Europe should levy a high tariff on Russian energy

EVEN AS RUSSIA has invaded Ukraine, terrorised civilians and flattened Mariupol, the European Union has spent €44bn ($46bn) buying its oil and gas. That could be about to change. On April 27th Russia announced that it had stopped supplying gas to Bulgaria and Poland, which had refused its demand to pay in roubles. Because the EU can easily buy oil, but not gas, from elsewhere, Russia is attempting to exploit its point of vulnerability.

Europe is considering how to respond. Already it was entertaining the possibility of sanctions on Russian oil. But it fears that it has the weaker hand. Olaf Scholz, Germany’s chancellor, has said that an embargo would plunge Europe into recession without doing much to hurt Vladimir Putin and his war effort. Russia’s gas is used both to heat homes and to power factories, and among Europe’s big economies Germany and Italy are especially dependent on it. Predicting what would happen without Russian gas is hard, because it depends on how quickly supply chains adapt around the disruption. Optimistic academics say the initial cost to Germany’s economy of a full energy embargo could be just 0.5% of lost GDP; Germany’s central bank puts the bill at 5% of GDP.