Written by Michael Whitney
“Rejection of Russian energy resources means that Europe will become the region with the highest energy costs in the world. This will seriously undermine the competitiveness of European industry which is already losing the competition to companies in other parts of the world…. Our Western colleagues seem to have forgotten the elementary laws of economics, or simply prefer to ignore them.” Vladimir Putin, President of the Russian Federation
On Tuesday, Russia announced a 40% reduction in the flow of natural gas to Germany through the Nord Stream pipeline. The announcement, that was made by Gazprom officials, sent tremors through the European gas market where prices quickly soared to new highs. In Germany—where prices have tripled in the last three months—the news was met with gasps of horror. With inflation already running at a 40-year high, this latest reduction in supply is certain to tip the German economy into recession or worse. All of Europe is now feeling the impact of Washington’s misguided sanctions on Russia. Here’s more from Oil Price website:
“Russia’s Gazprom said on Tuesday that it would limit natural gas supply via the Nord Stream pipeline to Germany by 40 percent compared to planned flows because of a delay in equipment repairs… The lower supply of gas via Nord Stream to the biggest European economy, Germany, sent Europe’s gas prices surging by double digits...
Russian gas deliveries to Europe… have already been down after Ukraine stopped last month flows from Russia to Europe at … one of the two transit points… thus supply was cut off for a third of the gas transiting Ukraine onto Europe.” (“Europe’s Gas Prices Surge 13% As Russia Reduces Nord Stream Flow“, Oil Price)
The United States and its European allies have imposed more sanctions on Russia than any country in history. But Tuesday’s announcement helps to illustrate who is actually suffering from the sanctions and who is not.
Russia is not suffering, in fact, Russia does not seem particularly perturbed at all. It has calmly brushed aside Washington’s attacks as one would whisk-away a fly at a family picnic. Even more surprising is the fact that the sanctions have strengthened the ruble, increased revenues from raw materials, sent Russia’s trade surplus into record territory, and pushed gas and oil profits into the stratosphere. By every objective standard, the sanctions appear to be benefiting Russia which, of course, is the opposite outcome that was expected.
Washington’s Economic Sanctions on Russia: Success or Failure?
- The Russian currency (the Ruble) has rallied to a five-year high.
- Russia’s commodities are raking in windfall profits
- Russia’s trade surplus is projected to hit a record high this year
- Russia’s oil and gas sales have risen sharply
There’s no evidence that Washington’s sanctions have achieved the objective of “weakening” Russia or damaging its economy. There is, however, considerable proof that the sanctions have backfired and inflicted a heavy toll on their supporters and their people. And while it’s hard to quantify how much damage has actually been done, we’ve tried to identify specific categories where the impact has been most dramatic. The sanctions have:
- Triggered a sharp rise in food and energy prices. (soaring inflation)
- Caused major disruptions in global supply-lines (Deglobalization)
- Greatly increased food shortages and the likelihood of famine
- Precipitated a severe slowdown in the global economy
So far, Russia has withstood these attacks patiently and without any retaliatory response. But we must assume that the sudden 40% reduction in gas flows to energy-dependent Germany is intended to send a message. Keep in mind, Nord Stream 2 was a massive multi-year, $10 billion project to which Russia was fully committed until Germany ‘pulled the rug out from under Putin’ at the eleventh hour. Germany proved that—when push comes to shove—Berlin will always march in lockstep with Washington rather than fulfill its business agreements or act in the interests of its own people. What Germany is discovering now, however, is that acting as Washington’s poodle comes at a very high price indeed. Here’s more from Reuters:
“Gazprom said on Tuesday it has curbed supplies via the Nord Stream 1 undersea pipeline to Germany to up to 100 million cubic metres (mcm) per day, down from 167 mcm, citing the delayed return of equipment that had been sent for repair….
Gazprom no longer exports gas westwards through Poland via the Yamal-Europe pipeline following Russian sanctions against EuRoPol Gaz, which owns the Polish section. Flows via Yamal-Europe continue eastwards from Germany to Poland.
“Due to the delayed return of gas compressor units from repair by Siemens … and technical engines’ malfunctions, only three gas compressor units can currently be used at the Portovaya compression station,” Gazprom said..
“Due to the sanctions imposed by Canada, it is currently impossible for Siemens Energy to deliver overhauled gas turbines to the customer. Against this background we have informed the Canadian and German governments and are working on a viable solution,” the company said.” (“Nord Stream gas capacity constrained as sanctions delay equipment“, Reuters)
Naturally, the media is going to point to a maintenance snafu as an excuse, but how credible is that? How often is supply of a vital resource cut by nearly half due to a compressor malfunction?
