Crisis roams Europe, or not sober from bourbon | Latest news The Moscow Post
25 May 2022

Crisis roams Europe, or "not sober from bourbon"

The main source of aggressive "dementia" is overseas.

Washington is trying to unleash an economic war or has even done so, Russian President Vladimir Putin said during a meeting on the development of aviation transportation and aircraft engineering, a correspondent for The Moscow Post reports.

Meanwhile, sanctions lead to problems in the westernmost camp. They are fraught with tests for Europe, including rising energy, automotive and food costs, halting energy-intensive industries, severing established ties, bankruptcy, and unemployment. The European Union itself refuses the comfortable conditions that have been provided for decades by Russian energy resources, their reasonable prices and stable supplies. This is written by the newspaper Handelsblatt, other publications. They share "discoveries," complain of the gravity and anxiety associated with... the actions of the West!

The first "discovery," according to The Economist, is that "if there is an economy in the world that can cope with difficulties under isolation and blockade, then this is the Russian economy." The second "discovery," of course, is associated with the transfer of payment for Russian natural gas to rubles for "unfriendly" countries. This is the subject of Europe's energy security, especially Germany, as its industrial core. The third line is occupied by worries about the state of the European economy after the pandemic. Sanctions added uncertainty.

Do not wait

Russia's economic war cannot be declared, it can only be continued by new types of attacks on the economy, sophisticated methods of subversive actions. The West does just that, calling its latest sanctions "nuclear," calling "in the trenches" the European Union, NATO, Japan, even God-forgotten Australia with New Zealand and Singapore. The collective West, which has hitherto sided with the law and private property rights, has frozen about half of the foreign reserves of the Central Bank of Russia.

An economic war without rules began! America has banned the supply of many goods, its own and other manufacturers. Large companies began to leave the country, leaving shops, shopping and dealerships, office premises, warehouses, suppliers and customers. Some stipulated the right to return.

The authors of the "nuclear" strikes turned to the data of the OECD, the analytical headquarters of the Western world. It turned out that Russia's GDP as of March 26 grew by 5% compared to the last week of March last year. Consumer spending increased, generation volumes exceeded March 2021 by 3.2%, demand for rail transportation did not change. The ruble almost regained its position.

The West's hopes for "dark times" for the Russian economy are related to expectations of "three cuts": consumer spending, industrial production, and a drop in income from energy exports. The latter is Washington's main hope. But it gradually turns out that Russia exports oil, oil products and natural gas in almost the same volumes, receiving tens of billions of dollars in return. In March, exports of oil and petroleum products grew by 350 thousand bar/day and averaged about 3 million bar/day for oil and 2 million bar/day for oil products.

True, the export by sea of some types of oil products, including fuel oil and vacuum gas oil, has decreased. According to Russian experts, the physical volume of oil exports this year may decrease by 15-20%. But high prices can support export volumes can by value.

Bloomberg estimates Russia's revenues from oil and gas exports in 2022 at more than $320 billion, a third more than the revenues received in 2021. According to estimates by the Washington Institute of International Finance (IIF), the current account surplus could reach a record level of $240 billion.

The conclusion made by The Economist is that "the Russian economy will survive. But the International Energy Agency (IEA) warns: reducing oil supplies will lead to a global oil crisis.

Lozenges in the "dry residue"

This is also the case in the gas market, with the only difference being that it is a crisis in Europe. The dependence of EU countries on natural gas varies from country to country. For France, this is only 17-20% in electricity generation and Paris can use gas supplied by Algeria. For Finland, dependence reaches 100%.

The Beijing News ironically noted that in response to Russia's actions to demilitarize and denazify Ukraine, Europe has embarked on the path of "derusification" of energy, but is the EU ready to pay for it, the Chinese publication asks.

In early March, the European Commission began implementing the European Energy Reset Plan project, aimed at reducing dependence on Russian natural gas by two-thirds over five years. By 2030, we have to completely get rid of Russian energy sources. The EU will purchase gas centrally, share gas storage and transportation infrastructure. The task is to fill all gas reservoirs by 80% of the volume by October 1 of this year.

So far, talk of Europe switching to American gas looks unconvincing. The United States can increase LNG supplies by 15 billion cubic meters per year (10% of Russian volumes) and bring them to 50 billion cubic meters by 2030 (30% of Russian volumes by 2021). Even if the physical volumes of Russian gas can be replaced, you will have to pay three to four times more for fuel than under Gazprom's long-term contracts.

Renewable sources are unlikely to help significantly. Many countries are reluctant to turn away from coal, abandoned nuclear power plants, and hydropower is called into question. The Beijing News notes that the emphasis on green energy creates a vicious circle: "the more Europe advocates alternative energy sources, the higher its dependence on natural gas." Wind parks and solar farms depend on the weather and time of day, need to support gas power plants.

The European Union, for many years, took relations with Gazprom for granted, as a sign of its "special location" to the gas supplier. Europe is mired in self-doubt about itself as a large, premium market. Brussels opposed long-term contracts with gas exporters, did not invest in the construction of infrastructure that produces projects. This did not suit suppliers, they preferred other schemes and long-term contracts with Asian countries. Brussels's plans to bring Europe's energy security under full control turned out to be nothing more than self-deception.

