Have sanctions really hurt Russia?
If anything, Europe has come off worse from the decision
Last week the Centre for Research on Energy and Clean Air (CREA) released a weekly snapshot of Russian fossil fuel exports. Since the price cap on Russian oil was announced in December 2022 and the snapshot provides data up until February 2023, it allows us to assess how effective sanctions against Russian crude oil have been.
Some have already pointed out that the sanctions have not actually stopped the European Union from buying Russian fossil fuel products. In fact, as of February the EU remains the second largest importer of Russian fossil fuels — trailing China, but still larger than India. But there is no doubt that there has still been an enormous shift: before the sanctions, the EU was by far the largest importer of Russian fossil fuels.
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Yet the real question is not whether the EU has cut its imports of Russian fossil fuels. Much more relevant is whether the sanctions have impacted Russia’s ability to export its energy products. If the EU has been forced to starve itself of energy in spite of the continued robustness of Russian energy exports, then it is Europe — and the United Kingdom — that the sanctions are hurting, not Russia.
When we look at CREA’s chart on Russian oil exports, it does appear that they have fallen since the price cap. As we can see, following the imposition of the price cap last December Russian crude oil exports have fallen from over €300m per day to under €250m per day. Looked at in a broader context, however, this is not a particularly dramatic decline. Economists tend to compare exports in one year to exports in the same month the previous year. In February 2022, Russian oil exports sat at around €250m per day, not far off where they are this February.
But even this is misleading, because the price of Russian oil has declined. Since the start of December Urals oil has fallen from around $66 per barrel to roughly $53. Some have claimed that this is an effect of the energy price cap, but if we look at other oil markets this seems unlikely to be the main cause. Today the difference between the Russian Urals price and the European Brent price is around $32 per barrel. Yet in the wake of Russia’s invasion of Ukraine, long before the price cap was imposed, the difference was over $35 per barrel.
The decline in the Russian oil price is mostly being driven by an overall global decline in prices, which has come about because Western economies are slowing down and will likely face recession this year. When the economy sags, less fuel is needed and so its price falls.
To control for this, the best indicator as to whether the energy price cap has damaged Russia’s ability to export its energy products is to look at the physical quantities of the exports. These can be seen in the chart below.
Here we see a different picture emerge, especially for crude oil. In February 2022 Russian crude oil exports stood at around 15 million tonnes per day. One year on, these exports have fallen slightly to 14 million tonnes — a fall which is hardly statistically significant and which may even be explained by the looming recession. There is no other way to interpret the data: the sanctions simply have not hurt Russia all that much. It has largely replaced its exports to Europe with exports to India and China, among others.
Meanwhile, Europe is being starved of energy. Despite the much-touted decline in gas futures prices, energy bills in Europe remain stubbornly high — no one except speculative traders pays the futures price, so serious analysts need to look at how much people are paying in their bills. In response to these high prices, gas consumption in Europe has fallen nearly 20%. Nor is this just impacting consumers: the European manufacturing sector has been contracting since the summer.
If the sanctions are designed with a goal to damage European economies and hurt European consumers, they have worked a treat. If, however, they have been designed to hobble Russia’s ability to export its energy products, they have been somewhat less successful.
Yesterday I had lunch with a Russian couple. He is a CTO of a big IT company, she is in logistics/trading. The topic was exactly that — how the sanctions affect Russia. View from inside.
The short answer – practically nothing changed. Logistics became more sophisticated, yes. I was expecting that some brands are replaced by Chinese but I was told that actually even that is not the case.
I asked – it must be at least something. I was told a few things.
First: “we miss IKEA”. The market was filled immediately but it seems that they had some weak spot for IKEA (meatballs?!) or something.
Second: it is not possible now properly dispose plastic Nespresso pods. They have to buy more expensive pods made with some disposable material (I did not get this part, I am not a Nespresso user).
“Can you buy IPhone?” “Yes (showing one of the latest). The price is cheaper than in EU, it’s same as in the US Apple store. Grey import”
“What about Mastercard/Visa?” “They work inside the country, for travelling we got cards in Minsk”.
“The cars?” “You can buy a BMW, 10-20% more expensive than before and no manufacturer warranty, only dealer’s. Comes from Kazakstan. Some people are switching to Chinese brands, they are not so bad”
I am sorry, I know it sounds like propaganda and I can expect such accusations, so don’t bother.
So nothing you can buy from abroad in Russia now comes with any warranty. But that’s really no big deal or like any sort of material change, is it ?
