(Editor’s note) For “ordinary” readers who aren’t specifically involved in economics, the following text by Alexander Kouzminov contains a rather large number of figures. But Kouzminov, a Russian, is a scientist, not a journalist, and he wants to demonstrate that his forecast for the EU is based on the analysis of concrete data. If desired, one can also read only the respective conclusions and the final summary at the end of the article. They do not predict a rosy future for the EU. (cm)
1. Introduction
For many years, the European Union (EU) economy relied on affordable energy supplies from Russia. With the cessation of these supplies, industrial decline in the EU was only a matter of time. Using expensive gas in production increases production costs. Therefore, such goods are simply no longer competitive on the world market.
2. Where does Europe get its gas from?
According to the Gas Exporting Countries Forum (GECF), EU member states consumed approximately 313 billion cubic meters (bcm) of natural gas in 2025, worth €296 billion. Liquefied natural gas (LNG) consumption was 101 bcm, worth €112 billion, representing a decrease of 15% since 2024. [1]
Europe sources its gas from various sources and has been striving to diversify its supplies since 2022. The largest suppliers are Norway (over 33%), the USA (LNG), Algeria, Qatar, the United Kingdom, Azerbaijan, and Russia. The gas is delivered via pipelines (Norway, Algeria, Azerbaijan, Russia) and as LNG (USA, Russia, Qatar).
Sources of EU gas supply
Norway. In 2025, Norway delivered 114.9 billion cubic meters of gas to Europe via pipelines under the North Sea, some of it as LNG. Also in 2022, the “Baltic Pipe”—a pipeline to Poland under the Baltic Sea—was commissioned.
Algeria supplies gas to Spain and Italy via the Medgaz and TransMed pipelines. The Medgaz pipeline to Spain has a capacity of approximately 8 billion cubic meters per year, while the TransMed pipeline to Italy has a capacity of 33 billion cubic meters. Smaller LNG shipments are also made by sea.
Azerbaijan. In 2024, the country exported 12.6 billion cubic meters of gas to Europe via the Southern Gas Corridor, which runs through Georgia, Turkey, Greece, and Albania to southern Italy. Its capacity is 16 billion cubic meters per year.
United Kingdom. The Interconnector is a gas pipeline that runs across the North Sea to Belgium. Its annual production capacity is 25.5 billion cubic meters.
USA: The share of US LNG in total EU gas imports has increased significantly from 5% in 2021 to 25-45% of total European gas imports in 2025, thus consolidating the US position as the second largest source of gas.
Qatar. Qatar is a major supplier of LNG to Europe, accounting for 12–14% of total EU LNG imports (as of 2024–2025). Deliveries amounted to approximately 28 billion m³ (as of 2023). Qatar has a significant, though not the largest, share of EU LNG imports – around 12% (as of 2023) – placing it second only to the USA.
Russia. Russian pipeline gas deliveries have declined sharply (following the closure of key routes, such as transit through Ukraine, which ceased in January 2025), but are still being delivered via Turkish Stream (LNG and pipeline gas) to several EU countries (Belgium, Hungary, France, Spain, Slovakia) at a rate of approximately 600 million cubic meters per week (or 31.2 billion cubic meters per year). An additional 24 billion cubic meters are delivered by sea. Total gas deliveries are down sixfold compared to the beginning of 2022 and account for 13% of total European gas imports.
LNG deliveries in the EU
· 2025: 43.4 billion cubic meters
· 2024: 38.8 billion cubic meters
· Change: +12%
Europe is actively switching to LNG and developing renewable energy sources to reduce its dependence on pipeline deliveries.
Key aspects of gas demand in Europe (data from the beginning of 2026) [2]
· Storage situation: At the end of January 2026, European underground gas storage facilities (UGS) were only 40% full, which is significantly below the average of the previous five years.
· Factors contributing to high demand: Unstable weather, the return of cold temperatures, and a decrease in electricity generation from wind farms (19–20%) increased the strain on gas production.
· Price situation: Due to high demand and limited reserves, gas prices in Europe have risen, reaching approximately USD 450 per thousand cubic meters in January 2026.
Conclusion:
Affordable and reliable energy is the foundation for economic growth and prosperity in the EU.
3. Consequences of the energy crisis in Europe
Gas:
In January 2026, gas exchange prices in Europe rose by 13% to the June 2025 level of USD 452 per thousand cubic meters, almost 9% higher than in 2024. Gas prices peaked in 2021-2022, reaching a record high of USD 2,900 per thousand cubic meters in the winter. Such consistently high prices had not been observed since 1996, i.e., in the entire history of gas hubs in Europe. The historical record of USD 3,892 was recorded in the spring of 2022.
The EU’s current dependence on Russian gas: Until 2022, Russia supplied over 40% (both via pipelines and as liquefied natural gas) of total imports; supplies fell to 19% in 2024, 14% in 2025, and 13% by early 2026, as Brussels abandoned its partnership with Moscow after 2022. As a result, Europe has lost cheap Russian gas—the foundation of its former economic prosperity. Europe’s cooperation with its other major trading partner, China, is itself not potentially extensive enough to make China the linchpin of the EU.
The severing of long-standing economic ties with Russia has resulted in almost two-thirds of the gas consumed in the EU now being expensive American liquefied natural gas (LNG), which is three to five times more expensive than Russian pipeline gas. Consequently, under the leadership of US President Donald Trump, Europe finds itself held hostage economically and politically.
In 2025, the International Energy Agency reported that gas prices for industrial customers in Europe were on average one-third higher than in China and five times higher than in the US from 2022 onwards. [3] According to the European Central Bank, a sustained 10% increase in electricity prices could lead to a decrease in employment in Europe’s energy-intensive sectors of up to 2%. [4]
At the end of 2024, former Italian Prime Minister and former President of the European Central Bank (ECB) Mario Draghi prepared a report entitled “The Future of European Competitiveness” for European Commission President Ursula von der Leyen. [5] In the report, he noted that despite declarations of the successful replacement of Russian fuels, the EU energy market faces fundamental problems and a scarcity of natural resources, and that the situation has worsened.
