The Energy Dilemma: How France's Dependence on Russian LNG Balances Economic Stability and the Financing of War

policy, International Trade https://ipr.blogs.ie.edu/ France's Dependence Economic Stability and exposing complex and structural dependencies that policy. Despite inputting multiple sets of sanctions on the European imports of Russian Liquefied Natural Gas have one of the main purchasers and continuing to do so. We note with the country buying around 4 million tons in the first strategic dilemma between preserving domestic economic to Russia and the war. This study will investigate how between domestic economic stability and the indirect of complex interdependence, economic statecraft, and the structural and normative dimensions of France’s policy communication will be combined with data on LNG trade and research suggests that France’s persistence in importing economic necessity. It is driven more by a need to stabilize national industrial competitiveness. However, it undermines of its sanctions regime and dialogue. The research explores incentives, phased LNG restrictions, and coordinated EU energy markets. statecraft, interdependence, moral economy, sanctions

1. Introduction

The ongoing war in Ukraine has forced Europe to confront the fragility and limits of its energy architecture.

For decades, Europe rested on the assumption that global energy markets would remain “predictable”, separated from geopolitics. Russia’s invasion broke that illusion. The European Union wanted to cut back its reliance on Russian fossil fuels after important sanctions and diplomatic isolation, but there is still an important loophole. Imports of liquefied natural gas (LNG) from Russian suppliers have not only continued but, in some cases, grown. France has become one of Moscow's main European customers in this regard. This paradox reveals a dilemma at the heart of European policy: the tension between economic stability and morality. For France, a country that promotes European solidarity and the protection of human rights, the continuous purchase of Russian LNG imports undermines both the credibility of sanctions and the EU’s proclaimed strategic autonomy. Yet French policymakers face a difficult trade-off. Stopping Russian LNG imports could threaten industrial sectors, make inflation an increasingly important issue and provoke social unrest. Understanding why France continues to import Russian LNG therefore requires an approach that goes beyond surface-level explanations of economic supply and demand theories. The country’s position reflects a complex situation of interdependence, strategic calculation, and ethical justification. To capture this dilemma, the study draws upon three theoretical frameworks, accompanied with quantitative data to illustrate it. Firstly, complex interdependence, which explains the mutual constraints of economic ties; Secondly, economic statecraft, which explores the use of trade and energy as instruments of power; and finally moral economy, which shows how norms and values shape perceptions of legitimacy in policy decision making. Together, these perspectives provide the conceptual foundation for analyzing both the structural pressures that shape French energy policy and the narratives that seek to legitimize it. In this paper, policy recommendations will be given following an in-depth analysis from different viewpoints and theories.