Not often. Russia is sending a simple but poignant message to Germany: “You made your bed, now sleep in it.” Russia’s reaction is perfectly normal after having been “stabbed you in the back.”
And, Germany’s travails are just beginning because it has no way to make up for the energy shortfall it will face in the near future; a shortfall that will precipitate rolling blackouts, freezing homes, and a relentless strangulation of its domestic industry. As the German government is discovering, there is no viable substitute for Russian hydrocarbons which is neither readily available nor does the quality fit Germany’s particular requirements. In other words, the US has led Germany down the primrose path believing that they could simply switch to other energy suppliers and everything would be just dandy. That is certainly not the case. As it happens, Germany and all of Europe are going to pay more for their energy than any region in the world which will severely undermine the EU’s competitiveness. This, in turn, will lead to a sharp decline in living standards as well as growing social unrest. Here’s more from the Wall Street Journal:
“For decades, European industry relied on Russia to supply low-cost oil and natural gas that kept the continent’s factories humming.
Now Europe’s industrial energy costs are soaring in the wake of Russia’s war on Ukraine, hobbling manufacturers’ ability to compete in the global marketplace. Factories are scrambling to find alternatives to Russian energy under threat that Moscow could abruptly turn off the gas spigot, bringing production to a halt.
Europe’s producers of chemicals, fertilizer, steel and other energy-intensive goods have come under pressure over the last eight months as tensions with Russia climbed ahead of the February invasion. Some producers are shutting down in the face of competition from factories in the U.S., the Middle East and other regions where energy costs are much lower than in Europe. Natural-gas prices are now nearly three times higher in Europe than in the U.S.” (“Some European Factories, Long Dependent on Cheap Russian Energy, Are Shutting Down; Industrial energy costs are soaring in the wake of Russia’s war on Ukraine, hobbling European manufacturers’ ability to compete globally”, Wall Street Journal)
The Wall Street Journal would like you to believe that Russia is responsible for Europe’s poor choices, but, it’s not true. Putin didn’t raise prices. Prices rose in response to the EU’s increased demand due to shortages brought on by the sanctions. How is that Putin’s fault?
It’s not. And the same goes for the EU officials who accused Putin of “blackmail”, a claim for which there was no basis whatsoever. When that accusation was made, the price of gas in the EU was one-third of its price today. Is that how blackmail works, by charging less than the market price?
Of course, not. It’s ridiculous. Europe was getting a great price on a scarce resource until they decided to take Uncle Sam’s bad advice and ruin it for themselves. Now they’re paying through the nose, and they can only blame themselves.
Did you know that EU leaders are already making plans to ration energy this winter?
It’s true. Europe has agreed to become another basket-case US lapdog in order to faithfully execute Washington’s ambitious global strategy. Here’s the story:
“Europe could be forced to start rationing energy this winter, starting with industrial uses of natural gas, especially if the winter is cold and China’s economy rebounds, the Executive Director of the International Energy Agency (IEA), Fatih Birol, told the Financial Times in an interview.
“If we have a harsh winter and a long winter . . . I wouldn’t exclude the rationing of natural gas in Europe, starting from the large industry facilities,” Birol told FT.
The world faces a “much bigger” energy crisis than the one of the 1970s, Birol told German daily Der Spiegel last month.
“Back then it was just about oil,” Birol told the news outlet. “Now we have an oil crisis, a gas crisis and an electricity crisis simultaneously,” said the head of the international agency created after the 1970s shock of the Arab oil embargo.” (“IEA: Europe Could See Energy Rationing This Winter“, Oil Price)
She’s wrong, isn’t she? We don’t have “an oil, gas and electricity crisis”. What we have is a political crisis. All of these shortages can be easily traced back to the foolish choices that were made by incompetent politicians doing the bidding of neocon fantasists who think they can turn the clock back to the heyday of American global primacy. But those days are over, and everyone seems to know they’re over except the insulated group of self-deluded fanatics at the Washington think tanks and their political spawn at 1600 Pennsylvania Avenue.