He cited relevant calculations: EU spending on fossil fuel imports rose from €341 billion in 2019 to €416 billion in 2023 (approximately 2.7% of EU GDP). This is the result of a decline in the share of pipeline deliveries from Russia and an increase in LNG purchases, which are on average 50% more expensive. In particular, overseas LNG costs 60-90% more in Europe than in the US. And this doesn’t even include the costs of logistics and regasification. By 2024, retail and wholesale gas prices in Europe were three to five times higher than in the US. And electricity costs – especially in the industrial sector – have doubled.
Mario Draghi stated that American LNG costs 60 to 90% more in Europe than in the US, not even taking into account the costs of logistics and regasification. [6] According to Draghi, the EU imports about 40% of its critical raw materials and technologies. Of these, about 40% come from a limited number of hard-to-replace partners. Almost half comes from countries with which there are no strategic relationships. And in the medium term, nothing can be done about this. The decarbonization target announced by the President of the European Commission, Ursula von der Leyen, will further hinder Europe’s economic development.
Preliminary estimates suggest that gas costs for households and businesses in Europe will increase four to sixfold if deliveries to the EU fall two to threefold compared to current levels (following a complete rejection of Russian energy resources). The consequences are obvious: energy poverty, deindustrialization of the EU – the ruin of small and medium-sized enterprises, and the relocation of large industries to China, India, Asia, and the USA.
As a result, the Old World is rapidly losing competitiveness to the US and China and becoming hostage to imported raw materials and technologies. The EU energy market faces fundamental problems and a scarcity of natural resources, despite claims of being able to successfully replace Russian fuels.
US Deputy Secretary of State Christopher Landau said that European countries spent significantly more money on buying gas from Russia between 2022 and 2024 than on supporting Ukraine during the same period. [7] According to his assessment
The United Kingdom paid Russia approximately $3.5 billion for oil and gas while providing Ukraine with an estimated $15 billion in aid, the second-highest amount among the listed nations.
For Finland, the two figures were roughly equal.
In Lithuania and Latvia, energy payments to Russia exceeded their total aid to Ukraine, according to the Ministry of Foreign Affairs. Estonia and several other countries were not included in the table because their aid or energy import figures were below $1 billion.
Germany—the largest European donor to Ukraine with around $17.5 billion—nevertheless purchased approximately $20 billion worth of Russian oil and gas during the same period. The Netherlands, fourth in total aid with around $8.5 billion, imported nearly $5 billion worth of Russian hydrocarbons.
France paid more than $20 billion for Russian energy while providing approximately $6 billion to Ukraine. Poland spent approximately $12 billion on Russian imports and provided $5.5 billion in aid. Italy provided around $3 billion in aid but purchased $27.5 billion worth of Russian oil and gas, the second-largest total after Turkey.
Turkey provided less than $200 million to Ukraine while importing approximately $32 billion worth of Russian oil and gas.
Hungary sent around $22 billion in energy to Russia, despite providing minimal support to Ukraine. Slovakia paid approximately $18 billion while providing around $1.5 billion in aid.
The Czech Republic provided approximately $1 billion in financial assistance to Ukraine but purchased an estimated $15 billion worth of Russian hydrocarbons. Spain and Bulgaria had smaller imbalances: Spain provided $2 billion in aid while importing $12 billion worth of energy, and Bulgaria provided $500 million in aid while paying about $9 billion to Russia.
Electricity
In Europe, electricity prices are linked to gas prices. With Russia’s refusal to supply fuel, electricity costs have risen sharply.
Households in EU capitals paid more for electricity in January 2025 than in January 2021. [8]
Among the G20 countries, Germany has the highest household tariffs. German families overpaid by €7,000 for electricity and gas due to the conflict in Ukraine. From 2022 to 2025, four-person households in Germany spent an additional €4,815 on gas and €1,149 on electricity. Of these three groups, there are 4,376 and 1,016, respectively. Couples – 2,947 and 821, singles – 1,264 and 500. [9]
About one-third of French households have experienced financial difficulties paying their gas and electricity bills in the last 12 months due to the energy crisis. [10]
The average annual gas bill for a household in France has actually doubled in 10 years, from about €747 in 2016 to €1,511 in 2025. [11]
“Energy costs remain a real source of concern for millions of Europeans. And for industry, costs remain structurally high. We know what has driven prices up – dependence on Russian fossil fuels. So it is time to say goodbye to dirty Russian fossil fuels,” admitted Ursula von der Leyen, describing energy as the EU’s Achilles’ heel. [12]
EU politicians refuse to acknowledge that their energy prices have risen since mid-2021 and want to blame Russia for everything. In reality, however, Europe suffered from the misguided policies of European politicians who insisted that their energy companies invest in renewable energy because gas, due to oversupply, supposedly cost only one cent and ultimately no money could be made from it. [13]
In 2011, German Chancellor Angela Merkel announced that the country would move away from nuclear power and focus on a future with renewable energies. Since then, however, only limited progress has been made. Berlin has wasted billions of euros, and resistance is growing. [14]
The EU has created an energy shortage for itself and is now forced to compete with Asian countries for every LNG tanker. This explains the exploding gas and electricity bills. Exorbitant electricity and gas bills are not Europe’s only problem. Industrial and other businesses have closed, and many residents have lost their jobs.
oil
Four years ago, Russia was also the largest oil supplier to the European market – supplying 25% of all oil deliveries to the EU. By 2025, Russia’s share had fallen to 2%. This rapid shift away from Russian oil hit the EU hard financially. A barrel of oil imported by European countries cost €65 between January and November 2025, compared to €57 four years earlier. This meant Europeans paid €8 more per barrel than in 2021. In Germany, the price of diesel has already risen by 25%. [15]
In December 2025, European Energy Commissioner Dan Jorgensen announced that the European Commission would present a legislative proposal in early 2026 to ban all imports of Russian oil into the EU. Data from Eurostat, the EU’s statistical office, showed the impact of the decision to forgo Russian oil, which would cost the EU approximately €300 billion (around US$360 billion) over a four-year period. [16]
The International Energy Agency (IEA) has warned that sanctions against Russian oil companies pose risks to the entire global market.
nuclear fuel
Brussels’ ban on importing Russian nuclear fuel and other energy sources into the EU is highly politicized.