2. Background

Europe’s dependence on Russian energy has deep historic roots. Since the 1970s, Moscow has used leverage of its important reserves of natural gas, oil, and coal as a geopolitical instrument. The construction of major pipeline networks such as “Yamal-Europe, Brotherhood, and Nord Stream 1” created a relationship of mutual dependence: Russia gained steady revenue, while Europe secured cheap and abundant energy to fuel its post-industrial growth. Fast forward, by 2021, the “European Union imported roughly 40% of its natural gas and 25% of its crude oil from Russia” according to the International Energy Agency, making energy the main element of EU- Russia trade relations. France’s relationship with Russian energy followed a slightly different path. Owing to its reliance on nuclear power for electricity generation, France imported less Russian pipeline gas than countries such as Germany or Italy. However, it played a growing role in the liquefied natural gas (LNG) trade, which expanded rapidly in the 2010s. “French energy giant TotalEnergies became one of the main investors in Russia’s Yamal LNG project (launched in 2017) and later Arctic LNG 2”, acquiring long-term contracts that guaranteed France access to competitively priced LNG cargoes. These commercial agreements helped diversify France’s supply routes but also entrenched economic ties that proved politically costly after 2022. The outbreak of the war in Ukraine fundamentally altered Europe’s energy map. Pipeline gas flows from Russia collapsed by more than 80% between 2021 and 2023, following both EU and US sanctions. On the other hand, LNG trade surged;“European countries imported over 19 billion cubic meters (bcm) of Russian LNG in 2023” up from around 15 bcm in 2021. France alone accounted for approximately 4.5 bcm, making it the largest European importer of Russian LNG alongside Spain and Belgium. These imports mainly arrived through the Montoir-de-Bretagne and Dunkirk terminals, where Russian cargoes represented more than a third of total arrivals. This growing reliance persists despite the EU’s firm commitment to cut out the use of Russian fossil fuels. France’s logic has been primarily economic. Russian LNG, traded under long-term contracts denominated below spot-market rates, offered price stability at a time when European gas prices soared from €20/MWh in early 2021 to over €200/MWh by August 2022. The continuation of these imports helped “shield” French households and industries from severe inflationary shocks, even as it generated significant political controversy within the EU. The result is a situation of structural ambivalence”: While Russia’s share in Europe’s overall energy mix has declined sharply since 2022, its LNG exports have become one of the few remaining revenue streams connecting Moscow and European markets. France’s participation in this trade proves the limits of European sanctions policy and the importance of energy interdependence that continues to bind the two sides.

3. Analysis

3.1 Complex Interdependence Firstly, France’s persistence in importing Russian LNG can be analysed through the lens of complex interdependence, which “transforms moral choices into structural constraints”. The framework developed by Robert Keohane and Joseph Nye explains how strong economic ties result in "reciprocal vulnerability." This means the more integrated two economies are, the higher the domestic cost of disengagement, economically and politically as all spheres of society would be impacted. These Russian cargoes sold under oil-indexed contracts at about €55–60/MWh served as an economic shock absorber when European petrol prices skyrocketed from €20/MWh in early 2021 to over €300/MWh in August

2022. Abandoning them would have meant importing

