Talks of economic sanctions against Russia are talk. Suppose the EU sanctions Russia over Ukraine or anything else. In that case, all Russia has to do is slow down the LNG pipelines and other fuel deliveries. The EU does not have enough reserves to stand for more than a couple of weeks. They could bring in LNG from Qatar and a few other Asian countries through Spain and the UK. But these pipelines are small compared to Nord Stream or the Ukrainian pipes. Converting and upgrading the Spanish and UK pipelines would take time and be expensive. The US is also dependent on fuel imports. The extra fuel needs of Europe would hit the US just as hard as it hits Europe. Europe could import oil and coal via tankers and freighters; this would cause more inflation due to the extra fuel costs.

The debate about Nordstream 2 gas pipeline is also a nonstarter. It is political theater. Russia has a handful of Aces against a ten-high hand. For example, regulators or politicians decide to stop the Nord Stream 2 pipeline to punish Russia. Russia could slow the flow of Natural gas through its sister pipeline, the Nord Stream. The EU imports 40%+- of its natural gas from Russia, 30%+- of its Crude Oil, and 42% of its coal. The Fuel embargo weapon is very potent and effective if Russia does not use it. It was like when Istanbul raised the taxes on items flowing through it to the west. Many Atlantic coastal countries developed deep sea shipping lines to bypass Istanbul to bring spices and other Asian products directly to Europe. Istanbul lost most of its tax revenues due to lower trade. Suppose Russia does stop or severely curtail energy flow to western Europe. In that case, Europe finds other sources of Natural Gas, oil, and solid fuels like coal.

Let's not sell short the idea of politicians cutting off their noses to spite their faces. Political insanity is nothing new, as we have seen in the past two years with the Covidiodiousy. Politicians have destroyed major parts of their respective economies with lockdowns and mandates that did not affect a mild virus. Yes, some people did die after they caught Covid. Almost every one of them had a co-morbidity.
If politicians did sanction Russia and lock their bank accounts, then Rationing would be the watch phrase of the day. With its rolling blackouts, California is the future of the US and Europe if they sanction Russia.

Now, we can take all of the arguments for why Europe will not Sanction Russia and flip that coin. Russia is not going to do anything like invade Ukraine. Russia needs the money brought in by selling oil, LNG, Coal, and other commodities to Western Europe. Energy is a large part of Russian exports to the EU. The import/export balance is relatively close Russian exports to Europe are 38% while it imports 37% from Europe. Another thing making Russia invading Ukraine unlikely is that the EU was the largest investor in Russia in 2019. The EU invested 311 billion Euros into Russia, while Russia invested 136 billion Euros in Europe.

Russia is a net importer of Services from Europe while it is a net exporter of Trade goods to Europe. The trade balance is close, so both parties have a lot to lose if either party imposes sanctions. From a pragmatic point of view, everyone loses if things go hot. Russia needs the services it imports and the money from exporting to Europe. Europe needs the energy and trade goods it gets from Russia.

President Zelensky is still asking western powers to tone down the rhetoric about Russia invading Ukraine. President Putin is also asking the west for more security. I am not a Putinphile, and I think he probably has a few skeletons in his closet that he would love to stay hidden, as most politicians in the world. Nowhere in all Eastern Propaganda Mills can see where Putin is being hawkish. I expect soft balling of Putin from Russia Today and other papers in Russia. But, the Kyiv Post playing down the threat of invasion does not fit with the rhetoric from the US, UK, and other western Propaganda Mills.