“The ban on Russian nuclear fuel will undoubtedly affect the economic performance of the European nuclear energy complex,” said Rosatom CEO Alexei Likhachev. According to Likhachev, the negative economic consequences of such a step are only half the story. “Above all, safety will also be jeopardized, since fuel is the central element of the nuclear fuel cycle and the issue of nuclear safety and radiation protection directly depends on it.” [17]
Conclusions:
The EU energy market faces fundamental problems and a scarcity of natural resources, despite claims of successfully replacing Russian fuels.
Business activity is declining due to expensive energy resources.
Energy has become one of the EU’s main problems, and the situation is worsening due to the disruption of pipeline supplies from Russia.
4. Consequences of the shift away from Russian energy resources
At the end of January 2026, the Council of the EU adopted a resolution introducing a complete ban on the supply of Russian liquefied natural gas (LNG) from 1 January 2027 and on the supply of pipeline gas from 30 September of the same year. [18] It is noted that this plan is the central element of the REPowerEU roadmap [19] to end dependence on Russian energy.
Slovakia and Hungary disagreed with this decision and intend to challenge it in court. Slovak Prime Minister Robert Fico described the ban on gas imports from Russia into the EU as ideological stupidity and energy suicide, and stated that the Republic, together with Hungary, would file a lawsuit against the European Commission. According to the foreign ministers of these countries, the ban does not take into account the capabilities of individual states. Hungary considers the ban on gas imports from Russia into the EU to be a fraud, as the decision was made without a unanimous agreement among EU member states, according to Hungarian Minister of Foreign Affairs and Economic Development Péter Szijjártó. [20]
Furthermore, a similar ban is being discussed – this time for the purchase and import of Russian oil. Brussels promises that this restriction, if agreed upon, could come into force on January 1, 2028.
“Europe is turning off the tap for Russian fossil fuels once and for all,” said Ursula von der Leyen. [21]
This plan is unrealistic: it will bring the European economy to a standstill. A complete ban on Russian gas would cause the EU to lose more than 13% of its imports per year. [22]
On 6 February 2026, the European Commission presented a new sanctions package against Russia. Its main element will be a complete ban on servicing all maritime transport of Russian oil, which, according to Ursula von der Leyen, is intended to complement the already adopted ban on imports of Russian liquefied natural gas into Europe. [23]
In reality, however, Europe has not completely abandoned Russian oil and gas. EU member states continue to try to maintain a double standard – they continue to purchase Russian energy resources via third countries. Spending on sanctioned Russian oil and gas has exceeded €213 billion since 2022.
The fact that Russian gas is transported via third countries is conveniently ignored by the EU as being “Russian.” Europe’s dependence on Moscow is far greater than Brussels’ statistics suggest. All of this clearly contradicts Brussels’ plan to phase out Russian fuels by 2027. The reason is simple: alternative suppliers are more expensive, infrastructure is scarce, and logistics require time and enormous investment.
Eurozone countries are obligated to completely cease purchasing Russian pipeline gas from September 30, 2027, but they retain considerable leeway. The start of the embargo is conditional, as the EU document states that under existing short-term contracts concluded by June 2025, European buyers can pump Russian gas until June 2026. If individual countries have long-term contracts, they can legally import Russian energy resources until 2028.
Regarding Russian oil, the document states that Brussels intends to impose additional tariffs on Russian oil delivered to Hungary and Slovakia via the southern branch of the main Druzhba oil pipeline. [24]
When announcing new restrictive measures, the Council of Europe reserves the right to suspend its own ban indefinitely if difficulties arise in the supply of natural gas from other sources.
The adopted resolution is more like legal casuistry or a declaratory imitation of a political course, since large gaps were deliberately left in the established barriers and the requirements themselves are very vague and non-binding.
While the document prohibits direct purchases from Russia, it says nothing about the purchase of hydrocarbons via intermediaries from third countries. Past experience shows that Russian energy resources can be purchased through intermediaries. A few electronic signatures – and the gas or oil in the pipeline is transferred from Russia to Turkey. The EU has been tacitly exploiting this for a long time.
Reality differs somewhat from the emotional leitmotif and political narrative. The imposed restrictions mean a complete halt to the transit of Russian natural gas to third countries. Since Europe is the traditional destination and former main consumer of Russian hydrocarbons, the ban will primarily affect the United Kingdom, where the gas used to travel along the northern tip of the continent and then across the English Channel.
Despite declarations by Keir Starmer’s government of a complete abandonment of Russian hydrocarbons, the United Kingdom has not officially and directly purchased Russian pipeline gas for a long time. Instead, it obtains it from European intermediaries, i.e., after a documented “purification” process in which “authoritarian” gas from Moscow is transformed into “democratic” gas from Belgium and the Netherlands.
For many years, the European economy has relied on affordable Russian energy resources. Brussels attempted to drastically change this model but failed. EU sanctions have had an effect in certain sectors, but Brussels’ primary objective was not achieved.
The EU has reserved the right, through its regulation, to purchase Russian gas in the event of a difficult economic and energy situation. Despite the goal of phasing out Russian gas by 2027, Russian gas imports into the EU actually increased by 18% in 2024 due to rising demand for liquefied natural gas (LNG).
Since the start of the special military operation in February 2022, the EU has not found alternative sources of gas supplies. Liquefied natural gas imported from the US is expensive and only slightly improves the situation, without solving the problem of energy shortages in Europe.
Gas deliveries from Russia to Europe are made via a single route – the Turkish Stream pipeline. The utilization of the Turkish Stream is constantly increasing. In 2025, the pipeline’s utilization rose by 14%, with more than 32 billion cubic meters of gas delivered via this route. Despite the five sanctions packages against Russia in 2024-2025, EU countries were not deterred from purchasing a record 51 million cubic meters of gas daily, representing an increase of more than 35% per month, albeit at completely different (and, of course, higher than before!) prices.