I don’t know for sure, but I guess if a product comes with unofficial “grey” channels there is no warranty. I heard some companies “semi-left” the Russian market, keeping some presence but cutting off completely marketing, R&D, etc. They are claiming they return to the market in the future. Well, if the Russian government is not stupid they would have organized some kind of massive lawsuits on behalf of the customers who got cut off from the warranty service. Cost of service is included in price and if some guy had bought a car prior the sanctions and then denied service (think of recalls!) it’s clearly a solid case in any reasonable court. I’m saying that the market could be already occupied by Chinese and getting back some market share might be not cheap due to huge fines from some customer protection agency.
What percentage of Western companies truly, fully left the markets there — need to research that. But it’s not 100% for sure. McDonald’s has gone (was bought out by some local entity and changed the name), Burger King has not.
You cannot expect or have a warranty on an illegally imported item. Any company receiving such a “lawsuiot” would put it straight in the bin. Think about it – paying compensation would actually amount to sanctions busting. No Western company would go up against the US government and prefer to pay out some spurious Russian claim. It’s just nonsense.
Apart from that. as we all know, Russian doesn’t have a functioning legal system. It hasn’t operated under the rule of law for over 100 years. If ever.
Downvotes because … ?
Because it’s true.
Downvote without comment = coward.
Russia is actually a highly legalistic society, your assertion that it does not have a functioning legal system is just risible.
Oh, and Putin trained as a lawyer.
I suggest you investigate further.
For instance, how they can suddenly make up “laws” that say that criticising the war – or even calling it a war – is a crime. Yet Putin now calls it a war himself.
I’m sure the show trials and gulags were all justified as being “legal”. That is not at all the same as rule of law.
No. The down vote is a fast way to express your opinion. Obviously people don’t agree with you. That is not cowardly that is what that button is for.
You do not ask for justification for up votes do you?
Still no credible explanation for the downvotes !
Why am I not surprised ?
It’s not a popularity contest sweety. You will have to suck it up, like everyone else, you are hardly one that ends up at the bottom of the board repeatedly are you?
Other explanation is bots, but that is normally a big one hit thing, and you would have a lot more down votes than that.
I think people just disagree with you Mr B.
Correction – “some” people disagree with him, perhaps the ones with a specific interest in disagreeing with him.
As it happens, i agree with the points he makes, but not about the downvotes, since as you say, it’s a “suck it up” scenario.
You notice on this thread Mr B actually disagreed with the original poster. So nobody started on him. Or had a specific interest in him.
I’m glad you agree with him, he obviously gets very upset if people disagree, in fact last time we had a disagreement he told me I needed to learn some manners.
I’m not in the least bit upset. That’s your assumption. If I was the sort of person who got easily upset, I don’t think I’d be here.
But I would like to understand why people disagree. It’s always possible they might say something I could learn from.
This is entirely my point. If people communicate only partial or incomplete information, all we get is misunderstanding and noise – and you and I will assume all sorts of things which aren’t true (like imagining I’m upset when I’m not).
PS – I hope you aren’t upset by anything I write. I can be a little terse, but it’s not my intention to get personal. Though we all get a little carried away sometimes.
PPS – Your manners here are impeccable !
Probably downvotes because the comment you responded to was about items purchased fully legally before sanctions, but still under warranty or purchased with expectation of reasonable support, such as product recalls.
Then I would expect those to still be covered by warranty terms. We have no reason to suppose they are not (other than the possibility that some local service centres for Western companies may now be closed in Russia).
But even if you were to buy a second hand item from someone in China, I very much doubt that the warranty would be transferable.
The most important thing to remember: Russian people are not stupid. They will find ways to adjust to their circumstances. They did under Communism, they all found some way to buy jeans.
1000+ companies left. The big exodus was last March. Some have stayed, but now part-trapped as can’t sell their business. Those that hedged it’d be a quick conflict and things would return to normal are now facing some significant right-downs.
Smuggling will be rife. That’ll source non-warranty goods.
By essentially nationalising so many of the jobs that exited companies would otherwise have ceased Putin has essentially avoided mass unemployment for now but at a huge cost to Russian reserves.
Here’s another point – a year ago Europe’s use of LNG pretty small. Now it’s huge. German’s especially have built conversion plants for shipped in LNG at rapid rate – hugely impressive delivery in the circumstances. Russia ain’t never getting back to it’s pre-conflict gas export values. And the pivot to China – they’ve no pipelines and no conversion plants to turn the gas into LNG so they could ship it. Estimates I’ve heard refer to 5-6 years to construct those and they can’t service any debt to fund this as nobody buying roubles. China may step in but Putin doesn’t want Xi owning Russian assets. And regardless they can’t do it quickly.
They are in big trouble. It’s just isn’t all instantaneous.
HaHa – Europe and funds the Russian War by buying their resources – USA funds the Ukrainian war by printing debt the American tax payers are ultimately liable for.
UK funds both sides – buys Russian stuff – and prints debt for Ukraine funding, haha, insane!