When I follow the money trail open to all, I see an interrelated web of investments and dependencies. Russia needs services and some trade goods from Europe, and Europe needs trade goods from Russia. My friends in Ukraine say that the threat of invasion is not new, and almost everybody has adjusted their lives to the threat, and they are not worried. Many people have said that Biden is making things worse and wish to tone it down. I agree; that everyone needs to step back. And think of the best possible course that avoids Europe going dark due to a lack of Fuel, or NATO lighting the candle and starting a war with Russia. There is no good outcome from a war between NATO and Russia.
Talks of economic sanctions against Russia are talk. Suppose the EU sanctions Russia over Ukraine or anything else. In that case, all Russia has to do is slow down the LNG pipelines and other fuel deliveries. The EU does not have enough reserves to stand for more than a couple of weeks. They could bring in LNG from Qatar and a few other Asian countries through Spain and the UK. But these pipelines are small compared to Nord Stream or the Ukrainian pipes. Converting and upgrading the Spanish and UK pipelines would take time and be expensive. The US is also dependent on fuel imports. The extra fuel needs of Europe would hit the US just as hard as it hits Europe. Europe could import oil and coal via tankers and freighters; this would cause more inflation due to the extra fuel costs. The debate about Nordstream 2 gas pipeline is also a nonstarter. It is political theater. Russia has a handful of Aces against a ten-high hand. For example, regulators or politicians decide to stop the Nord Stream 2 pipeline to punish Russia. Russia could slow the flow of Natural gas through its sister pipeline, the Nord Stream. The EU imports 40%+- of its natural gas from Russia, 30%+- of its Crude Oil, and 42% of its coal. The Fuel embargo weapon is very potent and effective if Russia does not use it. It was like when Istanbul raised the taxes on items flowing through it to the west. Many Atlantic coastal countries developed deep sea shipping lines to bypass Istanbul to bring spices and other Asian products directly to Europe. Istanbul lost most of its tax revenues due to lower trade. Suppose Russia does stop or severely curtail energy flow to western Europe. In that case, Europe finds other sources of Natural Gas, oil, and solid fuels like coal. Let's not sell short the idea of politicians cutting off their noses to spite their faces. Political insanity is nothing new, as we have seen in the past two years with the Covidiodiousy. Politicians have destroyed major parts of their respective economies with lockdowns and mandates that did not affect a mild virus. Yes, some people did die after they caught Covid. Almost every one of them had a co-morbidity. If politicians did sanction Russia and lock their bank accounts, then Rationing would be the watch phrase of the day. With its rolling blackouts, California is the future of the US and Europe if they sanction Russia. Now, we can take all of the arguments for why Europe will not Sanction Russia and flip that coin. Russia is not going to do anything like invade Ukraine. Russia needs the money brought in by selling oil, LNG, Coal, and other commodities to Western Europe. Energy is a large part of Russian exports to the EU. The import/export balance is relatively close Russian exports to Europe are 38% while it imports 37% from Europe. Another thing making Russia invading Ukraine unlikely is that the EU was the largest investor in Russia in 2019. The EU invested 311 billion Euros into Russia, while Russia invested 136 billion Euros in Europe. Russia is a net importer of Services from Europe while it is a net exporter of Trade goods to Europe. The trade balance is close, so both parties have a lot to lose if either party imposes sanctions. From a pragmatic point of view, everyone loses if things go hot. Russia needs the services it imports and the money from exporting to Europe. Europe needs the energy and trade goods it gets from Russia. President Zelensky is still asking western powers to tone down the rhetoric about Russia invading Ukraine. President Putin is also asking the west for more security. I am not a Putinphile, and I think he probably has a few skeletons in his closet that he would love to stay hidden, as most politicians in the world. Nowhere in all Eastern Propaganda Mills can see where Putin is being hawkish. I expect soft balling of Putin from Russia Today and other papers in Russia. But, the Kyiv Post playing down the threat of invasion does not fit with the rhetoric from the US, UK, and other western Propaganda Mills. When I follow the money trail open to all, I see an interrelated web of investments and dependencies. Russia needs services and some trade goods from Europe, and Europe needs trade goods from Russia. My friends in Ukraine say that the threat of invasion is not new, and almost everybody has adjusted their lives to the threat, and they are not worried. Many people have said that Biden is making things worse and wish to tone it down. I agree; that everyone needs to step back. And think of the best possible course that avoids Europe going dark due to a lack of Fuel, or NATO lighting the candle and starting a war with Russia. There is no good outcome from a war between NATO and Russia.
Like
1
0 Comments 0 Shares 190 Views