But, if desired, sources of supply can be changed. Thus, the precondition for the "continuous supply of Nigerian gas" is that it will be necessary to pay for the construction of a gas pipeline with a length of 4128 kilometers and a capacity of 30 billion cubic meters, passing through three countries, the desert and the sea. All this looks like "draw a cake to quench hunger," according to the well-known Chinese expression.

In the evening money, in the morning chairs

The innate craving of the Anglo-Saxons to plunder colonies took the form of a one-time confiscation of the reserves of the Central Bank of Russia. The "airbag" accumulated in foreign accounts was stealing "punctured," became inaccessible. This was accompanied by an "invitation" to continue to supply gas.

It is proposed to change foreign accounts for gas payments to accounts in the Russian Federation. Importers must pay for fuel supplies in rubles. So far, we are talking only about Gazprom.

Vladimir Putin, announcing this, proposed opening foreign exchange and ruble accounts at Gazprombank, transferring currency, converting it and paying bills in rubles. If payments are not made, the president warned, "we will consider this a default on the part of buyers - with all the ensuing consequences." There will be no charity, contracts will be stopped.

German Economy Minister Robert Habeck called these requirements "unacceptable violation of contracts." Recall that the European Union receives from Russia 30% of its oil and about 40% of natural gas, which costs Europeans about 400-500 million dollars daily, depending on the level of prices.

No gas, no electricity. Enterprises will close, store shelves will empty. In this regard, Moscow faces a complete embargo on the export of energy resources, at least gas, as a "response." French economists using models calculated how much the purchasing power of Europeans would decrease in this case. Assessing the consequences is completely difficult, but this will definitely undermine the EU economy.

And in the morning they will wake up

Estimates of direct losses vary. Each EU resident, the French say, will lose an average of 227 euros per year from a conditional wallet. In Lithuania, purchasing power will fall by 1745 euros per year, in Slovenia - by 716 euros, in Bulgaria - by 563 euros, in Finland - by 440 euros. Germany will be on the list of the eleventh country affected by the embargo, the purchasing power of Germans will decrease by 125 euros per year.

The Institute of Macroeconomics and Conditions (IMK), confirmed that the cessation of gas supplies from Russia will lead to a drop in German GDP by at least 6%, will cause a recession, will be detrimental to both the economy and society. The Leibniz Institute (IWH, Halle) has already reduced its GDP growth forecast to 3.1% in 2022. In December, experts expected growth to be 3.5% compared to 2021.

High energy prices in 2022 will accelerate inflation to 6.1%. The Federal Statistical Office of Germany in Wiesbaden reported that inflation in Germany in March will be 7.3%, which will be a record high since the fall of 1981.

German industry leaders are concerned. It is suggested that the halt in purchases from Gazprom will lead to a noticeable drop in German GDP, harmful social consequences. If Moscow stops supplying, then the German economy will not last for a long time, "said Jörg Hofman, chairman of the metalworkers union.

And he added that the work of chemical, cement, steel, aluminum and glass plants will have to be stopped. Enterprises such as the BASF plants in Ludwigshaven, which consumes one percent of all German energy, will not even partially be able to continue work without Russian gas.

Martin Brudermueller, CEO of BASF, warned that limiting or stopping energy imports from Russia would put small and medium-sized companies on the brink of bankruptcy, leading the German economy to a severe crisis since 1945. In Ludwigshaven alone, BASF's largest enterprise will have to lay off tens of thousands of employees. Rising gas prices are already forcing the company to reduce ammonia and fertilizer production, undermining the competitiveness of agricultural Europe.

Siegfried Russwurm, president of the Federal Union of German Industry (BDI), also predicted the industrial collapse caused by the embargo on Russian energy resources.

German Vice Chancellor, Minister of Economy and Climate Protection Robert Habeck warned of a split in German society in the event of a ban on energy supplies, suggested refraining from a sharp change in ties with Russia.

State Duma Chairman Vyacheslav Volodin also warned that export goods, including oil, grain, fertilizers and wood, can also be supplied only for rubles.

Russia will have to "select" from Europe production for the processing of its resources.

Unlike the giant volumes of virtual financial pyramids secured by the dollar, the ruble has a real filling, including, in addition to hydrocarbons, gold and diamonds, invaluable for industry platinum group metals, titanium, aluminum and much more. To this can be added a developed and competitive electric power industry, the nuclear industry and the export potential of Rosatom, wide opportunities for the use of natural gas inside the country, and oil for the needs of petrochemicals.

According to Leonhard Birnbaum, head of E.ON, disconnecting from Russian gas "will harm Germany more than Russia," will lead to the fact that "car factories will lack not only chips, but also steering rods, because steel plants did not receive gas." The EU, meanwhile, said that the new package of sanctions should not concern the energy sector. This was stated by European Commissioner for Economics Paolo Gentiloni, reports ANSA.

And the press secretary of the President of the Russian Federation Dmitry Peskov, as if answering, said that the time for reassessing relations and starting a dialogue will come when Europeans "cut away from the American bourbon," remembering the popular variety of American whiskey "Jim Beem" made from corn.

Photo: kremlin.ru

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