we have seen during this period so working very hard, all of us, for the transition on green energy that it’s not—there’s a solution. A combined cycle and a kind of diversification of sources, it’s what we should do.

So it’s not possible to base everything on solar. It’s not possible to base anything on hydro plants. It’s not possible to base everything on wind, because we have seen the problem that all the states, all the governments, that have invested or private entities that have invested on the North Sea what happened with the wind parks this year. They have produced 50 percent less energy because the wind was slower this year, so 2021, the last year, with 50 percent.

So what we are doing today in Albania we are trying to create new sources of producing energy and, of course, oil and gas are very important—are very important because you need to have sustainability and—

HADLEY GAMBLE: Yeah. And realistic policy, right.

MINISTER BELINDA BALLUKU: Yes, and, of course, the security of energy can be there only through diversification of sources. But Albania have based everything on electrical energy. So from heating, householding, cooking, industry, everything is based on electrical energy and, today, we are facing a costly market. Of course, this is reflecting to every product from the food and to every other necessary product, and this is a big problem that the government is facing through a social resistant package. This is the name that we have put for this package to support all our citizens. But this is something that can’t go on—cannot go on for long. So energy is affecting us in any field.

HADLEY GAMBLE: Which raises the question of whether the United States and the EU is going to inevitably have to have some kind of Marshall Plan for its own people as a result of this energy crisis that we’re walking into or wading through.

Your Excellency, I want to ask you about this specifically. When you think about what’s happened over the last six to 12 months—I asked Vladimir Putin back in October, are you using energy as a weapon? He denied it twice. When you look at what happened and where you are today, was the writing on the wall?

MINISTER ALEXANDER NIKOLOV: Yes. Actually, I do believe it was on the wall. But before commenting on the last 12 months, I would like to comment on what has been going on for the last four or five years because I do believe that the sloppiness as described started back in the days. Everybody believed that, yeah, we are OK. We’re all fine. No worries.

So the mindset in Europe was, OK, it’s a climate change. We are so good. We need to be green, la, la, la. And I do believe in this. Don’t get me wrong. But what was—what made the utility market from a commodity market turning into technology and financial market resulted in a start-up situation, which is ultra-extreme volatility.

So the thinking was, OK, we don’t like coals because they’re so brown. We’ll decommission them at any cost. So decommissioning started. Then, OK, this is banned—stable, sustainable energy. And I do believe that we are starting from sustainability, because if you ask your question from a risk management perspective what would you like not to lose at all cost, this is electricity because blackouts are critical. Affordability comes next. Just because money are easy to get, you can plan it with the budgets somehow, deficits here and there, and it’s—you cannot have room to maneuver.

So after coals it was nuclear. Nuclear so bad. It’s unreliable. We might have casualties. So let’s decommission. There are even brand new reactors that were decommissioned right after being constructed. Then natural gas. Oh, it’s a fossil fuel. We’re going to close it. And, I mean, I was looking at what’s been going on and I was thinking, basic microeconomics, what happens when you decrease so hardly the supply? It will impact, of course, the price.

And at the end of the day, when you kept on asking the question who’s going to be replacing, who’s going to be the substitution of all of that energy being lost in the system, and they were, like, well, green energy. Really? What do we do when there’s no wind, there’s no sun, and surprise, surprise, when there’s no sun, there’s no solar energy. And only 1 percent of the total energy being produced from renewable sources nowadays on the Earth is being balanced on either storage facilities or through hydro, which is water—again, clean but not so much accepted as clean.

So that was what has been going on through the, like, three, four years on the green part, and then on top you decide right after a financial crisis to let in financial players into ETS market that is directly impacting the price, and from 20 euro price of a carbon emission over 12 months you end up close to 100, and, again, surprise, surprise, one megawatt in Europe equals one ton of CO2 emissions, on average. So, practically, what was created over five years was pure instability plus high volatility, which, again, resulted in something that back in June I was trying to say that, OK, we are pushing for storage facilities. We’re pushing for green. But the market is not mature.

So if the cost of capital is higher than your IRR it results in inflation. You cannot avoid it. And then you get to get over indebted. So why are you doing this? And at the end of the day, when the problem hits the fan, you say, OK, taxonomy—we are going to accept at this moment nuclear but only for this moment. And, of course, it might sound a little bit strange, but if you look at the dynamics of the TTF prices on natural gas compared to what was described by Putin as trainings, you can see how some operations got funded in December.

So, practically, it was on the wall and still is on the wall. The promise, that is still on the wall, and it was mentioned, yes, there is an excess of 30 billion LNG in US that can supply not more than 18 to 20 percent of the consumption in the EU. Southern gas corridor curb can be lifted up with additional 18 [percent].