Bottom line: We all would have been much better off listening to Kissinger who advised his pals at the World Economic Forum (WEF) to wrap up the Ukrainian war pronto before Russia made changes that could not be reversed. Unfortunately, Kissinger’s appeal fell on deaf ears and Putin has already started redirecting his energy flows eastward. Check out this eyepopping excerpt from an article at oilprice.com:
“The biggest reshuffle of oil trade flows since the Arab oil embargo of the 1970s is underway—and things may never return to normal. The Russian invasion of Ukraine and the sanctions on Russian oil exports are changing global oil trade routes. Over the past nearly five decades, oil flowed more or less freely from any supplier to any customer in the world…
This free energy trade is now over, after …. the Western sanctions that followed, plus Europe’s irreversible decision to cut off its dependence on Russian energy at any cost…
By the end of this year, Europe expects to have effectively banned 90% of all its imports of Russian oil before the war… For oil going to Europe, crude from the Middle East will now travel longer distances to European ports compared to the shorter routes to India and China…
For Europe, the choice of oil supply is now political, and it will be willing to pay a premium to procure non-Russian oil. This will tighten supply options and continue to support elevated oil prices for months to come.
Commenting on the EU’s embargo on Russian seaborne oil imports, Fitch Ratings said last week:
“This ban will have a significant impact on global oil trade flows, with about 30% of EU’s imports needing replacement from other regions, including the Middle East (Saudi Arabia and the UAE have sustained production spare capacity of about 2MMbpd and 1MMbpd, respectively), Africa and the US.” (“The Biggest Reshuffle Of Oil Flows Since The 1970s”, Oil Price)
What does it mean?
It means that inflation will continue to rise as Russia’s prodigious crude supplies are redirected eastward. It means that Washington has abandoned its 30 year-long ‘pet project’, Globalization, and splintered the world into rival blocs. It means that the dollar, the bond market, the western financial system and the so-called “rules-based order”—all of which are inseparably linked to economic growth that depends almost-entirely on the availability of cheap energy—will begin to creak-and-groan beneath the weight of feather-headed policy decisions that have brought certain ruin to the nations of the west and their people.
We’re going to pay a heavy price for Washington suicidal power-grab.
This article was originally published on The Unz Review.
Michael Whitney is a renowned geopolitical and social analyst based in Washington State. He initiated his career as an independent citizen-journalist in 2002 with a commitment to honest journalism, social justice and World peace.
He is a Research Associate of the Centre for Research on Globalization (CRG).
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When they start saying again, “Ladies and Gentlemen” at online workworks, then I will return, but not until then! Florida is a common sense conservative state where most people have brains! http://Www.desalary.com
jens has cheese—Sawyer will chew his used condoms
Hahaha jens holm is crazy
Not crazy! Just verry stupid.
Ok. perhaps a little crazy also.
senile and mentally ill
Since the west and its satellites were bidding to isolate and abolish everything that’s linked to Russia, the Russians might as just voluntarily bar itself from whatsoever form of interaction from the adversarial bloc. It should only sell its unsold or left-over product to unfriendly customers with a strict condition that only rubles are acceptable as payment, meaning they need to buy rubles to be paid in advance for all purchase order. Or better yet issue an ultimatum to all of those entities who seized the 300 billion usd worth of Russian wealth to return the money within 48 hours or be cut from energy supply. Everybody will enjoy watching the cokroaches in hysteria begging mercy from Putin. The great transformation of EU.
angloshere and western Europe dead—the newG8: Russia, china, India Brazil Mexico, Iran, Turkey, Indonesia rotting decayed old g7 in debt, isolated from the world, begging for Russian gas anglos like to pay 2$ per liter for gas
The problem is that the west is losing it’s position in the world. That has caused irrationality – the fight to try to maintain that position, over the conditions and environment that creates the conditions that gave them that position – low energy prices, global trade and economics and control of currency. It’s like a librarian shouting and attacking readers, because e-books have appeared. It’s suicide at the feeling of being ruined!
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Work from a front line in Ukraine, earn a few dollars, whilst the drugged up Z-elensky couple earn billions and prepare for a billionaire lifestyle in US. Just visit Imaukrainanidiot.con
We are happy for that because we have a green clean environment in freedom, and Gulag Russia has Chernobyl radioactivity in their hearts and Genocide China have black coal dust in their commie lungs. Thats why we are happy!
Cool story bro
Look everyone. A happy European, soon to be a happy snowman.
an american i’d say, the reference to commies is a dead give away for britain’s retarded offspring, wait until the yanks realise its the EU that kept the dollar afloat and all those juicy weapon orders are going to dry up first.
Understand that the smoke from China’s coal burning can be seen on satellite imaging polluting the US and the world.
That is verry correct.
Iam also recommend using natural fertilizer from my behind for growing your vegeables, tomatoes and bananas.
