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© Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.Economics of war: Pain for Europe now, later for Russia
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kurisupisu
Europe is set for a major catastrophe and it is not just about supplies being cut off!
Government officials, turning up or down their office temperature is not going to solve a thing!
France generates a large percentage of electricity from nuclear power-Macron’s streetlight dimming is virtue signaling.
The more pressing problem
is food.
Russia has blocked food supplies to the east and south.
Large hungry populations will start to head for the EU countries in a massive wave of people.
There has to be capitulation soon or high fuel bills won’t be the only problem.
vic.M
Kurisupisu
This is not true. Russia has been doing all it can to enable Ukraine wheat to be shipped out. Ships can't come in to various Ukraine ports because Ukraine have mined their own ports.
Russia is self sufficent in it's own food production and why should Russia send their food to those who hate them ? No problem to send to China, Syria, Iran, India, venezuela etc. Oil, gas, Titanium, fertilizer, vegetable oils, rare earth minerals, wheat, rare gases for computer chips production, salmon etc.
Antiquesaving
We keep hearing the same thing, Russia will hurt more "later" wait didn't we heard the same thing before?
Oh right Cuba, North Korea, Iran, etc...
But now we move the goal posts again.
On the EU's own website, on multiple occasions they announced more sanctions explicitly saying they are:
Now suddenly on Monday foreign policy commissioner Josep Borrell said:
So the goal post are now to hurt the Russian economy not stop the war?
Oh and the oil prices, the worries Russia will cut the gas , not because of the invasion, but because of the sanctions. You can argue the invasion was the reason for the Sanctions so the invasion is the reason but in reality and Facts not feelings the Sanctions are the exact cause.
And can someone explain if Germany is worried gas from Nordstream 1 will be cut then how is it possible that Ukraine said not to return the Turbine to Russia and it (Ukraine) would sell Germany gas from the Sudzha pipeline in Ukraine, the gas is still Russian gas why isn't Ukraine worried that will get shut off, something doesn't make sense.
FizzBit
More like economics of imperialism
Of course we’ll never see the MSM question “If the US, NATO, UK and EU knew of Russias invasion, why didn’t they negotiate a deal to avoid this war?”
Give a big applause to the Dem party (Hillary, later for Biden) and their MSM lackey’s for years of phony Russian accusations about Trump and elections. You’ve all been played.
Antiquesaving
Ok we keep hearing this from Ukraine and the EU, etc ..
It is highly possible but something doesn't make sense.
Ukraine says it is worried about the personnel in capture Nuclear power plants, Ukraine tells Canada and Germany not to return the gas pump turbine for Nordstream 1, and Ukraine will sell Germany Russian gas via the Sudzha pipeline.
So Russia has the nuclear power plant, and Ukraine is ready to sell Russian gas to Germany, how does that work? Russia hasn't cut the power to Ukraine from the capture power plants, Russia hasn't cut the gas supply to the point Ukraine can offer to sell it to Germany!
But we are to believe Russia is blocking food shipments to many poor countries which would make Russia look bad!
Does any of this make sense.
Something smell.
Sven Asai
Pain for Russia later? You don’t know what you’re talking about. There isn’t such a thing like pain in Russia, because it’s the normal situation and standard case for centuries there. Under the Tsars, Bolsheviki, WW2, Stalin, Putin etc always the same normality which we would describe as pain. They are used to and capable of standing it without notion.
Antiquesaving
That reminds me of the Freelance journalist doing a report from inside Russia for the BBC.
He interviewed his city friends and acquaintances all fairly well off and all internationally well traveled.
They all expressed worry and disapproval of the war and the problems the sanctions we cause them.
He then went into the streets, other smaller cities, towns, countryside, etc.. interviewed the less well off general population.
(Note all had their identity hidden)
The response was very different from the those give by the journalist's friends.
The one reply we heard over and over again to nearly every question was:
" We are Russian" "We survive" .
The journalist seemed shocked, he had spent most of his time with the Russian version of Yuppies, now he was meeting the other side of Russia and they are tougher than he imagined.
At the end of the piece he was still stunned by how the vast majority were just plain resolved as to there was nothing to be done the situation is what it is and as Russiand they just keep on doing what they are doing!
rainyday
Well, yeah. Last I checked none of those countries have well functioning economies.