So I don’t see that transition happening faster than we want to. And also on top, if you want to increase the price of natural gas that’s being produced in Russia, what do you do? You play with the flexibility. You get control over storages. You decrease the volumes on the storages. Prices are going up, ultimately.

So it is not that type of super complex physics. The problem is that living in Bulgaria right now, thinking about the second pillar mentioned already—affordability—whereas you need to imagine that the average purchasing power in Bulgaria is 3.5 times lower than the average in the EU. So how would you explain to people that they need to pay two, three times higher prices for just their heating? It’s impossible. And if you do that, you’re creating political turmoil. Political turmoil decreases GP growth and then you cannot transform.

So it’s a pretty tough corner to be in and, to be perfectly honest, it’s super hard to see the exit.

HADLEY GAMBLE: Yeah, and political instability is something that, I think, that everybody is going to have to start thinking about if we move forward through this, especially with the influx of refugees as well.

Anatol, I want to come to you and just ask a bit about where does this leave the industry at this point, in your view, because we’ve talked so much about the lack of investment—the under investment in traditional sources of fuel—and how that led us into this crisis prior to there being the political instability that we’ve seen over the last several weeks.

ANATOL FEYGIN: Thanks, Hadley, and thanks to Fred and the Atlantic Council team for having us and, of course, to UAE for hosting us again.

We think there are great solutions for this, going forward, and a lot of this has been mentioned already. Diversity of supply, I think, is absolutely critical. Fred outlined four scenarios. I think in all four scenarios the countries that are planning and making decisions really have one choice and that is to diversify their sources of energy both in terms of supply lines as well as types of generation and fuel consumption.

We, at Cheniere, we started down this path when we realized that the US was endowed with this tremendous hydrocarbon resource—natural gas unconventionally developed, had the right economics to serve the world. We’ve invested close to $40 billion through this cycle, which started in 2012. Just Cheniere alone is the second largest LNG exporter today, second only to the friends we visited over the weekend and QE, and we will continue to do that. We’re growing our facility at Corpus Christi. US already is the largest LNG exporter, and a lot has been said about what the quantity and what the commitments are that US LNG has made.

Just to put it in perspective, US LNG today is about 135, 140 bcm of exports. It will grow from our facilities from the Golden Pass project that QE and Exxon are building as well as from another new entrant called Venture Global that’s starting up a plant in Louisiana. We’ll be close to 200 bcma in the next couple of years.

And, yes, the vast majority of Cheniere’s volume is committed under long-term contracts. Over 90 percent long-term, 95 percent overall. But every one of those molecules can go anywhere in the world and that’s why you’ve seen this response. That’s why you’ve seen, effectively, our customers decide to bring their volumes, for a host of reasons, to Europe, just like they have in the past to Latin America when there’s a drought or to Asia when there’s unprecedented growth. So just because our output is committed doesn’t mean that the molecules are destined for a certain place.

We also believe, as Fred said, that there’s no choice in providing these molecules and providing the security of supply and growing emissions. We are fully committed. We, Cheniere, are leading the charge on the North American front to ensure that we have the right information, we have the right partnerships, and we will continue to drive down the emissions profile of our product and we think that that’s absolutely critical for the longevity of our business as well as supporting all of the decisions that our customers make over time.

So we think all of these things are eminently feasible. It just is not something that you can change in the span of a month or two.

HADLEY GAMBLE: Yeah, which raises questions, frankly, about this agreement with the EU and how quickly—where that gas is going to come from and how quickly they could get to the market.

But I want to bring in—saving the best for last—Maxim. Walk us through, if you will, what’s happening in your country today, how this is impacting your business, how this is impacting consumers who are still able to live somewhat normal lives if they’re not in the epicenter of the fighting. And I think the whole audience would join me in saying that we’re all thinking and praying for your people.

MAXIM TIMCHENKO: Thank you. Thank you for invitation and opportunity to speak about Ukraine here. I’ll never be a politician, and I’m leading one of the largest power producer in Ukraine for 18 years. But I just appeal to everybody not to be so naïve saying that politics is not connected to energy. It’s happening for centuries. Saying that Nord Stream 2 was purely commercial project, listening to Putin saying that he will never use energy as a weapon, I think we should stop this naiveté because we have different energy crisis. Energy crisis in Europe is rising prices, rising cost of households’ bills, which politicians don’t like, lack of diversity of energy supply, probably green transition not at a speed as it was expected.

But let me tell you about energy crisis in Ukraine today. We have 34 days of shelling our energy infrastructure, two out of five nuclear power stations captured by Russians. One is Chernobyl power station full of spent fuel and the other one the largest nuclear power station in Europe with six nuclear power units and controlled by Russians at the moment.

