Kubilius: When will we stop buying tanks for Putin?

The Ukrainians are winning hard battles. In three days, they smashed 146 Russian tanks and a lot of other military equipment.

The West is waking up: it has started supplying arms. The German chancellor gave a powerful speech in the Bundestag: Germany no longer wants to be blind friends with Putin.

The huge widespread protests throughout the democratic world and the victories of Ukraine on the battlefield are forcing Western leaders to rethink their previous posture, to be more courageous in their support for Ukraine, and even to impose sanctions on Putin and on the entire Russian economy that were hardly to be expected until very recently.

The announcement several days ago of a decision by Western leaders on the famous SWIFT sanctions was encouraging.

Unfortunately, however, it became clear yesterday that these SWIFT sanctions are only partial for those already sanctioned banks. This means that both Russian banks and Gazprom can easily circumvent them. In addition, other financial sanctions that are painful for Russia, such as sanctions on the Central Bank of Russia and its accumulated reserves, are in place. Still, the SWIFT sanctions remain largely toothless for the time being.

I have previously written about why this is so. According to the Western analytical press, the Germans are particularly terrified that implementing total SWIFT sanctions will make it impossible to pay for the gas they buy from Gazprom. As a result, Germany will have to go without such gas. In Germany, as much as 54% of the gas consumed comes from Gazprom.

That is why, once again, I wrote a few days ago that it is very important for Europe, and for Germany itself, to declare a full embargo on Russian gas and oil imports as soon as possible in the coming days. Because, by no longer buying gas from Russia, Germany itself will no longer have to fear the consequences of the SWIFT sanctions.

Today, now that it has become clear that the full SWIFT sanctions are stuck, for the time being, I would like to put forward a few more arguments as to why such an embargo on Russian gas and oil must be declared immediately. It would be even better if such an embargo were to be imposed on all Russian goods and services. And my arguments will be more moral than economic.

A few days ago, Politico published a lot of valuable statistics on how much we Europeans pay Russia every year for various goods, including gas and oil, which account for the lion’s share (about 60%) of Russia’s exports to the European Union. And these are impressive sums of money. Putin is using all this money to buy new tanks and other weapons. In other words, the longer the countries of the European Union avoid imposing an embargo on imports from Russia, the longer Putin will be able to finance this insane war, and we will be the ones buying Putin new tanks to replace the ones that have been destroyed by Ukrainian artillery.

If we look at some more information readily available on Google, which shows that one Russian T-72 tank costs around EUR 1.5 million (depending on the modification), while a more modern T-80 costs around EUR 3 million, we can come to the following conclusions:

In 2020, the European Union paid €64 billion to Russia for energy imports (gas, oil) (Politico data). According to Politico, this covers Russia’s entire military budget, which in 2020 was €62 billion.

With the EU paying more than €60 billion a year to Russia, this means that in one day, the EU paid Russia around €164 million for gas and oil imports. For the sake of simplicity of calculation, I am treating these figures for this year as well. It is also worth noting that, although we are mostly talking about buying Russian gas, the experts at Politico show that the EU pays much more for Russian oil than for gas.

If we calculate that a T-72 tank costs around EUR 1.5 million in Russia and a T-80 around EUR 3 million, it is easy to calculate that we Europeans buy Putin 40 000 (!!!) new T-72 tanks a year, or around 20 000 T-80 tanks, and that in one day, we buy him around 100 T-72 tanks. Ukrainian troops have to fight for two days to smash as many tanks as the European Union buys Putin in one day.

It is worth remembering that, among the EU countries, Germany is the most dependent on Gazprom gas, where Gazprom gas accounts for between 46% and 54% of total gas consumption.

The purpose of this text is to show that, when we are still buying gas and oil from Russia, we are also paying for Putin’s desire to have new tanks. Of course, this requires a lot of money, but we pay so much for gas and oil that Putin can buy a lot of tanks.

This leaves us in a morally very ambiguous situation: after much hesitation, Germany agreed to provide Ukraine with weapons, perhaps 1 000 anti-tank grenade launchers and 500 Stingers, but at the same time, it wants to continue to buy Russian gas (and therefore does not want full SWIFT sanctions), and with that money, Putin will easily pay for new tanks. It is good that we do not yet have the paradox of bartering for Russian gas: it would then be possible to obtain German Leopard tanks directly. And there would be additional benefits for the German industry.

War is war: you have to choose which side you stand on. When you try to get out and do business with both sides, you find 100 000 Germans gathering at the Brandenburg Gate in protest.

For all these reasons, I say that the European Union, together with Germany, must immediately impose an embargo on Russian gas and oil imports. Especially as the European Parliament has already indicated that this will have to be done in the event of an invasion of Ukraine in a resolution adopted in April 2021.

Once the embargo is in place, it will also be easy to agree on a full SWIFT ban without any exceptions. Then we will no longer be buying tanks for Putin either.