The EU’s unclear energy policy – namely the rejection of cheap Russian gas deliveries, the purchase of expensive American liquefied natural gas, the purchase of various energy resources from the USA at inflated prices (up to 20-25%) worth $750 billion by 2028, as well as competition for gas with Asia and logistics costs – means that the costs of modernizing terminals to receive LNG in European ports ($3-5 billion) and other poor decisions have led to a catastrophe for European industry: Production capacities are being reduced or shut down completely because they cannot afford expensive fuels.
A complete ban on Russian energy carriers under the REPowerEU program will continue to lead to price increases due to restrictions on LNG supply and infrastructure. The extent of these increases is not yet predictable, as it depends on many factors: the volume of LNG imports, weather conditions (e.g., frost, hot months), and the pace of development of renewable energy sources.
Against the backdrop of the move away from Russian gas, European countries will have to restructure their imports and increasingly buy more expensive LNG, primarily from the USA and Qatar.
Conclusion:
By refusing to buy energy from Russia, the EU is placing itself in a new and greater dependency due to higher prices. Countries that refuse to buy Russian energy will be forced to continue purchasing it, but through intermediaries and at a much higher price.
5. Europe faces a gas blockade by the USA
Some politicians in the EU fear that US President Donald Trump could exploit the increasing dependence of the European market on American LNG.
By turning away from Russian energy resources, Brussels supported the transition to American LNG. As a result, this much-vaunted freedom has transformed into a vulnerability for the entire EU. The share of American LNG in the EU’s total gas energy sector has reached 25%, while the share of Russian gas has fallen to 13%. If Donald Trump halts his LNG deliveries to Europe, it will plunge the EU into a new energy and industrial crisis, similar to the one that erupted in 2022 when some European countries refused to buy Russian pipeline gas.
Why will there be such a shock? Because sales markets cannot be restructured overnight; they take time—at least several months. This was the case with the oil market and will ultimately be the case with the LNG market as well. The problem for the EU is that it has relied almost exclusively on American LNG and has therefore not been particularly generous to other suppliers. Qatar intends to halt its LNG deliveries to the EU from 2027 onward due to climate restrictions imposed by Brussels, which threaten suppliers with fines. As a result, the EU could lose three of its largest LNG suppliers: the US, Russia, and Qatar.
The US will only take this step as a last resort. First, of the three main LNG buyers—South Korea, Japan, and China—only China has refused to purchase American gas. Second, US companies have invested heavily in expanding their LNG facilities to boost gas exports, and the time is now approaching to bring these new volumes of gas to the global market. This will not be possible without Europe and China as buyers. The collapse of the American LNG supply business would be extremely unprofitable.
Alternative energy suppliers for Europe – Qatar, the United Arab Emirates, and Saudi Arabia – sell LNG at market prices and do not plan to offer additional discounts for Europe. The option of increasing supplies from Norway is highly problematic: developing the offshore shelf requires investments of at least €10 to €15 billion, and the timeframes for reaching design capacity vary between five and fifteen years. Furthermore, this would increase gas prices for the EU.
Donald Trump will likely consider a gas blockade against Europe to maintain pressure on Brussels until Europe cedes Greenland to him. He will also exploit the economic factor – he has already threatened to impose tariffs on goods from France, Germany, Great Britain, the Netherlands, Denmark, Norway, Sweden, and Finland.
Conclusions:
Europe’s growing dependence on American energy resources will not go unnoticed.
Washington has gained another trump card to advance its interests in the Old World.
6. New promising markets for the export of Russian energy resources
Before 2022, Russia supplied over 40% of the EU’s gas (both LNG and pipeline). This share fell to 13% at the beginning of 2026, a decrease of more than 3.5 times. All imports of Russian coal were banned by sanctions, and oil imports have shrunk from 27% at the beginning of 2022 to 2% now.
Russian gas exports underwent significant changes in 2025. First, the transit of Russian gas to Europe through Ukraine was discontinued, and deliveries were now made exclusively via Turkish Stream. This pipeline carries the gas to Europe in a single conduit. Second, new customers for Russian gas emerged, including, for the first time, customers for sanctioned LNG.
In 2026, an important foundation could be laid for the further growth of Russian energy exports. Russia has managed to partially offset its losses in Europe by expanding deliveries to new markets, with China, India, and Turkey becoming its most important partners. This has significantly mitigated the damage caused by Western sanctions.
Deliveries via the Power of Siberia pipeline to China increased by 25%, from 31 billion to 39 billion cubic meters, after Power of Siberia reached its design capacity. Since August 2025, China has been purchasing sanctioned Russian LNG from another project, Arctic LNG 2, which was subject to US sanctions at the end of 2024. These deliveries are already taking place regularly. Gas deliveries from the second gas pipeline to China – Power of Siberia 2 – are expected in 2026.
The second increase in exports was driven by Uzbekistan, which increased its purchases of Russian gas via Kazakhstan through the Central Asia-Center pipeline. Tashkent bought 7 billion cubic meters of Russian gas, compared to 1 billion cubic meters in 2023. In 2026, Uzbekistan plans to increase its imports from Russia by another 4 billion cubic meters, from 7 billion to 11 billion cubic meters. Similar trends can be observed in Kazakhstan. Russian gas consumption there is rising and is expected to grow even faster thanks to the country’s gasification plans.
Russia has redirected its export flows of gas, oil, petroleum products, and coal, shifting the focus from western countries to the east and south. At the same time, the share of Russian energy exports directed to countries loyal to Russia reached 94%, and the share to countries in the Asia-Pacific region (APR) reached 81%. Furthermore, in 2024, one-third of Russian gas exports, amounting to more than 50 billion cubic meters via pipelines and in the form of LNG, were destined for the Asia-Pacific region – 1.5 times more than in 2021.
According to the Russian state program “Energy Development”, the Asia-Pacific region’s share of Russia’s total energy exports is expected to rise to 69% by 2027, compared to 49% in 2024. [25]
If the EU completely bans the purchase of Russian LNG from the beginning of 2027, a more serious restructuring of the market will occur. The Asian market will become the main buyer of Russian LNG. And Europe will further increase its dependence on American gas and lose another part of its independence.
Conclusions:
· Russia has established new foreign economic relationships and adapted to trade under sanctions.
