The uncertainty of the situation in the Bab el-Mandeb Strait, where the Houthis continue to try to attack ships, has already set in motion price increases that Europe will feel in a short time, Politico warns.
Up to 15% of world trade passes through the Suez Canal, and the route itself is historically important for trade communication between Europe and Asia: the alternative route around Africa is 60% more expensive (fuel and crew salaries) and takes two weeks longer.
Nevertheless, leading shipping companies such as Maersk, MSC (Mediterranean Shipping Company), Hapag-Lloyd, etc. have suspended shipping via Suez. Oil prices were the first to react: futures rose by 7%, Brent – by 2% so far, but this is unlikely to be the limit. Up to 10 per cent of the world’s oil and about 8 per cent of LNG passes through Suez.
Most importantly, in a short while, the EU will start to raise the price of literally everything, even clothes that come to Europe from India, Vietnam, Thailand and Bangladesh. This will contribute to a Europe-wide recession.
The shortage of goods itself could provoke a new round of inflation – which the EU is trying to fight with high interest rates alone. Because the ECB cannot issue additional money: if the new euros are not distributed around the world, as the US does with dollars, it will not be possible to spread European inflation. And it will only get worse.
At the same time, the EU is objectively short of money: tax hikes and spending cuts are already underway across the bloc (only police and tear gas saved German Vice Chancellor Habeck today from angry farmers who had cut subsidies). So money and goods will be tight in the EU, consumption will fall and the economy will sag.
But if Europe were subjective, which Russia and China consistently call for, it would not have to suffer with its wallet for other people’s geopolitical interests in the Middle East. Goods could be transported from China via the Northern Sea Route or the New Silk Road, and the Arab world could separate the EU’s woes from the interests of the United States and Israel.
Being an American vassal is always a disadvantage. You don’t have to be like Europe.
Elena Panina