We have 1.3 million settlements, villages, and cities disconnected from electricity supply and 1.5 million people without electricity supply for weeks. Probably all of you know the city of Mariupol and, basically, this is the example how Ukraine resist. This city with a half million population before the war, nobody knows how many people left and how many people killed in this—in the city. And this city lives without electricity, heat, and gas supply for 26 days. Temperature—minus temperature in Ukraine two weeks ago.

So this is energy crisis in our country. But what is—we have one similarity of energy crisis in Europe and in Ukraine is behavior of Russia. Even before this war started, you all can realize that Russians could increase supply of gas to address rising prices. It was not done. And now we cannot imagine that energy crisis will be over with one key prerequisite—war in Ukraine stop—and, again, we cannot be naïve, saying that Europe is not in war. It is already in economic war with Russia, and we are very much grateful for all support we get from our European partners bringing sanctions, bringing such a strong response and unity.

I’ve been asked about short-term response on this Ukrainian crisis, what we demand and what we appeal. To the companies I’ve seen on the screen still working with Russia, so every dollar paid today to Russia, either for gas or oil or any machinery supplied to Russia, converted into bullets killing Ukrainians. What higher price can be then death of 137 children in the country? What can justify any business plans or profits or revenues coming from Russia to these companies?

We are very much grateful for those who stop any connections to Russia at the expense of profits and shareholders’ value or whatever is more important for corporations. But it’s not enough. I think it should become part of corporate policy for the Western world and for the company respect freedom. It should be in the corporate court not to walk with terrorist countries like Russia today.

HADLEY GAMBLE: When you think about what happens next, there have been a lot of conversations, obviously, about what could, potentially, happen in Eastern Europe, and I’m talking about NATO members. When we sit here with these ministers—and you mentioned naiveté—do you look at them and say, your country could be next?

MAXIM TIMCHENKO: If we don’t stop altogether this war immediately, yes. Because nobody thought that full-scope invasion can happen in Ukraine until the last moment, until 24th of February. It’s happened. Nobody could expect that some crazy man can—shelling nuclear power stations. It’s happened. Nobody was thinking that this war cannot—that they attack cities and civilians, hundreds of thousands. But it’s happened.

So who can say with any level of guarantee that your countries from Eastern Europe wouldn’t be the next one?


MAXIM TIMCHENKO: Of course not. And, again, this is about naiveté. Let’s stop talking about something not happening at your homes. It will come if we do not unite all our efforts and stand with Ukraine and fight for our future. This is the words of the men living in Ukraine all this weeks and coming here just for two days to deliver this message.

HADLEY GAMBLE: President Zelensky, in the last 48 hours—President Zelensky, in the last 48 hours has, essentially, said that he is calling on energy-rich nations to help support the market so that, potentially, Europe will agree to sanction Russian energy, calling on oil-rich nations, calling on gas-rich nations. We’re sitting in one right now.

Would you make the same call as your president? Should the UAE, should Saudi Arabia, should Gulf Arab producers of oil, be supporting the market at this point and should gas countries like Qatar, like others, be attempting to make up as quickly as possible for that shortfall so that Europe is able to be weaned off of Russian gas more quickly?

MAXIM TIMCHENKO: Of course. That’s what I call unity. The whole world should unite. Either increase supply of gas or increase supply of armory to Ukraine or put a ban on buying Russian products. So I think it’s all in our hands our future. So we should not underestimate the threat we have now from Russia, because Ukraine can be the first country. The next will be Europe.


Fred, I want to bring you in on this, and Wolfgang as well. I mean, how realistic, in your view, is it at this point for Europe to sanction Russian energy? I would go out on a limb and say that would inevitably cause such economic harm and damage that we would have political instability as well as refugee instability as well as energy instability and goodness knows what else in an already incredibly inflationary environment.

And then also, when you think a step back and think about what more, then, the United States can actually do in this crisis, what do you see as the levers with which President Biden could, potentially, influence Vladimir Putin’s thinking?

WOLFGANG ISCHINGER: I’m sorry. We are having, in the context of the German debate, we’re having, as we speak, an ongoing serious discussion about an immediate stop of oil and gas imports. I had a very hard time but I did join a call of a number of economists and fellow politicians and academics to immediately stop oil and gas imports.

But I have to say, in all fairness, that I understand my government’s position, which is a position of hesitation, because as you just said hinted at, Hadley, it is probably not going to be very helpful to the cause of Ukraine’s freedom and existence if we experience in our countries, you know, large-scale economic chaos, which some predict, which would make—which would probably produce a much reduced willingness by our population to support Ukraine.