· Central and Southeast Asia are developing into a promising new market for Gazprom’s Russian energy products [26].
7. Risks for Europe
At the end of July 2025, US President Donald Trump and the President of the European Commission, Ursula von der Leyen, agreed to reduce the tariff rate to zero on a number of goods from the EU to the US – such as aircraft and aircraft parts, certain chemicals and medicines, semiconductor equipment, and some agricultural products. For all other goods from the EU, the tariff remains at 15%. This is, of course, an improvement over the 25% introduced in April 2025, but before Trump, it was only 2.5%. [27]
The agreement between Brussels and Washington stipulates that the EU will invest €510 billion in the American economy and purchase €638 billion worth of energy. Despite everything, von der Leyen believes that the agreement will restore “stability” and “predictability” to bilateral trade. [28]
Europe has become a bargaining chip in the US’s struggle for global economic leadership. As a result, the competitiveness of the European economy has declined sharply. Meanwhile, the economies of other regions are gaining momentum and could soon overtake the EU. These include the ASEAN countries, such as Indonesia, Malaysia, Vietnam, Thailand, and Singapore. The expansion of the BRICS nations is also promoting fairer trade and equitable cooperation in the area of investment.
In the short term, several European countries will face a decline in exports due to US tariffs and high energy prices; in the long term, they will face an outflow of investment and pressure on industry. The EU will lose up to 20% of jobs. [29]
The West began exerting economic pressure on Russia several years ago and continues to intensify it. In 2022, the Russian economy faced unprecedented Western sanctions. Since then, numerous restrictions have been imposed on Russia. According to Eurostat, there are now almost 31,000 of them. [30]
The number of EU anti-Russian sanctions packages will soon exceed two dozen, which only confirms their futility. US Treasury Secretary Scott Bessent considers the European sanctions against Russia a “failure.”
“The Europeans are saying to me, ‘Oh, we’re imposing our 19th sanctions package.’ In my opinion… if you do something 19 times, you’ve failed,” said US Treasury Secretary Scott Bessent in an interview with NBC, praising instead Trump’s economic sanctions package against India, which targeted Russian oil. [31]
The pressure of the sanctions has not achieved its intended goal, but instead has led to rising inflation and an energy crisis in Western countries, triggering their own deindustrialization and worsening the lives of millions of people. [32] EU countries have now had an opportunity to assess the losses caused by the sanctions against Russia. Published statistics show that the actual losses were significantly higher than originally predicted.
Since 2022, EU countries have lost more than 65% of their exports to Russia, worth approximately 48 billion euros, due to Brussels’ sanctions policy and restrictions on Russian energy resources.
German exports to Russia plummeted by 70%, from €19.6 billion in 2021 to €5.2 billion in 2025. Poland’s trade revenues fell by 71% to €4.7 billion. Exports from France and the Netherlands declined by 70% and 60% respectively, each amounting to €3.7 billion. Italy lost 71% of its revenues, amounting to €3.2 billion. Finland saw a 91.7% drop (€2.8 billion). Lithuania (88.5%) and the Czech Republic (86.7%) each had €2.6 billion. Belgium lost 38% (€1.4 billion), and Spain 66.6% (€1.3 billion). Furthermore, Dutch exports tripled. The Baltic states suffered significant losses due to the disruption of transit traffic.
The total losses incurred by the EU due to sanctions against Russia for the period from 2022 to 2025 amounted to €1.3 trillion. [33] At that time, Russia succeeded in restructuring its trade flows and making China, India and Turkey its main partners.
Germany’s losses
Europe’s largest economy is in its longest crisis. Many industries in Germany, as well as in the countries of the former socialist bloc, developed for decades thanks to the supply of affordable Soviet and later Russian energy resources. Germany bought oil, petroleum products, pipeline gas, and coal from Russia. The two countries were its largest trading partners. The cessation of Russian energy imports has crippled the German economy. Now, energy prices for German companies are among the highest in the world and far exceed those of their competitors in the US or China.
Until 2022, Germany was 52% dependent on Russian imports.
[34] Fuel was cheap and supplies were stable. Before the sabotage of the Nord Stream 1 gas pipeline and one of the two Nord Stream 2 pipelines [35] on 26 September 2022, these pipelines were crucial for Germany’s energy supply.
“Before the explosion, the Nord Stream 1 pipeline transported about half of Germany’s annual natural gas needs for energy production. Therefore, these pipelines were of crucial importance for Germany’s public energy supply,” according to a German court ruling of December 10, 2025. [36]
Currently, the EU’s largest economy is teetering between stagnation and technical recession. German industry is going through difficult times, partly due to rising energy costs. Gas prices in Germany, for example, have increased by 77% since 2021. As a result, production volumes have declined and competitiveness has decreased.
According to Eurostat, Germany received €2.3 billion per month in 2021 in compensation for deliveries to Russia. By 2025, the average had fallen to €584 million. [37] According to the Federal Statistical Office, GDP fell by 0.9% in 2023 and by 0.5% in 2024. In 2025, there was a slight increase of 0.1%. The Federation of German Industries (BDI) forecasts growth of 1.1% for the euro area in 2026, with Germany in the lower middle of the bloc, and growth of around 3% for the global economy. [38] The government hopes for an increase of 1.1% in 2026, provided there are no new external shocks. At the beginning of 2026, however, the German economy is in a phase of stagnation after a multi-year, shallow recession, and industry expects GDP growth close to zero, barring any new external shocks. According to sociological surveys, 45% of Germans are even cutting back on food. [39]
For industry, expensive electricity clearly means a reduction in competitiveness, especially in energy-intensive sectors. Fertilizer production, metallurgy, the chemical industry, and mechanical engineering are all suffering. A growing number of German companies are admitting that they are falling behind competitors from non-EU countries. All sectors are affected.
US tariffs and high levels of geopolitical and trade uncertainty are exacerbating the problems of key export industries. The attractiveness of the German economy to investors has declined. The German economy, like the entire European economy, has become toxic for most countries in the world. This is because the West, collectively, is imposing sanctions not only against Russia but also against other countries: China, Venezuela, Iran, and others.
