The war in Ukraine has been ongoing for months, and Western allies are beginning to feel the severe pinch of sanctions as Putin’s forces settle in for the long haul.
As a huge provider of natural gas to Europe, Russia is well positioned with natural resources to continue its fight for quite some time. The nation can also weaponize these resources, as the International Monetary Fund (IMF) recently warned.
According to the IMF, Russia may decide to cut gas supplies to Europe, which would likely send several nations into a recession.
Putin announced that Russia would continue to fulfill its commitments for supplying natural gas to Europe, but he noted that the flows through the Nord Stream 1 pipeline, which connects Germany and Russia, may be reduced soon if ongoing sanctions will prevent maintenance on key components of the pipeline.
This threat immediately caught the attention of the IMF, who issued a blog post regarding the ramifications of the decision to shut off gasoline supplies.
“The prospect of an unprecedented total shutoff is fueling concern about gas shortages, still higher prices, and economic impacts,” the IMF warned, “while policymakers are moving swiftly, they lack a blueprint to manage and minimize impact.”
The IMF also noted that their projections showed some of the most impacted nations to fall within eastern and central Europe, where shortages could run as high as 40 percent.
These shortages could result in shrinking GDPs by up to 6 percent or more, resulting in feared recessions and resulting contagion effects.
The IMF also offered some means of offsetting the worst impacts, such as finding alternate supplies of energy in the event of a Russian cutoff.
“The impacts, however, could be mitigated by securing alternative supplies and energy sources, easing infrastructure bottlenecks,” the IMF recommended, “[which encourages] energy savings while protecting vulnerable households, and expanding solidarity agreements to share gas across countries.”