CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Following weeks of international tension and suspicion about Russian President Vladimir Putin's intentions toward Ukrainian President , Russian forces have invaded Ukraine from multiple angles (Poroshenko, 2022). Russia recently recognized the independence of the entire Donbas region in eastern Ukraine, implying at first that Russia's ambitions were limited to the independence of the eastern provinces Poroshenko, (2022). Russia, on the other hand, responded by deploying soldiers into Ukraine from many angles and launching a full-fledged invasion of the nation. Threats to Ukrainian sovereignty by Russia are nothing new, according to Kriesberg (2022). Russia has tried to influence Ukraine's internal and diplomatic policies since the country's foundation. Russia opposes stronger connections between Ukraine and the European Union, and it opposes Ukraine joining NATO outright Kriesberg(2022). Ukraine's ten-year quest for deeper relations with the EU came to a halt in 2014, when Russia invaded Crimea Kriesberg (2022). Russia also backed separatist movements in the eastern provinces of Donetsk and Luhansk, which culminated in nearly a third of the territory proclaiming independence from Ukraine. Greetings, Poroshenko (2022). The separatist factions signed the Minsk Protocol shortly after its formation, with the aid of France and Germany, in order to restore peace to the area and reintegrate the breakaway republics into Ukraine in exchange for local elections and decentralization. Greetings, Poroshenko (2022). The Minsk Protocol's conditions were never met. Putin's aims are clearly clear: he wants to take over Ukraine and keep it under Russian rule indefinitely, preventing it from pursuing stronger economic ties with the EU or joining NATO Poroshenko, (2022). Ukraine will pay a tremendous humanitarian and economic price for Russia's assault. The immediate international reaction has been to tighten current sanctions by restricting Russian persons and businesses' capacity to participate in commercial transactions with the rest of the world. Since its invasion of Crimea in 2014, Russia has been subjected to international sanctions. Travel bans, asset freezes, and limits on imports and exports in different industries have all come from the sanctions imposed by the US, the EU, and other nations Dreger,(2021). Access to U.S. and other foreign financial markets has been severely curtailed for Russian banks and several oil and gas companies. The US has attempted to penalize firms and even warships involved in the construction of gas pipelines in recent years, which has impeded the development of the two new pipelines Russia is building to send gas to Europe Mamonov,(2022).
The European Union obtains its gas from a variety of sources, with pipeline gas from Russia, Norway, and the Netherlands covering the majority of the continent's demands. There is also pipeline supplies from North Africa, as well as some capability for obtaining liquefied natural gas from the worldwide market. Geographical closeness and an extensive pipeline network have left the EU unduly dependent on Russian supplies, with Russia accounting for more than a third of EU gas consumption Mamonov (2022). The EU also imports around a quarter of its oil from Russia, depending on a network of oil pipelines once again. Because of Russia's tense relationship with Ukraine, gas supplies have been disrupted on occasion, most recently in 2006 and 2009 (Tuzova ,2022). In each of these cases, disputes with Ukraine over the payment of gas transit costs were reported as the basis for shutting off supplies, but the European nations at the end of the pipes were the first to be impacted (Stone, 2022). Since then, the EU has worked to enhance its gas security, but it remains significantly reliant on Russia. With long-term contracts in place in global gas markets and regional, pipeline-based supplies, the EU's diversification away from Russia is difficult, if not impossible, in the near term Tuzova (2022). The price of gas in Europe increased in 2021, owing to significant global pricing pressures as economic activity picked up and localized reasons such as a maintenance-related outage in Norway. However, in the latter months of the year, pricing worries were more focused on the flow of Russian gas Tuzova (2022). These fears culminated in December 2021, when Russia temporarily stopped providing gas via one of the key pipelines, causing European gas prices to skyrocket. While this was a short period in which certain pricing aspects of the European gas market, rather than any purposeful stoppage by Russia, are likely to have played a key role in causing this increase, there have been strong signals of decreased flow from Russia during the previous several months Dreger (2021). In recent weeks, the EU has attempted to compensate by boosting LNG imports. Since the invasion began, European gas prices have skyrocketed. The recent spike in gas prices has had a substantial impact on inflation in the euro zone. Mamonov,(2022).