Iam always use it and it is verry good and tasty.
The European and North American energy matrix are all on fossil fuel. The only country in the Americas that have a green energy source is Brazil with energy coming from hydro.
Why is the west making irrational, self destructive moves? There are many tens of millions of voters. who are the embodiment of “Tommy Jensen”.
What minor religion controls the west?
Sure took him long enough!… . I guess the murder of 10s of thousands of Eastern Ukrainians the past 8 years that he never acknowledged as a coup along with the murder(s) of Andrei Karlov in Turkey and Vitaly Churkin in Manhattan -didn’t make this happen earlier!?…
I think he waited until his industry could stockpile the necessary number of rockets, ammo, and artillery rounds and spare parts to be sure of victory. He is no idiot. He plays the long game.
Exactly. I think he timed it perfectly, with economies already reeling from the pandemic. Maximum impact.
Say that to the Airport security in Damascus begging for SA-300s and SA-400s that has been jilted many times between I$rael and Turkey!…
I’m sure you are a Jew that has dual citizenship in I$rael and Russia ready to jump off one host in North America to greener pastures in Russia!…
If he hadn’t done this (https://theduran.com/putin-911-not-inside-job/) 3 years after Maidan I’d be his biggest fan!… But it begs the biggest question who’s side is he really on!?…
I’m going to really enjoy watching the Europeans’ squirms turn into gnashing of teeth, regime change and hopefully eventually, enlightenment over the next couple of years. Of course, WWIII could be a possibility, too.
This article is the sad and obvious truth! Russia knew its initial losses would be heavy. They drew the bulk of the Ukranian full time military to Kiev and slugged it out until they had weakened it sufficiently to start its real invasion in the east. They are grinding the forced conscript Ukranian army into lunch meat with artillery and then occupying that territory with surprisingly few casualties. NATO and the US misread the initial slugfest as a sign that Russia would lose and then over committed to the Ukraine, quite possibly the most corrupt government in Europe. Now, they and their citizens will pay a heavy price.
This is just a case of a Biden balls up! Objective Obama, looked at this in 2014 and came to the conclusion that Russia would always have escalatory dominance in the Dombas and close by areas. It’s simple military fact. Russia can and has put an advanced air defence umbrella over the region projected from existing Russian territory. Russia has short well covered supply routes and logistics, as opposed to sprawling long supply chains for Ukrainian Nazis (they are now practically dependent on western supplies). The thing is this was all known in 2014. Therefore what Biden has done here is either gross incompetence or an attempt to deliberately make western citizens poorer and colder.
It was deliberate. His regressive policies in the US were tanking our economy and spiking out inflationary pressures. He thought that creating this war instead of negotiating / following the 2014 agreement that America would jump behind him and once again blame Russia. That, along with his policies was an utter failure and now he’s shoving advanced weaponry into a country that the Russians may someday control the majority of………..including those weapons.
Russia has been smart to diversify to the east. It has also been smart to understand supply problems and scarcity in the market drives up prices and hence revenue. They are in the driving seat regarding the west – hence the chant, our product our rules – the declaration that they have won and the west doesn’t control things anymore. Winter is coming, and winter has always been a friend to Russia in Warfare. Europe simply has no answer to Russian gas supplies, and Russia knows it. Hence why peace talks are touted by Ukraine in August. The Europeans have told Ukraine, get what you can by August, but after that you need make peace to secure our gas. Russia is indeed in control and playing a smart game!
Just like any other deranged terrorist threatening the rest of the world. The same way he’s blocking the grain exports with the deliberate intention of causing worldwide famine. Vladimir Putin is the scum of the earth and proud of it. The Southfront troll farm isn’t saying anything the rest of the world doesn’t already know.
Hee! You sound like a naughty child’s smacked buttocks.
I need a big dick in my ass now or I’ll go on rampage nonsense until I get some.
We got another Putin here who wants to rape Yamil Perez. Cracks me up when they pop up.
LGBT Ukrop faggots are blocking the grain by mining the waters and refusing to demine. Get it right you ugly inbred mamzer kike.
Russia isn’t blocking grain, the sanctions are. Well, actually Russia is selling mass amounts of its raw materials to the 2/3rds of the worlds populations that aren’t following the illegal sanctions. Only the UN / Security Council can apply legal sanctions.
Yes it is, you delusional asshole.
Lots of european companies are going to go out of business, including the energy companies. Do these companies want to protect their customers, or do they just want to let things ride and use the opportunity to fleece them? Most people are skint already, and living from day to day. Soon, these bills will not be paid, come what may. This will be on such a scale that the companies won’t survive. A fitting end to a company which screws over its customer base.