Russia could be on a path to having an economy that gave its citizens a standard of living similar to that of other Europeans. Instead its government has decided to give them one closer to that enjoyed by North Koreans.
Antiquesaving
Last time I checked they all still have the same regimes in power, NK now has Nukes, Iran isn't budging and all have been under some form of sanctions for at least 40 plus years.
Now if a bad economy and poor population is the goal and not the war, well I guess it may work.
And lest get this straight and clear.
EU foreign policy commissioner Josep Borrell said the sanctions are not in place to stop the war.
So if the sanction are not going to help Ukraine and cause worldwide problems what is the point? Revenge? So we hurt ourselves to hopefully hurt Russia?
That is some backwards logic.
Antiquesaving
Funny, I only point out facts, I pointed out the EU now "officially" says the Sanction are not in place to stop the war and people here don't like the facts.
They seem to prefer rumours, feelings and anything else but facts and reality.
If I said 2+2=4
But Zelensky, The USA administration, or EU UK leader said, 2+2=5 I feel many here would truely come up with a reason to believe 2+2=5
rainyday
Well, last time I checked regime change in Moscow was not the aim of sanctions.
The logic I believe is that weaker economy = weaker ability to wage war, and thus greater pressure on Russia to curtail its maximalist objectives and end the war at some point.
Thus when Borrell says, as you cite him, that the goal of the sanctions is not to end the war, what he means is that sanctions by themselves cannot achieve that end. But its not the same, as you are suggesting, as him saying that sanctions are completely irrelevant to ending the war and are just an arbitrary means of extracting revenge on Russia.
Antiquesaving
Come on let's be realistic!
Lets stop the fantasy of the Sanctions.
Cuba over 60 year, a country with near zero resources.
North Korea also not a country with great abundant resources: depending on how you calculate 60+ to 30+ years of sanctions, not only did the Sanctions not stop them from being a threat they succeed in developing Missiles and nuclear weapons.
Iran 40 + years and still selling oil and also developing weapons without interference from sanctions.
Russia, has more resources than all three combined, Russia is near self-sufficient in everything and we are to believe sanctions will do to Russia what they haven't been able to do to the other three!
If you and the USA, EU, etc.. are correct then I guess Ukraine will be at war for at least a few decades because it will take minimum that long before Sanctions even begin to hinder Russia's war capabilities, all we need to do is look at Iran and North Korea to see that.
rainyday
I am being realistic about sanctions and not engaging in any fantasy. Yes, some people were definitely overhyping sanctions. I’m not doing that. I’m trying to objectively assess their relevance. You are putting forth the argument that they are completely unrelated to the war and merely a means of arbitrarily extracting revenge on Russia (if I understand correctly, please correct me if I am mistaken). I’m pushing back on that specific point because I don’t think it is accurate either.
Yup, those are accurate descriptions of those three cases. But what are we to make of them when assessing sanctions against Russia?
On the one hand, yes you are right. Those countries have survived sanctions for decades without it leading to regime change or any of them suddenly changing heart and becoming pro-west or abandoning nuclear programs, etc. Given Russia’s much greater resources, it is even better situated to withstand sanctions than those countries over the long term, so even less likely that it will do anything like that in response to sanctions. Therefore this leads to your conclusion that the sanctions make no sense as a means of forcing Russia to change course and are merely “revenge”.
On the other hand though you don’t seem to be considering the differences between those cases and Russia. First and foremost these sanctions are aimed at a country at war, rather than trying to change its regime or deter it from getting nuclear weapons. The West wants Russia to withdraw from Ukraine. Since Russia won’t decide to do that on its own, the West is pursuing a strategy of weakening Russia to the point that it is either defeated in battle or finds itself no longer able to afford the war (which is extremely expensive for Russia to maintain) and is forced to withdraw (or partially withdraw). Sanctions are part of this strategy and seem to make sense in that context. Russia can certainly withstand sanctions for decades without changing its government or suddenly becoming friendly to the West (like North Korea, etc), but it can’t afford to finance an extremely expensive war for decades while under severe sanctions.