equivalent volumes from the United States or Qatar at up to five times the price, raising French energy prices by 25–30 percent and fueling inflation already at 6.1 percent in early 2023. Here, the causal mechanism is evident: interdependence causes the short-term cost of moral behaviour to outweigh the long-term cost of reputational inconsistency. Gridlocks which France faces include contractual lock-ins, winter storage restrictions, and domestic political vulnerability all contribute to France's "choice" to continue importing. This clarifies the how of the trade-off: reducing Russian LNG would cause immediate economic suffering while only providing symbolic moral coherence on the international scene. Moral restraint becomes politically unattractive in such a situation. 3.2 Economic Statecraft The second point of view is the concept of economic statecraft. Meaning : “the use of economic instruments to influence other states”. Sanctions are meant to impose costs that change a behaviour, but they can backfire due to what academics refer to as “sanction elasticity” when the targeted good is crucial. Russia’s strategy since 2022 has exploited precisely this weakness. Moscow repositioned LNG as a "commercially neutral" commodity by providing contract stability and maintaining legal separation between LNG trade and state-controlled pipelines. European consumers, including France, were able to defend ongoing purchases without formally and legally going against the sanctions. The economic logic was reinforced by the pricing strategy which was put in place. While spot LNG prices in Europe exceeded €200–250/MWh in 2022, Russia continued supplying long-term cargoes to France at around €60/MWh through oil-indexed contracts . This discount effectively turned Russian LNG into a stabilizer of French inflation and energy costs which were a politically advantageous situation for the French government, which faced mounting pressure over consumer prices. In 2023 alone, France imported approximately 4.5 billion cubic meters (bcm) of Russian LNG valued at €2.3 billion, representing just 0.2 percent of its total imports yet generating an estimated €400–500 million in tax revenue for the Russian state. Here, the mechanism that Russia is using can be referred to as “inverted deterrence”: by offering France short-term advantageous pricing, Russia ensured that sanctions would not fully impact their energy sector. The Economic Statecraft theory can explain why France’s behavior reflects strategic reflection more than “complicity”, putting the interest of the citizens first. When domestic costs rise it leads to social unrest, electoral backlash, the focus turns directly more to a national perspective. Consider the precedent events of social unrest in France with the “Gilet Jaune” crisis at the beginning of Macron’s 1st term for example. 3.3 Moral Economy While complex interdependence explains the structural constraints that bind France to Russian energy, and economic statecraft reveals how sanctions are neutralised under such constraints, the framework of moral economy clarifies why this contradiction remains socially and politically acceptable. The concept of Moral economy advances that legitimacy does not rest on “abstract principles, but on what societies perceive as fair, necessary, and protective of collective welfare”. Economic security becomes the top ethical priority during times of crisis, moral judgements are therefore recalibrated around survival needs. In the context of France, government officials consistently framed the issue in terms of “protecting households,” and “preventing economic disruption”. This pushes the narrative of a moral obligation which is in this case shielding citizens from volatility caused by the war. The fact that Russian LNG arrived at roughly €60/MWh while spot prices exceeded €200–250/MWh reinforced the narrative that refusing these cargoes would have imposed hardship on the citizens. Public opinion data confirms this moral “recalibration”. Indeed, as seen in an IFOP 2023 survey, “61% of French respondents prioritized energy price stability over stricter sanctions on Russia”, suggesting that citizens have a form of a “hierarchy of values” in domestic issues. The mechanism at play is a form of “social re-ranking of obligations”. Meaning that when faced with scarcity and volatility, societies legitimize government actions that prioritize internal stability over supranational or international, even if this indirectly finances an aggressor. This explains why the trade-off in France’s LNG policy, economic stability versus indirect war financing, continues to endure without great domestic opposition. We may also note that this effect is limited because France also adopts a leadership stance in Europe in the face of Russian aggression.

