Russia has underlined Europe’s dependence on its gas, while keeping EU powers guessing over its next move on Ukraine.

Germany was to blame for record-high gas prices in Europe because it was trying to profit from Poland and Ukraine instead of shipping gas further west, Russian leader Vladimir Putin said at his end-of-year TV press conference on Thursday (23 December).

“They turned this route [the Yamal pipeline from Russia to Germany] into reverse from Germany to Poland … Why? Because we supply gas to Germany under long-term contracts and the price is three-to-four, [even] six-to-seven times cheaper than on spot [markets]. Just reselling 1 billion cubic metres one can earn $1 billion,” he said.

“Instead of shipping gas to Poland and then to Ukraine … wouldn’t it be better to ship it further to Europe and impact the spot price?”, he added.

His comments had the usual intention of trying to drive a wedge between EU allies.

But they also drew attention to Europe’s vulnerability to Russian gas cut-offs in the event of a new invasion of Ukraine.

The EU and US have warned that if Putin ordered new aggression they would strike at Russian energy exports, including by shutting down Russia’s new Nord Stream 2 gas pipeline to Germany.

But their warnings come amid a gas-supply crunch in Europe which many have said was engineered by Russia as part of its “hybrid” tactics on the Ukraine conflict.

And for his part, Italian prime minister Mario Draghi has also said the EU warnings sounded like a bluff given market conditions.

“What deterrence [against Russia] can Europe deploy?”, he said in Rome on Wednesday.

“Do we have missiles, ships, cannons, armies? At the moment, no … We Europeans have at most some sort of economic deterrence,” he noted.

“But even here, we need to think a moment. If we want to impose sanctions that also include gas … are we really capable of doing it in a strong enough fashion at the right moment? Clearly the answer is: ‘No’,” Draghi said.

For their part, France and Germany also spoke out on Thursday, urging all parties to stop fighting in east Ukraine.

“We urge the sides to respect the ceasefire and to continue discussions on further steps in the humanitarian field, e.g. the opening of crossing points and the exchange of detainees,” the French and German foreign ministries said.

The EU’s foreign affairs chief Josep Borrell likewise urged dialogue. “The EU believes that dialogue, negotiation, and cooperation are the only means to overcome disputes,” Borrell said.

They spoke after Putin surged troops to Ukraine’s border and demanded that Nato pulled out its forces from eastern Europe.

Russia and the US aimed to start talks on the security crisis in January, while EU states were to take part via parallel discussions in Nato and in the Organisation for Security and Cooperation in Europe.

And in the meantime, Putin continued to keep the West guessing on his next move.

“This [conflict with the West] is not our [preferred] choice, we do not want this,” he said on Thursday.

But Nato had “brazenly tricked” Russia after the end of the Cold War by expanding further east, he added.

“There should be no further Nato movement to the east. The ball is in their court, they should answer us with something,” he said.

“You must give us guarantees, and immediately – now,” Putin said.

Russian Mercenaries

His forces, the same day, conducted drills designed to simulate seizure of extra Ukrainian territory.

And Russian mercenaries had begun deploying in Russia-occupied east Ukraine in ever greater numbers, Russian sources told the Reuters news agency.

“There is a full house. They are gathering everybody with combat experience,” one Russian source said.

“The current deployments are versatile. They keep Russia’s options open and therefore keep the defender guessing,” Keir Giles, an associate fellow at London’s Chatham House think-tank, said.

Meanwhile, Nato has put its rapid reaction forces in eastern Europe on high alert in case any new conflict spread beyond Ukraine’s borders, according to German daily Die Welt.

And “it’s possible that in case of escalation [in Ukraine], or, if we see that Belarus could be finally occupied [by Russia], extra Nato troops could be deployed in Lithuania,” Lithuania’s defence chief, lieutenant general Valdemaras Rupsys, told Lithuanian news website 15 minutes on Thursday.