Will this be successful? I don’t know. My point though is that your assertion that this is just an impotent desire for revenge that is driving these sanctions is not convincing either.
ian
If they let Ukraine by themselves what's the worst that could have happened?
Antiquesaving
Ok I see your point and respectfully disagree.
Look back on past EU and USA press releases, look back on the comments and speeches given by the different leaders and representatives.
All were clearly saying the sanctions were to end the war go look on the EU's own website in February, March, April May, now the message has clearly changed, and the full comment by EU foreign policy commissioner Josep Borrell was totally different, it made it very clear the Sanctions were only there to hurt Russia's economy, he totally distance the EU from and connection to ending the war.
Go look for yourself his comments on Monday act as if no one had previously ever said the Sanctions were to help of force Russia to end the war.
Unfortunately for the EU the actual opposite was clear said by many including Ursula von der Leyen, President of the European Commission, how on multiple EU releases stated the Sanctions goals war to end the war.
She was repeating this as late as mid June.
There are many of these comments on the EU's own website.
Now Borrell needs to suddenly " clarify" that the Sanctions goal isn't to end the war.
Why the sudden need to clarify?
Why now 6 months later?
Could it be because they aren't working and hurting us more than Russia?
Yes I see your point of view, but too many things just don't add up.
Why would Russia be supposedly blocking food shipments, but not cut off power as it now controls Ukraine's nuclear power plant, does cut Ukraine's gas flow to the point Ukraine offered to sell gas to Germany.
I just don't get all the different contradictions going on and being claimed.
Antiquesaving
Anyone not living outside Japan.
If you want to know how the economic effects are on other places.
Just look up egg prices in the USA if you can find eggs at Walmart their cheapest low grade comes out to 10 eggs for just over ¥ 207 ( converted to Japanese egg pack of 10 and Japanese yen) but in most places like Safeway 10 eggs will now cost ¥400.
Previously a dozen eggs was under ¥200 for top premium and around ¥ 100 for cheapest Walmart low grade.
The national average egg prices are up 33% to 68% depending on type and quality, Free range are over $6 US for a dozen more than double the price
rainyday
I don’t see how the sanctions themselves are hurting the West. The main economic pain on the west (and the rest of the world) is mainly being driven by spiking energy and food prices, which is causing massive increases in inflation. Those seem to be mostly the result of market reactions to the war itself rather than sanctions per se though.
Antiquesaving
Actually no and despite the political danger the leading ecomists of the largest 3 Canadian banks stated that simply lowering oil prices would alleviate most of the problems we are facing now.
And let's again not try fooling ourselves, oil prices are high only because of the Sanctions on Russian oil, that was the catalyst not the invasion the Sanctions.
Now the problem with pointing that out especially in Canada, is the extremely large ethic Ukrainian community and the even bigger need for high prices to make Canada's oil sands economically viable.
The oil producers are making a killing and they provide the political incentives to keep the price high.
Again nothing I am saying is opinion or my feelings, all facts pointed out by the same BMO, CIBC, TD Banks rejected by the western powers because politically it isn't in the plan.
Do you have any idea how much the high oil prices affected Canada, oil production was stopped in many places now they are all up and running extracting the dirtiest oil in the world,
Saudi and friends increased their prices not because they had to but because they could.
Simple if you remove the lower priced competition, you can now charge whatever you want, the people have no choice.
ian
Per Reuters:
https://www.reuters.com/business/energy/exclusive-saudi-arabia-doubles-q2-russian-fuel-oil-imports-power-generation-2022-07-14/
Flute
@Antiquesaving
Well I think you know what only one think it stinks.
Josep Borrell Fontelles is High Representative/Vice-President of Foreign Policy Commission.
I can not find the link to the direct quote, unfortunately, but it seems like you are not the one having difficulty understanding english. The sentence give no clue about the purpose of the sanction. It acknowledges it will not manage to stop war (as previously believed) and state that it still will have effect. It say nowhere that it was the expected effect nor that it is/was/will be end goal. As you failed to provide any link to the original source there is no way to know it was said by who they claim it was said : some Josep Borrell or who it seems to be implied it was said Josep Borrell Fontelles.
https://de.stuklopechat.com/images/zakon/gazoprovod-cherez-ukrainu-v-evropu-shema-i-marshrut_5.jpg
Because Russia can not stop it without cutting supply to countries and stolen territory they perhaps do not want to cut supply to ? Like Crimea
See above : if they cut power or gaz, they will also affect themselves and/or people they do not want to affect.
