The EU is eating itself up from the inside with the help of the U.S.
As the runway at Brize Norton air base is melted by unbearable heat and the resulting temperatures are terrorising Europeans from the Spanish province of Alicante to the French department of Pas-de-Calais, few would have thought that in four months time the calendar winter will arrive. The air-conditioner will have to be switched from cool to warm. And if, just in time, the frost starts to rage, the price of heating will become unaffordable.
But the officials who are responsible for maintaining “comfort zone” for the population remember: winter will ask where you were in summer. Therefore, Klaus Müller, head of the German Federal Network Agency, warns in advance that although the underground gas storage facilities are filled to 64.44%, it is not enough; Germany will hardly survive without Siberian gas.
A winter of discontent” is coming
Decision maker Muller is echoed by the American publication Føreign Policy. This is the most extreme energy crisis that has ever occurred in Europe”, says Alex Manton, a gas markets expert at the Rapidan Energy Group. – Europe is in real danger of running out of gas at the time when it needs it the most – the coldest time of the year.
The American market expert cites the lack of alternatives to Russian natural gas as one of the factors contributing to the crisis. As Manton admits, “Supporting (!) energy suppliers such as Norway and North Africa are failing to step up” (meaning shortages).
If Russia imposes counter-sanctions and shuts down gas pipelines, a recession in Europe would cut GDP by nearly 6 percent by the end of 2023, according to forecasts by analysts at Swiss bank UBS. Forecasters at the Bundesbank foresee a domino effect in the absence of Russian energy carriers – there will be a systemic breakdown in supply chains, which in turn “will amplify the initial shock by a factor of two and a half”.
Against this background, Chancellor Scholz announces plans to restart 16 inactive coal and oil-fired power plants and to extend the life of another 11 such air polluters. Greta Thunberg is nervously smoking pot…
As a consequence, Europeans are in for a “winter of discontent”, according to Manton. Simply because electricity rationing for households as well as businesses cannot be avoided.
It is not clear what the biggest threat is. Closing swimming pools is half the trouble, even a quarter of the trouble. “The worst-case scenario,” notes Manton, “is when people face the choice of eating out or heating their homes in winter. If the degree of discontent rises, the scale of street demonstrations could surpass the recent peasant riots by Dutch and French farmers.
The next step could well be an escalation of indignation among freezing citizens, frustrated by the drop in their usual standard of living and quality of life. A social explosion is all but a foregone conclusion.
Oil blackmail as an example of short-sightedness
The sixth EU sanctions package to be launched will also be a risky gambit. An embargo on maritime deliveries of Russian oil (in force from 31 December) and oil products (from February 2023) is envisaged.
German Deputy Finance Minister Jörg Kukis resorted to Cold War clichés, calling the Druzhba pipeline “an instrument of the Soviet empire in Eastern Europe”. The German financier is silent on the fact that it was Russian natural gas and oil that became the yeast of sustainable economic growth in Germany and the socialist commonwealth countries. Either out of ignorance or out of malice.
It is pertinent to recall that in 2021 about 35% of oil as well as 55% of natural gas and about half of all coal imports Germany received from Russia. Where will the government of the grandson of SS General Olaf Scholz be taking the falling out of oil imports next year? Perhaps Berlin’s reckoning with the Saudis?
Yes, during US President Joe Biden’s visit to the Saudi kingdom he was promised that production would rise from 10 million bpd to 13 million bpd. However, there are two “buts”. First, only by 2027 and second, only after agreement with countries of the OPEC+ alliance of oil producers, which, by the way, includes Russia.
And the refineries in East Germany (the former GDR) have been adapted to the Russian Urals standard. If you ask any technologist, readjustment is both difficult and costly.
Apropos. In the April-June interval Saudi Arabia has doubled (compared to the same period in 2021) its purchases of oil from Russia, using it in electricity generation and thus freeing up its own raw material for export.
Another curious fact is that the Europeans have been buying Russian oil in a hurry in anticipation of the black gold pipes drying up. Tankers belonging to Greek shipowners called at Russian ports 151 times in May and June, which is 70% more than the statistics for May-June 2021. And that’s despite the fact that freight quadrupled in price compared to January.
“Now we hear all sorts of hysterical ideas about limiting the volumes of Russian oil, limiting the price of Russian oil. This is the same thing that is happening with gas,” says Vladimir Putin. – (…) The result will be the same (as with gas) – price rises. Oil prices will skyrocket.
