Why Putin Is Also Running Out of Time

Sir Keir Starmer has been asking Europe to walk the talk for a while but how seriously does he take his own words? After Saturday’s virtual summit on Ukraine, the British prime minister affirmed that a lot has happened since he came up with the “coalition of the willing” idea at Lancaster House two weeks ago. French President Emmanuel Macron, meanwhile, proposed extending France’s nuclear deterrent over Europe—an idea Polish President Andrzej Duda, not really a foe of Donald Trump, lapped up.

But for all the urgency in Starmer’s push—there were more participants on Saturday than a fortnight ago, including Italy—it is still all words and will be so as long as certain undeniable hurdles are not cleared from the path of a European coalition to keep the peace in Ukraine after a ceasefire. And the faintest hint of detail is still missing from the plans.

The biggest obstacle is, of course, US President Trump’s refusal to budge yet on providing military support to such a European undertaking—the so-called “backstop”. In its absence, we will see more gatherings and more urgent talk of aiding Ukraine and keeping the noose of sanctions on Russia as tight as possible. Europe, nonetheless, has been gripped by panic and prodded into action—at least into talking about acting.

Thus, Starmer isn’t bluffing about an operational phase when European military chiefs meet later this week. But what that operational phase amounts to at this stage beyond a few more gatherings and more words, remains to be seen. On the other hand, Zelensky might not have accepted the US’ 30-day ceasefire plan in Riyadh without being expressly told to do so by the very European leadership swearing to stand by him at what is undoubtedly a Ukrainian nadir in the war, with Zelensky’s forces in Russia’s Kursk about to be expelled. The situation, as Ukraine claims, may not be as dire as Trump made it out to be but there is no denying that Kyiv is rapidly losing the Kursk bargaining chip, if it ever was one.

Europe’s Trump-sized problem is that peacekeeping in Ukraine after a ceasefire, should that happen, had to always go hand-in-hand with full-scale continental rearmament, raising defence budgets not from, say, 1.5 to 2.5 per cent but beyond Trump’s demand of 5 per cent, perhaps all the way up to 7-8 or maybe even 10, if the UK and the EU are to fend off any future Russian threat without American help.

That’s not happening even in the best-case scenarios. It would require sacrificing prosperity, ease of living, social security and welfare to an extent that would fundamentally alter the identity and character of the post-war and post-Cold War continent.

For that matter, Europe does manufacture and sell a lot of military hardware, most notably France. But even the French nuclear arsenal is limited while the UK has shrunk its military to insignificance. Therefore, Europe is not taking over its own security from the US anytime soon.

MEANWHILE IN RUSSIA…

Which brings the question of ceasefire and subsequent peacekeeping to the door of the man who started it all. Russian President Vladimir Putin has agreed in principle to the need for a ceasefire but with conditions Ukraine and Europe won’t accept. Yet, while most commentary has rightly attributed his “yes, but” approach to his intention of first throwing Ukraine out of Kursk, there is a bigger, long-term factor within Russia itself the impact of which on Putin’s own timeline for a ceasefire has been largely ignored.

Much has been written about the resilience of the Russian economy in the face of sanctions but not much about how long such resilience could possibly last. Gazprom, Russia’s state-owned gas giant, a state-within-a-state which controls entire towns in Siberia and the Arctic north, is in serious trouble.

So much so, that its export wing is now a shell with a few dozen employees left from the 600 it had in 2020. Gazprom now plans to sell prime St Petersburg real estate it owns—including the palazzo-style HQ of Gazprom Export—as well as downsize by cutting 1,500 jobs at the parent company’s HQ in Lakhta Centre, Europe’s tallest skyscraper. A Reuters investigation published on March 13 has brought a lot of detail about Gazprom’s troubles to light despite being stonewalled by the company and the Russian government.

Why is Gazprom in trouble? The answer is Europe.

Gazprom CEO Alexey Miller, his boss and St Petersburg buddy Putin, and the Kremlin had miscalculated. They had thought the Ukraine war would have a quick end, followed almost immediately by the lifting or easing of sanctions, and, above all, a resumption of gas supplies to Europe almost back up to pre-war levels.

That didn’t happen. And won’t happen even if the war were to end tomorrow.

European capitals have been steadfast in cutting themselves off from Russian gas, specifically Gazprom (although they have been buying LNG from Gazprom competitors like Novatek), and have since expressed their intent to buy only from non-Russian sources. Europe didn’t go nuclear, it opted out of fracking, but its refusal to ease the pressure on Russia has led to the possibility of much more LNG capacity coming online, from sources ranging from the US to the Middle East. This will take time, but the momentum is against Moscow. Moreover, the EU plans to end its use of Russian fossil fuels completely by 2027 while those supplies from the US and the Middle East may muscle Russia out of its market share for good.

“Last year, Gazprom posted a net loss of $7 billion for 2023, its first since 1999, the year Putin came to power. It posted another loss in the first 9 months of 2024… Gazprom’s share price fell in mid-December to its lowest since January 2009, touching 106.1 roubles, a decline of more than a third since the start of 2024,” says the Reuters report. Before the sanctions, Gazprom had a 35 per cent share in EU market which has since fallen to 7 per cent. Its current market capitalisation is reportedly down to $46 billion from $330 billion at its peak in 2007.

And Europe has no appetite for being dependent on Russian gas again. The Nord Stream, thus, may stay dead.

The magnitude of this, going back in time, is captured succinctly by Austrian academic Ralph Schoellhammer in a recent article: “The Russian pipeline network on which Putin’s war machine relies has been designed for over 40 years to supply oil to Western and Central Europe. But these arteries are running dry: Gazprom’s sales through the Urengoy-Pomary-Uzhhorod pipeline ended when it was shut down in December last year. With the additional closures of the Nord Stream and Yamal pipelines, Gazprom’s only remaining route for transporting gas to Europe is through Turkey, using the TurkStream and Blue Stream pipelines beneath the Black Sea. Gazprom’s exports to Europe via pipeline have dropped by 75% and the still-developing new pipelines aiming to supply China and Asia cannot make up the difference. Even the most ambitious projects being contemplated to transport gas eastward would not reach half of the previous annual peak exports of 180 billion cubic meters.”

There is a possibility that Gazprom revenues may fall by as much as 80 per cent by 2030 compared to levels at the start of the Ukraine war. Russia’s gas mostly went to Europe via the pipelines. With Europe, including Germany, no longer buying, Russia is stuck with the surplus. Thus, Gazprom is also being forced to reorient its operations towards supplying affordable gas to domestic Russian consumers. In 2007, Miller had predicted a $1 trillion market capitalisation for Gazprom. His boss has put paid to that dream.

It’s not just Ukraine and Zelensky. Russia and Putin, too, are fast running out of time. Miller, himself long under sanctions, can’t say a word in anger but Gazprom is the reason his boss may come to the table soon.

Emmanuel MacrongeopliticsRussia-Ukraine conflictSir Keir StarmerVladimir PutinVolodymyr Zelensky