It is amazing to me to see how Germans are now opening up their apartments, their houses, to Ukrainian refugees. There is an enormous outburst of solidarity. That’s important for us to maintain over the long run because we don’t know whether this is going to be—take another couple of weeks, couple of months, maybe a couple of years.

So we need to talk also not only in terms of energy, also in terms of political solidarity, we need to think about sustainability. So I appreciate my government’s huge problem in taking this decision, but I think we have to do it. I think we have no choice. Germany’s greatest post-World War II asset is its trustworthiness and reliability, and we need Ukrainians to believe that we are reliable partners and friends. So I think we really have no choice.

Last remark. There are some in Germany—this is also a meaningful argument which one should not discard—there are some who say, so let’s assume that Putin escalates and uses, as has been hinted, a chemical, biological, or maybe even a nuclear weapon. If we totally cut the oil and gas imports right now we would have nothing, at least nothing in terms of economic measures, to escalate—to counter escalate ourselves.

Personally, I believe that’s the wrong argument because as far as I’m concerned Ukraine is not a laboratory for us to experiment around. Ukraine needs to be protected now with everything we have. But I represent a minority view.

FREDERICK KEMPE: So I want to embrace this minority view, and I think things are shifting. So in November and December inside the Biden administration I think there was a really interesting, courageous decision to go public with what they knew to shift the narrative and to really make it clear what Putin was planning to do, which even our Ukrainian friends at that point didn’t accept and didn’t want to think was happening. But it was released.

But inside the administration there was still a lot of caution about how to respond. We, at the Atlantic Council, were pushing for preemptive sanctions because 180,000 troops were already on the border. So Putin had already moved and we thought the sanctions should come first, come early. We thought more weaponry should go to Ukraine faster because 180,000 troops were already there.

The administration wanted to hold this in reserve. I think my view now is it, certainly, is about Ukraine. It’s about the courageous people of Ukraine. It’s about the resilience of Ukraine. But it’s really about who’s going to shape the global order. We’re at an inflection point in history as important as the end of World War I, end of World War II, end of the Cold War.

End of World War I we got it, tragically, wrong. End of World War II more right than wrong. End of the Cold War we thought everyone will come into our system and everything would be fine, and for a while it looked like that was going to happen. NATO enlarged. The EU enlarged.

But now we’re in a new era and that new era is going to be shaped and it’s being shaped right now in Ukraine. So it’s not enough to say we’re going to defend every inch of NATO. I think the more we see the horrors of what Putin is doing in Ukraine, I think, the more you’re going to see pressure on Western politicians from their own publics to say, no, we’re going to defend every inch of what remains of Ukraine because it’s too terrible to think about the generational consequences if Ukraine loses or, more importantly, if Putin wins. The stakes are too high.

So what does that mean? It means you have to roll out even more sanctions, and we’ve never used sanctions this way before—and I’ll try to be brief. We’re talking about an arsenal of sanctions. We’re talking about sanctions as a deterrent. Sanctions—and Biden actually talked about it in his speech yesterday—sanctions have never been used as a military instrument to the extent that they’re being used now. Is that going to work? Is it not going to work? Who knows?

HADLEY GAMBLE: Would it undermine the value of the US dollar if it does?

FREDERICK KEMPE: Yeah. The weapons aren’t getting there fast enough. I’m also one of those that’s in favor of the MiG-29s that the—if Poland wants to send Ukraine fighters that can help them regain control of their skies, I don’t see why we should be standing in front of that.

So, I think, in terms of—and I know some people would say, well, that’s escalatory. But I actually think it’s weakness that’s escalatory. I don’t think strength is escalatory right now. And so I really think we’re playing for keeps and because of that my own view is the sanctions have to be toughened. The support militarily for Ukraine have to be toughened without US troops, NATO troops, going in. I understand that, and a no-fly humanitarian corridor from the West, I think that has to be seriously considered.

And so—and in terms of energy, you have to leave that to the Europeans to try to decide what to do. The US had only 8 percent of its oil coming from Russia. That was easy to give up. I think it’s relatively easy for Europe and Germany to give up oil, which is 25 percent and—

WOLFGANG ISCHINGER: The gas is the problem.

FREDERICK KEMPE: Gas is the problem.

HADLEY GAMBLE: Yeah. Unfortunately, we are out of time or I’d keep you all here all day. I want to invite Randy to come back to the stage and thank the panelists very much for being here and for your incredible insights, as always. I’ve always learned something when I hear Wolfgang and Fred. Thank you guys so much.

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Further reading

Image: Speakers Minister Belinda Balluku, Anatol Feygin, Amb. Wolfgang Ischinger, Frederick Kempe, Min. Alexander Nikolov, and Maxim Timchenko speak at the 2022 Global Energy Forum in Dubai on March 28, 2022.