Is an energy-for-grain scheme being floated around by Russia? - ERDAL TANAS KARAGÖL

Is an energy-for-grain scheme being floated around by Russia?

As Russia pressed ahead with its invasion of neighboring Ukraine, energy dependence became a major headache for EU countries, but then came the issue of transporting grains from Ukraine, which is a key producer in terms of food security, to international markets, after the country’s ports were blocked by Russia, causing a grain supply shortage that threatends to unleash a food crisis that would affect so many countries across the world.

As for Moscow, it regards blocking all ports and preventing Ukraine from delivering its grain to international markets as a bargaining chip as it tries to ensure demand security for its oil and natural gas products.

In other words, Moscow is sending a  message to the world, particularly to EU countries that “if you continue to buy oil and natural gas, I will clear the way for grain supplies. Otherwise, I will continue to block these grains that would cause a food crisis from reaching international markets."

Will Russia take steps to further excacerbate the grain crisis?

We can perhaps predict that an economic and political struggle over energy will only accelerate, even if Moscow does not take any further steps that would result in a global food crisis.


RUSSIA'S ENERGY PROWESS

It is clear that Russia is an important actor in energy supply security, especially in natural gas. The fact that more than 40 percent of EU countries, are dependent on Russian natural gas, in some cases completely reliant, further strengthens Moscow’s hand.

Energy is the backbone of economies, as it generates approximately $400 billion in daily revenue. However, Russia needs to ensure demand security along with its impressive energy production prowess, that is, in order to maintain its oil and natural gas revenues.

It is worth mentioning that recently, EU countries' plans to accelerate their natural gas diversifcation efforts and reduce their oil purchases from Russia are critical decisions that could prove detrimental to Russia’s economy.

Even if EU countries do not have any natural gas resources, they can find alternative sources to obtaining oil from different countries within a short time. However, if Russia loses EU countries, it will lose a large slice of market and income, and it may experience problems in finding new ones to replace them, as well as when it comes to how much oil it will end up exporting in the future.

For this reason, Russia has blocked EU efforts aimed at reaching grain supplies they so deseperately need from Ukraine during this period while it still maintains its energy card. This issue is now entering the process of becoming a food crisis, not only for EU countries, but also for the world at large.

Russia is conveying the message that EU countries continuing to purchase oil and natural gas from Moscow will be in return for ensuring Ukraine's grain supply to the world. By this means, it is trying to ensure the security of demand in energy, and it also provides an opportunity for EU countries to continue to be dependent on it for energy and therefore to continue the Ukraine war funded by the income flowing to Moscow’s coffers from energy sales.


WHAT ARE EU COUNTRIES TO DO?

EU countries are still dependent on Russia when it comes to energy. It’s no secret that numerous member states, especially those highly dependent on Moscow for gas, have no choice but to continue to get their energy supplies from Russia.

Frankly, it has also showed just how dependent Russia’s own economy is on oil and natural gas revenues.

We are at a time where both supply and demand security have become immeasurably more important than ever.


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