Time you start broadening your sources, me guess.
Antiquesaving
See Reuters article that
Just posted interesting how it all goes around the oil.
Now lets see Sanctions!!!!
Saudi Arabia our friend ally, etc .. seems to be making a killing and has no problem buying Russian oil cheaper.
I don't believe in coincidences Canada, UK USA oil producers were complaining about low oil prices, now no more complaints all is fine again.
wallace
Saudi buying cheap Russian oil to run their summer power plants while exporting their more expensive crude.
Seth M
Russia only "suffered" about 30 days, then they figured out putting mayo and catch-up to make burgers that would taste same as big Mac, their only regret was probably getting ripped off for so long.
Europes suffering however is only beginning, energy and grains are lifeblood of civilizations
rainyday
True, lowering oil prices is key to controlling inflation.
You also make a fair point about the sanctions affecting the price of oil, I was over-stating the case to the contrary. And yeah, its also fair to say that energy producers like Canada are more than happy to see Russian oil sidelined due to their own self interests rather than concern for Ukraine.
But I also think its incorrect to view ending sanctions as the solution.
The price spikes are not just about sanctions but also other risk factors associated with the war, including the likelihood that even without sanctions Putin would cut supply to the West in retaliation anyway (much like he is doing with gas which isn’t sanctioned). This would create the same effect (high oil prices) but would be controlled by Putin rather than the West. Either way, you’ve got higher oil prices, sanctions or not.
Flute
@Antiquesaving
Which in no way respond your message because ...
Were you really expecting, nobody was taking advantage of the situation ?
That do not change the situation, the current Russia is not a reliable partner for Europe, they better back out and start being self sufficient.
ian
What stroke of fortune for the Saudis. Not only can they sell as much as they want for the price they want but they also benefit by buying and using the cheap oil from Russia. The more they buy the more they can sell.
And they are doing it as a favor to both Russia and the west.
Antiquesaving
Actually until the sanctions The western European countries had no problem with Russian oil or gas and Russia wasn't a problem.
NATO constant expansion and western involvement in Ukraine in 2014 started the ball rolling towards supply being used as a weapon.
And we got plenty of warning, to be exact Russia gave a lot and a lot of warnings before we got to this point.
The west is delusional, it goes on and on about "the world is untied" in support of Ukraine and against Russia, when in fact (FACTS not feelings) the vast vast vast majority of the world isn't and doesn't care, to be exact the vast majority of the world wants nothing to do with the Sanctions it want low fuel low food cost.
Let me make it very clear Saudi Arabia is nothing it is only one of over 155 countries not part of the sanctions again 155+ countries VS fewer than 40 countries involved in sanctions.
Over 7 billion people not part of the sanctions VS fewer than 800 million part of the sanction group.
China, India Indonesia, Pakistan, Nigeria, Brazil, Bangladesh, Russia Mexico 9 of the top most populous countries not imposing sanctions not even NATO member Turkey.
The West has already lost the PR battle as non sanction countries blame the USA and Europe not Russia.
The African Union is saying that it's members blame sanctions for their difficulties in buy grain and oil from Russia and leading to prices the people cannot afford.
This is now being repeated in South America and Asia.
Not Russia getting the blame but the western powers.
rainyday
This is the same Russia that was insisting it had no intention whatsoever of invading Ukraine and all they were doing was regular military training right up until the day before it invaded Ukraine?
Axel
The ruble has stabilized is one way to say it. The ruble is at record highs is more accurate.
But Russia will definitely pay a price in the long term. No Big Macs or Strabucks coffee. But that won't be available to Europeans either because food prices are too expensive.
Flute
@ Antiquesaving
Do you really believe the problem started with Russia invasion of Crimea. Georgia ? Moldovia ? CFE treaty ? WTO dispute regarding inconsistent tariff ? Ring a bell ?
