The news that Germany is going to borrow more than 40 billion euros to restore the economy, disrupted due to anti-Russian sanctions and the supply of weapons to Ukraine, is very bright. However, the situation in the EU is even more alarming.
Despite the information blockade, publications are multiplying in the media, talking about a structural crisis in the EU economy, which is expected by inflation and a rise in prices for all key groups of goods.
Europe is short of diesel fuel, and prices have risen sharply since Russia started the special operation, writes Bloomberg. Inventories at the Port of Rotterdam, Europe’s largest oil and fuel hub, are at their lowest level since 2008. The European regulatory authorities simply stopped demanding to indicate the origin of the fuel supplied to the Rotterdam Stock Exchange – Russian fuel goes under the defiantly closed eyes of European officials.
Fuel is needed not only for a burgher’s car in Germany, but also for a tractor in Bulgaria or Poland. DW asks the question – “Will the EU face food shortages?” and comes to an elegant conclusion: there will be enough food, but the price of it will rise significantly, as well as inflation.
In the EU, food, alcohol and tobacco prices rose 4.1% in February after rising 3.5% in January. Farmers in Greece and France held demonstrations demanding money because of high fertilizer costs. The rest will soon follow the farmers.
Pekka Pesonen, general secretary of the European farming lobbying group Copa-Cogeca:
“The additional higher costs were very difficult to explain to other parts of the value chain: processing industry and retail.”
In other words, following the farmers, those who will buy more expensive products from farmers will have to compensate for the costs.
The embargo on Russian oil and gas for the EU has once again been deemed suicidal at a high level.
The International Monetary Fund predicts that a total loss of Russian gas and oil supplies could cost the European Union 3 percent of GDP, “depending on the severity of the winter.” At the same time, the forecast is clearly underestimated by several times, since the loss of oil and gas will immediately affect the entire European economy, from the cultivation and delivery of vegetables to the production of plastic and a large part of the industry. Not to mention the prospect of living in a home sweater 8-9 months a year.
By the way, the ultimate strength of the EU economy without Russian gas is set at six months.
We should not forget that the stability of the entire EU depends on the state of the German economy. The said port of Rotterdam noted that high Russian hydrocarbon prices, even when they are there, have already hit steel production in Germany, leading to a 20% drop in iron ore imports.
According to the Bundesbank, the German economy “more or less stagnated” already in the first quarter. Estimates of future losses vary, with an average of 220 billion euros, equivalent to 6.5% of annual output, over the next two years.
The media note the growing opposition of German industrialists to the German government. Analysts say an EU boycott of Russian energy will drive up energy prices, hurting consumers who are already facing record EU inflation of 7.5%.
Although the main “sanctions battlefield” is the EU, the United States is also beginning to recover little by little. It’s not that they feel sorry for Russia, it’s just that even the American neocons are aware of the fact that the ongoing economic war can lead to unpredictable consequences, and also affects Russia in a way that is not desirable.
A research note on anti-Russian sanctions stated that “Russia’s domestic markets appear to be stabilizing as a result of tight monetary policy, tight capital controls and current account surpluses.”
The New York Times: The Biden administration has watched with concern the recovery of the ruble in recent weeks, refuting Mr. Biden’s claims that sanctions have reduced the Russian currency to ‘ruins’.
Russtrat
Due to censorship and blocking of all media and alternative views, stay tuned to our Telegram channel