Dumitru Vicol: Government plays quite smartly between gas price and alignment with sanctions

The political analyst Dumitru Vicol thinks that the Moldovan government is playing a “quite smart” game of balancing between securing acceptable gas prices and aligning itself with the western sanctions against Russia.

Speaking at an IPN debate on the subject of the sanctions, Vicol commented on Russia’s demands that EU countries pay for gas in rubles, in which case they will have to open bank accounts in Russia. “Essentially, the idea is to make the consumer buy rubles. And if the ruble grows in demand, it means it will stay afloat. The hope is that the ruble will appreciate and bounce back to its previous positions eventually”.

Naturally, the expert believes, Europeans disagree, saying it is a breach of contract. “And that’s true. Most contracts stipulate dollars or euros. But the Russians couldn’t care less. They don’t care about international arbitration, or dollar and euros, and this makes them feel strong”.

Another argument from the Russians is that the West has frozen its foreign exchange reserves. “It is a confrontation, and Russia’s victory in this confrontation will mean a rise in oil prices. Price expectations for this year are about $1,400 per thousand cubic meters and about $1,000 for next year. When the plan to reduce Europe’s dependence on Russian gas starts being implemented, the price could rise to $2,000, as the amount of gas in Europe decreases”, said Dumitru Vicol.

According to him, in the current situation, Russia will lose, because it will deliver smaller volumes on the international market. But the European Union will also lose for having to pay a “very large” bill, according to the expert. In peacetime, a breach of contract is examined in court and is subject to penalties. Now, however, Russia has said it is no longer complying with the old arrangements, and sanctions may no longer have repercussions. “Relationships are so damaged that no arbitration or penalty matters anymore. The Russians say - go ahead, buy gas elsewhere. Unfortunately, there is not enough gas elsewhere”, said Dumitru Vicol.

Responding to the question of whether Moldovan society has the capacity to influence the authorities in relation to the sanctions imposed on the Russian Federation, Dumitru Vicol referred to a report of the National Bank of Moldova of February 15, according to which inflation will increase in II-III quarter up to 20 percent, and oil and gas prices will fall. “But oil prices have risen, and inflation is expected to rise to 30 percent. This means that if we impose sanctions, they could lead to Moldova having to look for gas elsewhere, at even higher prices, and inflation would rise further, to as high as 50 percent. In conclusion, if each of us is ready to lose half of our savings, then the government of the Republic of Moldova can impose sanctions or align itself with Western sanctions… I think the government in Chisinau is playing smart between the gas price and the issue of alignment with sanctions”, said the expert.

The debate was the 231st installment of the “Developing Political Culture” Series, run by IPN with the support of the “Hanns Seidel” Foundation.

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