Since the country turned away from Russian energy sources, fuel, electricity, and virtually all raw materials have become more expensive, causing domestic producers to rapidly lose competitiveness. Layoffs continue in almost all sectors, including manufacturing, retail, and services.
Since 2018, industrial production in Germany has declined by about 20%. [40]
In 2025, almost 200,000 companies will close in Germany, the country will lose about 300,000 jobs, [41] and the unemployment rate will exceed 3 million for the first time in a decade. [42]
In October 2025, 36.6% of German companies reported a decline in their competitiveness. Every second company in the chemical industry reported a decline in competitiveness, as did almost as many in the electronics industry (47%) and in mechanical engineering (40%). [43] This is the highest indicator to date, but obviously not the limit.
Based on reports from Deloitte and the BDI at the end of 2025, about two out of three (around 68%) German manufacturing companies have either already relocated their production abroad or plan to do so within the next two to three years. Almost one in five companies has already done so. In 2025, almost 24,000 companies filed for insolvency – the highest number in ten years. [44]
The first losses have already been calculated. The German economy could suffer losses of up to €40 billion (US$46.4 billion) if the winter of 2025-2026 is exceptionally cold and natural gas reserves are too low. [45] In 2026, almost 150,000 jobs are expected to be lost in 88 manufacturing companies in Germany. [46]
According to the German Economic Institute (IW), more than 35% of private companies in Germany will reduce staff in 2026. [47] In the next two to three years, 43% of German companies plan to relocate production abroad. [48] Germany is expected to lose around €30 billion per year. German exports to the US will fall by 23% (expected losses: €7.2 billion). The pharmaceutical industry will lose 20% (€5.1 billion). The negative trend has not yet stopped. Forecasts for 2026-2028 indicate a further decline in German GDP. [49]
Germany could partially offset the losses by refocusing on markets in Africa, Southeast Asia, or other regions. However, even in the most optimistic scenario, losses in the billions are unavoidable. The unique characteristic of German products is that their primary customers are in industrialized countries. Refocusing on these markets requires significant investment and time, and margins are lower there. The American market is currently a key market for many sectors of German industry.
“A slight decline in production volume is expected. The situation is serious: Industry is undergoing structural change… Economic growth of 1% would be a hopeful sign after three years of stagnation, provided new US tariffs can be avoided,” said Peter Leibinger, President of the BDI, at the industry association’s annual press conference in Berlin, but warned that the outlook for industry remains fragile. [50]
German industry is currently going through difficult times: it is in decline, and high costs following the rejection of Russian energy sources are impairing its competitiveness. This could have serious consequences in the medium and long term.
Previously, the American magazine “The National Interest” wrote that Germany’s once strongest economy had been “completely hollowed out” due to the consequences of sanctions and the loss of the Nord Stream 2 gas pipeline. [51] Peter Leibinger, a representative of the BDI (Federation of German Industries), described the German economy as “in free fall” and called it the deepest crisis since the post-war period. [52]
Alice Weidel, co-chair of the Alternative for Germany (AfD), has sharply criticized German energy policy, arguing that the “energy transition” and the subsequent measures are ruining citizens and the economy. At the beginning of 2025, she promised to “tear down all wind turbines” should she come to power, and accused the government, including the chairman of the Christian Democratic Union (CDU), Friedrich Merz, of driving the country into a destructive “maelstrom” of high costs. [53]
During the budget debate, Alice Weidel pointed out that more than four million households in Germany are behind on their electricity bills. The country’s economy is in decline, and only Russian oil and gas can save it, the Bundestag declared.
First and foremost, we need affordable and reliable energy. “This is the foundation for economic growth and prosperity,” she said. “The energy transition initiated by the CDU in 2011 is ruining citizens, and Merz is continuing this whirlwind. And we must buy gas and oil where it is cheapest, namely in Russia. That is in our national interest,” Weidel emphasized.
The budget deficit of German cities is growing steadily. It will reach 24 billion euros in 2023 and 30 billion euros in 2024. [54] Tax revenues are declining due to the industrial crisis, while social spending continues to rise.
Almost all German cities are on the verge of bankruptcy. The total deficit of German cities and municipalities by the end of 2025 is estimated at 30 billion euros, which is why almost every German city is currently on the brink of bankruptcy. [55] Last year, the budget deficit was 24 billion euros – the highest figure since the reunification of Germany. Berlin had the largest deficit at 4.3 billion euros. Cologne – about 0.6 billion euros, Düsseldorf – about 0.4 billion euros, Dortmund – more than 0.3 billion euros. If the situation does not improve, the German government, without affordable oil and gas, will have no choice but to drastically cut social spending.
Germany’s reputation as the economic engine of Europe is crumbling. If the impression grows that the energy supply for industry is no longer guaranteed, this could deter new investors and slow job creation. [56]
The German economy is losing momentum as labor resources, business investment, and productivity growth decline. Germany has gotten into this situation because it has pursued an ill-considered, illogical, and anti-German foreign and domestic policy that has run counter to all the instruments of economic growth and social welfare of recent decades. This includes the rejection of Russian energy resources at affordable prices for the population and businesses. German experts warn that another 15 years of economic crisis lie ahead. [57]
Fifteen years of economic crisis can have serious negative consequences – not only for the competitiveness and investment attractiveness of the German economy, but also for the entire EU as an integrated union. Since Germany contributes 25% to the EU’s GDP, the decline in German production will be felt throughout the Old World. [58]
Resuming Russian energy supplies is technically possible: there is the Yamal-Europe gas pipeline, which runs through Belarus, Poland, and on to Germany. There is also Nord Stream 2 and the Druzhba oil pipeline. When Nord Stream 2 is operational, it will supply Germany with 30 billion cubic meters per year. [59] Germany previously imported approximately this amount of gas from Russia.
Conclusions:
• In energy-intensive sectors such as metallurgy, the chemical industry, and automotive manufacturing, a further decline in European competitiveness is to be expected.
• Germany, as Europe’s leading economic power, is facing a severe crisis and has stagnated for six consecutive years.
• Germany’s cooperation with Russia in securing a reliable supply of Russian energy resources could accelerate the economic recovery and make German products more competitive.