None of what you say make sense. How is the fact that other countries do not care should change the fact that Europa and other feeling the same have the right to care and act ? If countries are not applying sanction, nothing stopping them to do business with Russia, were you not just pointing out that Saudia Arabia was ? Why claiming it is because of sanction they are not involved in ?
You can go around all you want. The situation is what it is because Russia attacked (again) another country.
So what if bunch of people do not care about the blood spread for cheap gazoline and bread ? Usually, it is north-American and European which are said to do that, seeing some/several/all/whatever African, South American and Asian being said they are the same at least made everyone equal. Nice to know all of us care about what we care when we care and do not care about what we do not care when we do not care. Oh wait ! We were perfectly aware of that, thought most of people have the decence to not purposely throw it at the people they do not care about and/or try to justify they find their suffering perfectly acceptable if not well deserved because they are not the right color, the right nationality, refused submission, elected a jew president, ..., or whatever. 'People just kept their mouth shut and finger still. What about you try ? Instead of sending post after post about why it is perfectly acceptable that Ukraine people, life, city, ... are turned to morsel.
Antiquesaving
That is the same false thing said by the EU.
The EU said "Food is not part of the Sanctions" that is technically true, what the EU and you forget to point out it that Europe and the USA have blocked all Russian banks and government from SWIFT.
Ooops!
So sure these starving countries can buy from Russia but we (the EU ) will block their attempts to pay for any orders!
As for
Would you like me to lost out all the places the USA, UK, France, etc... invaded, took their land, exploited, arranged coup d'état, etc...
Stove meet pot!
Oh spare me the lesson in morality.
Where was all this great European, UK and USA caring when the refugees were dark skinned Syrians? Where is the care for the 150,000 killed by USA and UK weapons in Yemen?
Perhaps the world doesn't care because the western countries didn't care when the wars and victims are black, brown, Asian.
Perhaps they don't care because the Europeans do these vendetta war regularly.
Perhaps they as countries formerly under colonial rule were forced to fight and die by their European masters in too many previous European revenge wars and now as independent countries they want nothing to do with another European war.
Any of that ever pop into your mind?
If not think about it.
Desert Tortoise
Sigh. Hurt the Russian economy so they cannot produce weapons as fast as they lose them, and cannot obtain funding from foreign sales. The western allies will give Ukraine a huge advantage in the number and sophistication of weapons allowing them to prevail in the long run. Ukraine today is in the same position Russia was during WWII where US, Canadian and British Lend Lease gave Russian the resources to prevail over the Germans. Now the situation is flipped, Russia is in the same position Germany was invading a nation that resists while Ukraine benefits from Lend Lease.
Russia has already stopped producing new tanks and many other military vehicles. Auto and civilian truck plants are also not producing. They can't get repair or maintenance parts for the US sourced diesel engines in many of their vehicles. They cannot buy tires for their trucks. They can't get new semiconductors for their weapons and are reduced to cannibalizing home appliances for what them, but those civil semiconductors are not designed for the rigors of military use, meaning they are not tested for shock loads and extreme temperatures in an environmental lab (what we call shake and bake). Put these in weapon under the wing of an airplane flying in -65 degrees with the G forces and vibration of flight and they might not work. Already we see the mighty Red Army using civilian trucks to move troops and equipment because they cannot maintain their military trucks. By the end of summer or fall the Russians will be out of resources to fight with.
Desert Tortoise
Accept some sacrifices now to support Ukraine, or face the prospect of the Russians trying to take NATO allies Latvia, Lithuania and Estonia at the very least next. If the Russians are not stopped in Ukraine they will not stop at the Ukrainian border, just like Hitler didn't stop after annexing Czechoslovakia and Austria. They just whet his appetite for more. Some inflation and energy rationing are nothing compared to what the Ukrainians are suffering and if Russia isn't stopped there all of Europe and maybe even the US and Canada face the prospect of Russian missiles landing in their cities.
Desert Tortoise
Travel almost anywhere in Europe, the US or Canada and you will see large communities of these refugees. Despite the protests of bigots the western nations have taken in millions of refugees from all over the world. The reason Turkiye is objecting so strenuously to admitting Sweden and Finland into NATO is that both nations have large communities of Kurdish and Turkish refugees living there who are able to write freely of their opposition to Turkish policies.