This is what happens when you carry out the wishes of jews. Full destruction, let them burn! Idiots.
The problem is warmongers who kill for more power which includes individuals of all races and ethnicities.
Don’t forget that the UK government ( and EU) fleeces all their citizens and companies by the use of government fuel duties, VAT, and the rediculous Green Taxes.
HMG taxes amount to circa 70% of the total motor fuel costs. It’s de-facto theft.
To add insult to injury the UK petrol has 5% and 10% Bio fuel grades that is blended with fossil fuel and the Bio fuel is refined from FOOD.
Millions are starving in the world and making food into fuel only increases the cost of food.
Yes. All taxation is theft.
Wait , there’s more ! The UE rules imposes electricity prices based on “spot” gaz prices. Like it’s not that you have to do it, you MUST do it , it’s by law. You’ve gone green like Portugal or nuclear like France ? Sad for you : the EU said gaz price. I’ve got not enough face nor palm for that level of shit.
Mike is at the top the game now and has been for quite a while. Want truth? Just ask Mike.
Nordstream 2 würde alles lösen… Es gibt keine Gaskrise. Nur Politiker, die ihr Gesicht verlieren, weil sie wie bekiffte Hühner um das goldene us- Kalb tanzen. Feinde brauchen wir nicht, wir haben Politiker….
Europa seguirá comprando petróleo ruso, pero lo hará en el mercado negro controlado por las mafias que controlan a sus políticos.
LOL, get rekt Eurabia. How is it working out for you carrying out jewish wishes? Highest energy cost in the world and knee grows violating your women and taking your jobs at every corner! Nice!
They are carrying out the wishes of the neocon and neolib warmongers who want to rule the world. Jews are no worse than non-Jews.
This war is hapenning because an arrogant, bossy, Jewish clown like Zelenskyy is president of Ukraine. These kind of people are the same that want the US to attack Iran, they love eternal finacial and military aid but always stay out of it and watch the fireworks while the US foots the bill in blood and treasure.
Not so big of a deal. The West was already doing the suicide thing, this just speeds it up a bit.
It appears that the Zionist dream of the ‘Morgenthau Plan’ of 1944 could finally be achieved. A return to a German agrarian economy is on the cards if high priced energy becomes permanent.
The German and heavy engineering EU auto industries would be kaput.
Invest in horses
1. The Russian currency (the Ruble) has rallied to a five-year high. 2. Russia’s commodities are raking in windfall profits. 3. Russia’s trade surplus is projected to hit a record high this year. 4. Russia’s oil and gas sales have risen sharply.
Yes, but Coca Cola stopped selling their sh** in Russia. So sanctions work.
I think what Russia is doing, and what I thought Russia should have done months ago was to just cut off the gas supply ASAP because Europe was feeling up its reserves for the winter. Russia needed to starve Europe of natural gas to show them just what their sanctions will do.
green energy makes for a cold ass this winter
It is not everyday, nay even decades or generations where we witness an implied declaration of war to the hegemon. lol Let us see where this leads us.
The European “leaders”: endlessly screwing their Peoples for more money. This is perfectly following the wef plan to destroy European civilization.
Interesting article except it totally miss the point. Is it intentional to unanimously miss the point that sanctions have same effect as green fachism, covid lockdown. That crisis is managed by green fachism promoters: banks & London centered global oligarchy. Where its gone wrong from them is that most of the world didnt join sanction against Russia. How can we miss at that point (except willfully) the desperation of UK to strangle Russia: skripal and that bs, uk trained ukraine nazi, most mercenaries in ukraine are british, trying to have Finland in Nato to enable missiles launchers seconds from Moscow, trying to use odessa port blocade as reason for west intervention, last attempt as Nato is useless: trying to create alternative to EU including Finland UK USA to get those missiles at Moscow’s door.
“US and it’s European Allies”? More like US and it’s European lap dogs. The US and all the rest of the Western world have been infiltrated by an enemy who hates people of European descent.
As I stated so many times before. Russia has won on all fronts. EU and US will suffer a lot and will eventually decline in their living standard. There are enough resources for all of the nations, but some just don’t understand how international trade and diplomacy work. Now the west has to pay dearly for their blind ignorance and malicious agendas towards other nations. Smart people in Europe will relocate to Asia. There are so many other levels to what is going on, there are even more bad surprises for the west along the way they have not really considered.