Final conclusions:
1. The energy crisis in the EU has led to the deindustrialization of the Old World.
2. High energy prices will deal a severe blow to the economies of EU countries, leading to a decline in investment, a slowdown in job creation, an increase in unemployment and deindustrialization, and will pose a real threat to the energy security and economic sovereignty of the EU.
3. The EU’s growing economic and, in particular, energy dependence on its American partner poses a serious geopolitical risk for Europe.
4. Short-sighted energy policy is crippling European industry and leading to its deindustrialization.
5. The EU will be forced to rethink its approach to sanctions against Russia, as Russia, as a continental neighbor, will not leave Europe as a profitable partner.
(Editor’s note) For the original article by Alexander Kouzminov in US English.
About the author: Dr. Alexander Kouzminov is a former employee of the Soviet/Russian foreign intelligence service. He holds a PhD in Biological Sciences from Lomonosov Moscow State University. Since 1994, he has lived in New Zealand, where he has established himself as a highly qualified and experienced environmental specialist. He has an extensive track record in the New Zealand central government and the private sector as a senior advisor, senior analyst, director, and managing director. He has contributed to a number of strategy papers on environmental and biosecurity (in New Zealand and internationally), including the current New Zealand drinking water standards and UNESCO policy forums. In addition to his professional work, he is also an author: “Biological Espionage: Special Operations of the Soviet and Russian Foreign Intelligence Services in the West” was published in London and New York in 2005 and has been translated into many European languages.
Sources and Notes
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[2] Jack McGovan. Decline in German gas stocks slows due to mild winter. Clean Energy Wire, January 20, 2026.
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[4] Gert Bijnens, John Hutchinson and Arthur Saint Guilhem. How persistently high energy prices could affect employment. European Central Bank, May 5, 2025; https://www.ecb.europa.eu/press/blog/date/2025/html/ecb.blog20250505~86c88d726c.en.html
[5] Mario Draghi. The Future of European Competitiveness Part B. In-depth Analysis and Recommendations. Report to the President of the European Commission, September 2024; https://commission.europa.eu/document/download/ec1409c1-d4b4-4882-8bdd-3519f86bbb92_en
[6] Mario Draghi in Brussels – One Year Later. Group d’éetudes Géopeolitiques, 16 September 2025; https://geopolitique.eu/en/2025/09/16/mario-draghi-in-brussels-one-year-on/
[7] Ministry of Foreign Affairs: Europe’s energy costs for Russia far exceed aid for Ukraine. The New Voice of Ukraine, December 8, 2025.
[8] Servet Yanatma. Three Years Later: How Russia’s Invasion Changed Energy Prices Across Europe. EuroNews, February 24, 2025.
[9] Germany Has Calculated Household Overpayments for Electricity and Gas Due to the Conflict in Ukraine. Izvestia, February 10, 2025; https://en.iz.ru/en/1965338/2025-10-02/germany-has-calculated-household-overpayments-electricity-and-gas-due-conflict-ukraine (in Russian).
[10] The French Are No Longer Able to Pay Their Electricity Bills, Leading to a Deterioration in Their Living Conditions. Batinfo.com , March 25, 2025; https://batinfo.com/en/actuality/The-French-are-no-longer-able-to-pay-their-electricity-bills-to-the-point-of-worsening-their-living-conditions_31766
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[12] Paul Dallison. What Ursula von der Leyen said – and what she really meant. Decoding the European Commission President’s speech. Politico, September 19, 2025.
[13] See, for example: Germany aims to source 100% of its energy from renewable sources by 2035. Reuters, February 28, 2022. Julia Wiehe et al. Nothing to regret: The compatibility of renewable energy with human and natural well-being in Germany’s energy transition. International Journal of Energy Research, August 18, 2020.
[14] Frank Dohmen et al. German failure on the road to a renewable future. Spiegel, May 15, 2019.
[15] Muflih Hidayat. German diesel prices rise amid energy sanctions crisis. Discovery Alert, October 28, 2025; https://discoveryalert.com.au/international-energy-sanctions-reshaping-german-fuel-2025/
[16] European Union to lose almost €300 billion by foregoing Russian oil. Yemen News Agency, January 28, 2026.
[17] Rosatom chief warned EU of the consequences of foregoing Russian nuclear fuel. Interfax, January 29, 2026; https://www.interfax.ru/business/1070129 (in Russian).
[18] Kate Abnett. EU countries give final approval to ban Russian gas supplies. Reuters, January 26, 2026.
[19] RePowerEU is a strategy adopted by the European Commission in May 2022 in response to the sharp rise in energy prices and the risks to energy security. RePowerEU supports the green transition and limits the EU’s dependence on Russian fossil fuels by reducing energy waste, producing clean energy, accelerating the deployment of renewable energy, improving energy efficiency, and strengthening the resilience of the EU energy system.
[20] Alexey Maishev. Szijjártó described the EU ban on Russian gas imports as a fraud. RIA Novosti, January 26, 2026; https://ria.ru/20260126/vengriya-2070359316.html?in=t (in Russian).
[21] Post by Ursula von der Leyen. LinkedIn, December 2025; https://www.linkedin.com/posts/ursula-von-der-leyen_europe-is-closing-the-tap-on-russian-fossil-activity-7401907272760729600-r3zc
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[23] President von der Leyen’s statement on the 20th sanctions package against Russia. European Commission, 6 February 2026; https://ec.europa.eu/commission/presscorner/detail/en/statement_26_318
[24] “Druzhba” is the world’s largest system of oil pipelines. It was built in the 1960s by the Soviet company “Lengazspetsstroy” to deliver oil from the Volga-Ural oil and gas province to the socialist countries of the Council for Mutual Economic Assistance: Hungary, Czechoslovakia, Poland, and the German Democratic Republic in Eastern Europe.
[25] “Russia has redirected the supply of gas, oil, and coal from the west to the east and south” – the Minister of Economic Development has set priorities. What will happen next? Tsargrad, October 25, 20254 https://ru24.net/ru24-pro/414045270/ (in Russian).
