Putin Gas Cutoff for Europe: Severe Recession to Follow

Russian President Vladimir Putin's gas cuts could send some European countries into a recession, the International Monetary Fund warned Wednesday.

Putin on Tuesday said Russia would fulfill its commitments to supply natural gas to Europe but warned that flows through the Nord Stream 1 pipeline connecting Russia to Germany could be curbed soon if sanctions prevent maintenance on its components.

"The prospect of an unprecedented total shutoff is fueling concern about gas shortages, still higher prices, and economic impacts. While policymakers are moving swiftly, they lack a blueprint to manage and minimize impact," IMF officials said in a blog post.

"Our work shows that in some of the most-affected countries in central and eastern Europe, there is a risk of shortages of as much as 40% of gas consumption and of gross domestic product shrinking by up to 6%.

"The impacts, however, could be mitigated by securing alternative supplies and energy sources, easing infrastructure bottlenecks, encouraging energy savings while protecting vulnerable households, and expanding solidarity agreements to share gas across countries."

Russia has already reduced its exports of gas to Europe's largest economy amid rising tensions between Moscow and the West over the war in Ukraine. Less gas could mean millions freezing in their homes this winter.

Gazprom, Russia's state-controlled gas giant, in June said repairs were to blame for the gas cuts. Last Monday it shut down for routine maintenance.

"I think we should be very clear. [Russia state-owned] Gazprom has proven to be a completely unreliable supplier," European Commission President Ursula von der Leyen said Wednesday. "And behind Gazprom is, as we know, Putin. So it is not predictable what is going to happen."

Analysts at Swiss bank UBS said no gas this winter would trigger a "deep recession" with almost 6% wiped off GDP by the end of next year.

The European Commission on Wednesday asked EU member states to adopt a strict energy consumption plan after warning of possible further disruptions including a "complete stop of Russian gas deliveries."

"Months before the war broke out, Russia kept gas supply intentionally as low as possible despite the high gas prices," von der Leyen told the news media on Wednesday.

"Russia is blackmailing us. Russia is using energy as a weapon," she said.

Alternatives are scarce for EU countries. Germany's government three weeks ago triggered the second stage of its national gas emergency plan and brought mothballed coal-fired power stations back online.

• Europe Races to Cut Russian Gas Usage on Putin Warning
• Putin Warns EU That Gas Supplies Could Keep Dwindling