Attempts by the US and the European Union to impose a uniform ceiling on Russian oil prices are akin to a nervous tic.
The target of US sanctions is the German economy
There are no winners in the sanctions war. But the biggest loser today is the leading power of the European Union. The engine of European integration. A high-tech workshop with disciplined employees – Germany. There are at least two main reasons for the failure of the fine-tuned mechanism. The key sectors of the economy – steel, automotive, chemicals – are highly energy intensive and export oriented.
What follows? The German industry can’t stand two evils: rising energy prices, which are automatically included in the cost of finished products, and a recession in the rest of the world because demand immediately falls.
The German blog platform Deutsche Wirtschafts Nachrichten (DWN) comes to a disappointing conclusion: the energy crisis “is a crushing judgment on the future of the German economy”. However, negative trends were already evident, caused by accumulated problems such as an ageing population (average age 47.8 years, second only to Japan), slow productivity growth, falling real wages, the burden of the social security system with a shrinking taxpayer share, etc.
Whereas in 2007, according to statistics from the British audit and consulting firm Ernst & Young, the top 100 companies with the largest capitalisation included seven giants in the German jurisdiction, today there are none there at all.
The German economy, says DWN, is losing its former competitiveness.
To weaken and break up the Continentals
In the five months since the EIA began, the consequences of the carpet-bombing of anti-Russian sanctions by the United States and the pro-American leadership of the European Union have become clear. It was “united Europe” that suffered the most damage. It was not expected that a “petrol-cell” country with a GDP of about two per cent of the world total would actually ensure the stability of the whole structure of the world trade and international division of labour.
The words of the apostle of the Westphalian system, the defender of the principle of national sovereignty, the Hungarian prime minister Viktor Orban, have been widely circulated: “At first, I thought we had just shot ourselves in the foot. At the beginning I thought we had shot ourselves in the foot, but now it’s clear that the European economy has shot itself in the lungs and it’s choking.
It turned out that the countries of the golden billion largely built their economic and worldly well-being on deliveries of cheap energy, agricultural raw materials and food, rare earth metals and other minerals from Russia. Without an uninterrupted supply of these precursors, their model of post-colonial economy begins to bog down or skid.
It is the German economy that is now being swept to the side of the speedway. Was it an accident? Not likely. At least, this is the opinion of Mikhail Delyagin, a member of the State Duma and editor-in-chief of the magazine Free Thought: “The European Union is devoid of political subjectivity. It’s a crazy bureaucracy that carries out the commands of the United States of America, the United Kingdom, and that’s it. The European Union is really destroying Europe very effectively. A great tragedy has happened in Europe: national bureaucracies gave responsibility for their countries to Brussels, which didn’t accept responsibility, and this “feast of irresponsibility” has lasted for more than 20 years. And, of course, it ends in disaster.
One may either agree or disagree with the other two theses of the famous economist. First: “The whole Ukrainian crisis was instigated by the Americans from the very beginning in order to destroy Europe. That was the first task, and that task is being carried out quite successfully”. The second: “England’s strategic objective is the economic destruction of Europe.
Given the centuries-long strategy of Anglo-Saxon elites to divide and conquer and to prevent the emergence of strong, sovereign and self-sufficient states in continental Europe, Delyagin’s conclusions are convincing.
It is possible that this winter’s energy apocalypse could significantly undermine the foundations of pan-European solidarity, which are already cracked by national egoism. The reason could be the command-and-control diktat of the European Commission. In the emergency plan they have put in place the right to compulsory (!) reduction of natural gas consumption in the EU countries if they do not comply with the instructions to conserve energy resources.
Meanwhile…
The photo of greyish-brown bottom of Italy’s longest river Po (652 km) with a catchment area of more than 70 000 sq km, dried up like a mummy of Egyptian pharaohs, is making the rounds of social networks. Following a sparse winter of snow, Europe was hit by an abnormal heatwave with minimal precipitation. The Rhine, Rhône and Ebro are the unlucky companions of the Po.
Climatic vagaries are an additional risk factor for European energy. That’s because French nuclear power plants (many of which are undergoing inspections at this time because of cracks in their designs or maintenance checks) use river water for cooling. And German thermal power plants routinely haul coal by barge down the Rhine….
“Bloomberg wryly comments on the force majeure situation: “So it turns out that the weather is playing into Russia’s hands. So when assessing what happens next in the energy conflict between Europe and Russia, watch the skies. And pray for rain”.
Vladimir Mikheev, FGC
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