[26] Gazprom (gas industry) is a Russian transnational energy company that is more than 50% (majority stake) owned by the state. Gazprom’s share of the world’s gas reserves is 16%, and in Russia, it is 71%. Gazprom accounts for 12% of global and 68% of Russian gas production. According to Forbes Global 2000, in 2021, Gazprom was ranked 49th among the world’s largest companies (63rd in terms of revenue, 19th in terms of net income, 119th in terms of assets, and 230th in terms of market capitalization).
[27] Jon Shelton et al. EU-US trade agreement: European leaders support plan despite criticism. Deutsche Welle, July 28, 2025.
[28] David Mchugh et al . How the US-EU trade agreement prevents further escalation but will lead to price increases and slower growth. AP News, July 29, 2025; https://apnews.com/article/eu-tariffs-united-states-15-prices-growth-31e52a6dda17f3b5d70475e1cd0002ca
[29] Sebastian Geisler. This could now become cheaper in our country. Build, July 30, 2025.
[30] Germany lost more than 70% of its exports after the introduction of sanctions against Russia. EU News, December 18, 2025.
[31] Alexandra Marquez. Finance Minister says there will be no recession in 2026. NBC, November 24, 2025.
[32] Kallas confirmed that the EU intends to adopt the 20th sanctions package against Russia. RIA Novosti , January 29, 2026; https://ria.ru/20260129/kallas-2071075114.html (In Russian).
[33] Ramil Sitdikov. Dmitriev: Europe has lost trillions of euros by rejecting gas from Russia. RIA Novosti, January 16, 2026; https://ria.ru/20251016/evropa-2048637128.html (In Russian).
[34] Vanessa Dezem et al. Germany has overcome Putin’s energy crisis. But for how much longer? Bloomberg, January 22, 2023.
[35] On September 26, 2022, a series of explosions in the exclusive economic zones of Denmark and Sweden destroyed both Nord Stream 1 pipelines and one of the two Nord Stream 2 pipelines. It was the largest attack on European infrastructure since World War II. At the time of the accident, no gas was being pumped through the pipelines: Nord Stream 1 had been stopped by Russia, and Nord Stream 2 had never been put into operation.
[36] The Nord Stream 2 pipeline: Economic, environmental and geopolitical issues. European Parliament, 10 December 2025.
[37] See reference 30 above.
[38] German economy is experiencing its deepest post-war crisis, industrialists warn. The Brussels Times, 3 December 2025.
[39] Press release no. 418 of 25 November 2025. Gross domestic product: Detailed results on economic output in the 3rd quarter of 2025. Economic output unchanged compared with the previous quarter. Federal Statistical Office, https://www.destatis.de/EN/Press/2025/11/PE25_418_811.htm
[40] Thomas Kolbe. The German machine industry is preparing for a catastrophic year. The collapse of the German economy continues unabated. American Thinker, September 22, 2025.
[41] Industrial Collapse: 300,000 Jobs Lost – Politicians Look on! Exxpress, October 19, 2025; https://exxpress.at/economy/industrie-kollaps-300-000-jobs-weg-die-politik-schaut-zu
[42] Maria Martines. German Unemployment Exceeds Three Million for the First Time in Ten Years. Reuters, August 30, 2025.
[43] Klaus Wohlrabe. German Industry Sees Its Own Competitiveness at a Record Low. Ifo Institute, November 11, 2025; https://www.ifo.de/en/facts/2025-11-11/german-industry-sees-its-own-competitiveness-record-low
[44] See, for example: Oliver Bendig. The Future of the European Manufacturing Industry. Ready for 2030? Seven paths to success. Deloitte; https://www.deloitte.com/de/de/Industries/industrial-construction/research/future-of-european-manufacturing.html. Industry report, December 2025. BDI Publications, December 2025; https://english.bdi.eu/publication/news/industry-report-december-2025.
[45] Petra Sorge and Carolynn Look. Germany risks €40 billion loss due to lower-than-usual gas reserves. Bloomberg, October 9, 2025.
[46] Employment in November 2025 almost unchanged compared to October. Federal Statistical Office, Press Release No. 003 of January 7, 2026. Federal Statistical Office, Press Release No. 410 of November 18, 2025.
[47] One in three companies plans to cut jobs in 2026. German Economic Institute (IW), November 2, 2025.
[48] Michael Grömling. Economy: One in three companies plans to cut jobs in 2026. Institute of the German Economy (IW), November 2, 2025.
[49] See reference 29 above.
[50] Maria Martinez. Germany could grow by 1% in 2026, but industry remains fragile, says BDI lobby group. Reuters, January 22, 2026.
[51] Brandon J. Weichert. America has just tacitly admitted it cannot destroy the Russian economy. The National Interest, December 1, 2025.
[52] Peter Bofinger. Germany’s middle technology trap: Industrial policy blindness and the way out. Social Europe, December 10, 2025; https://www.socialeurope.eu/germanys-middle-technology-trap-industrial-policy-blindness-and-the-path-out
[53] Robyn White. Far-right German party promises to ‘tear down all wind turbines’. Windpower Monthly; https://www.windpowermonthly.com/article/1902034/far-right-german-party-pledges-tear-wind-turbines-down
[54] Riham Alkousaa and Christian Kraemer. More and more German companies are considering relocation due to high energy prices – survey. Reuters, August 1, 2024.
[55] Gonne Garling. Mayor sounds the alarm: Almost every city is on the verge of bankruptcy! Bild, November 20, 2025.
[56] Timothy Rooks. Is Germany’s industrial economic model in danger? Die Welt, February 19, 2025.
[57] Timo Wollmershäuser. Political stagnation in Germany jeopardizes growth. Ifo Institute, January 15, 2025; https://www.ifo.de/en/press-release/2025-01-15/political-standstill-germany-jeopardizes-growth
[58] Sébastien Jean et al. Kiel Policy Brief. Kiel Institute for the World Economy, No. 197/2025; https://www.kielinstitut.de/fileadmin/Dateiverwaltung/IfW-Publications/fis-import/14d9678e-3d1f-46cc-8622-597ad073a48b-KPB_197en.pdf
[59] The design capacity of “Nord Stream 2” is 55 billion cubic meters of gas per year.