4. Policy Recommendations

4.1 Prioritize Domestic Stability Through a Managed and Sequenced Reduction of Russian LNG Imports France’s strategic priority must be to avoid any abrupt rupture in LNG supply that could destabilize their domestic market. As the analysis showed, Russian LNG’s competitiveness is structural; rooted in long-term oil-indexed contracts priced at €55–60/MWh which provided stability during the energy crisis and functioned as an economic shock absorber while spot markets surged largely above €200/MWh. As previously stated, when energy prices are at the center of policy making, especially after successive inflationary shocks, any sudden elimination of Russian LNG could lead to a serious domestic conflict, particularly within vulnerable households and energy-intensive industries. Therefore, the objective cannot be a rapid and abrupt or symbolic cut, but a carefully sequenced “disengagement”, one that limits short-term economic volatility while focusing on long term strategic solutions. The first step may be a complete inventory of contractual commitments held by French entities specifying for example expiration dates, penalty clauses, and flexibility options. Instead of terminating these contracts rapidly, France can allow them to unwind naturally and reach maturity, while ensuring that each upcoming expiration date is met with an alternative. This alternative would be pre-secured and agreed on volumes from diverse suppliers. This includes signing agreements with the United States, Qatar, Norway, and potentially West African exporters such as Nigeria and Mauritania (Greater Tortue). These suppliers cannot directly replicate direct Russian pricing but can offer a solution which is more costly, but in the long run will have a greater impact on the Russian war financing machine. A second element of this strategy involves domestic price stabilization. France possesses efficient mechanisms which it should reinforce. The tariff shield mechanisms are an interesting options which should be explored, via the CRE or a new “Tarif de Souveraineté Énergétique” to guarantee stable consumer prices during the transition. This would limit public backlash and ensure political possibility. This progressive long term and sovereignty focused approach preserves French interests, while reducing dependency in a realistic and economically responsible manner, especially in a politically difficult situation. 4.2 Reinforce French Energy Sovereignty by Pushing for the development Nuclear Option The best long term policy option for France would be a large expansion of domestic nuclear capacity. Nuclear energy has been a main component of French sovereignty since the 1970s, giving Paris the autonomy to remain protected from the oil shocks and to maintain some of the lowest electricity prices in Europe for decades. Unlike LNG, nuclear power does not fluctuate with global markets, it's not subject to geopolitical manipulation and events, and reinforces France’s strategic autonomy. Therefore, France could focus on a continuous nuclear expansion. For example, this could require accelerating the deployment of the EPR2 program, not simply maintaining the already-announced six reactors but committing to twelve or fifteen units by 2050. This expansion would be costly in the short term but would allow France to retire some gas-fired plants. Another possibility is for France to fast-track the Small Modular Reactor (SMR) strategy through EDF’s NUWARD project. These reactors have the capacity to serve as local generators for industrial hubs, replacing gas-powered systems and hydrogen production, thereby directly reducing demand for LNG. The French state must also address the investment gridlock when it comes to Nuclear power. A sovereign financing vehicle similar to the “Grand Carénage fund” could pool public and private capital for nuclear expansion. Long-term price contracts for nuclear production would guarantee predictable revenue streams and, therefore, attract private investment. In this matter France should negotiate with the European Commission to ensure that nuclear energy remains categorized as “sustainable” within EU tax law. We believe in the development of the nuclear sector , as it is the only policy option that simultaneously achieves energy sovereignty, price stability, industrial competitiveness, and reduction of imported LNG in this precise case. 4.3 Continue Apply Targeted Sanctions That Limit Russian LNG Influence Without Harming French Consumers. We recommend that France continues applying targeted sanctions on Russian cargoes. An effective measure would be to ban Russian LNG transshipment through French ports. France currently acts as a “key hub” for Russian Arctic LNG re-export, enabling Russia to bypass shipping constraints and access global markets. Another potential sector for sanctions in the maritime area would be the restriction of maritime services offered to Russian LNG carriers in order to complicate Russia’s export chain. These types of sanctions or restrictions would target Russia’s commercial logistics, not France’s domestic consumption.

5. Conclusion

France’s continued import of Russian LNG proves that there is a strategic dilemma concerning not only international pressures but also the constraints of France’s current domestic political situation. While not in full crisis, the French government currently faces significant political fragmentation and complication due to tight budgetary conditions that limit the government’s room for manoeuvre. Public expectations regarding energy affordability remain high and are crucial. It is also noteworthy that polarisation and political competition have intensified. The analysis showed that this dilemma is not only politically ideological, but also structural. Firstly, through complex interdependence, France’s energy choices appear constrained by long term contractual ties, and the immediate economic consequences of disengagement. Through economic statecraft, sanctions fail when the country which applies them has a domestic vulnerability that exceeds its willingness to bear the costs, precisely the situation France faces currently. Finally, through the moral economy, in times of crises public opinion shifts and prioritizes more national interest, especially in sensible topics such as energy prices. In this context, the French government cannot easily implement strong punishing measures without risking severe domestic repercussions. The political system is too polarized, the fiscal space too limited, and public tolerance for economic and social hardship too low at the moment. The challenge is therefore not simply to reduce dependence on Russian LNG, but to do so in a way that does not destabilize France’s domestic situation. The policy recommendations proposed may be the most viable and realistic at the moment, constituting a gradual reduction of Russian LNG, accelerated nuclear investment, strategic reinforcement of domestic infrastructure, and targeted low-cost sanctions. In the end, France’s energy problem illustrates the conflict between aspiration and reality. In times of geopolitical rupture, states must act within the limits of their domestic environments. For France, the most important thing is the welfare of the people and nation. It should also try to limit the exposure to Russian energies to punish Russia more. We need to acknowledge the reality of our position because long-term sovereignty cannot be maintained through theatrics but rather through resilient, economically sustainable policy choices.