Haha – we are just fighting ourselves!!!! With Ukrainians and Russians as Cannon-Fodder, A system only a mad Lizard like Biden could have come up with, and only a Boris could agree to.
Er, I think his point is that Europe is not buying from Russia. Other nations are, at lower prices.
But sadly, wars aren’t won by those who can still buy iphones or cars in Moscow.
They are won by blood and iron, in the Donbas…
Here is what I saw the other day in an [Russian propaganda] article, (approximately, cant’ remember the exact quote): “A Jew paid by Anglo-Saxons keeps Slavs killing Slavs”. Insane, unexpected and scary view.
I’m shocked the Russians think there are any Saxons involved
Joe Biden is an Irish Catholic LOL
Maybe someone at the other end of the socio-economic scale would give you a different set of answers?
But they never matter, do they?
What do you mean, they no longer get the Guardian, the BBC, the Disney Channel, the New York Times, the Washington Post.
Too awful for words
So if Europe knew it was going to have to add US LNG at 4x the price, doesn’t this suggest they knew full well about the impending war and who would gain. We, the consumer, of course lose – but gas has gone down by 44% and oil by 10.41% over the last year, so we’re paying higher prices in order to get oil and gas from our ‘allies’. No wonder the US starts so many wars. Big $ spinners.
Nothing happens by chance.
Joe started Maidan in 2013 to up gas prices in 2023.
Only the most illuminated can see all the connections…
There had to be a reason why Hunter Biden sat on the board of that Ukrainian energy company (Burisma) with zero experience.
It’s quite interesting that many think that Russians, being deprived of Western high tech are not able to replace it with their own in just short few years. It’s like we’re talking about some Amazonian tribe, not the guys who actually did some stuff on that field. We’ll see.
Think that is you like. But it’s just another fantasy.
The Russians don’t actually produce any consumer high tech kit that’s any good. Certainly not good enough to export anywhere. And they won’t be able to any time soon. Masses of their best technical people have left. That’s the trouble with talented people – they don’t put up with BS and being told what they can and cannot think or say – so they’ll just walk. Unless you confiscate their passports. Or build another Berlin Wall. Something we’ve never needed to do in the West.
Peter, you are being unreasonable. How about high-tech weapons? Russia keeps 2nd (or 3rd?) market share position in the world. How about the ISS project? Of course they have gotten very lazy with oil money flowing and letting buy this and that, but it is a mistake to underestimate the potential.
As for “people left” — believe me, a seasoned project manager, if I need people for a project I would find them even if the project is in North Korea, South Pole station or f **king Mars. It is mostly a matter of money if the project is politically neutral.
And what “consumer high tech” is in fact produced in Europe, let me ask you? Look around. Korean and Chinese. Even my IPhone is made in China. European cars, yes, but this is declining. It’s been long time since I saw “made in UK” or “made in France” on something non-alcoholic. 🙂
How about the Russian space programme?
A total mess.
And how is Russia going to get money for selling to foreign buyers of military equpt, when it can’t even produce enough for its own army?
The Russian rocket engines proved to be so much better than the US ones that post Soviet collapse, NASA went around buying them up.
You’ll find very few takers in the West to sign up to go and work in Russia on all these exciting tech projects they may (or may not) have. However much they might be paying. Partly because these projects are no longer “politically neutral” ! Plus the sanctions. It would be like someone from the UK going to work in South Africa during apartheid (an offer my father declined).
What Europe produces is irrelevant to this discussion. It’s just whataboutery. Since we’ve been detoured there, I can say with certainty (from personal experience) that Europe still has far greater high tech design capability and experience than Russia. It does help to live in a free, open society (where the government doesn’t own the media and change the law at will to lock up opponents – or murder journalists) if you want technical innovation. You need free thinkers.
Perhaps the biggest problem Russia has is incompetent management. They’ve never had good management. Ever. Dostoyevsky noted this 150 years ago. Increasing corruption has only made the problem worse. People running oil and gas companies who know nothing about those industries. Defence ministers who have no experience of defence. Need I continue ?
“It does help to live in a free, open society (where the government doesn’t own the media and change the law at will to lock up opponents – or murder journalists) if you want technical innovation. You need free thinkers.”
Oh my! Apparently you don’t read or listen to BBC or the Guardian. Alternative views never see the light of day. Bringing truth to power indeed. Just think about what is happening to Julian Assange.
You’re absolutely correct. The West is just as propagandized as Russia. Almost all journalists these days tell us what to think rather than report on the news.
Utter nonsense. Other media are available. You’re freely expressing your opinion here amongst other things. And no one is going to lock you up for it.
You just don’t know how lucky you are to live in a free society where – in Adlai Stevenson’s words – it’s safe to be unpopular.
Beside that, what was it your *actually disagreed with in the quote you extracted above* ?
Lol, you can literally be arrested and jailed in this country for saying things that are deemed “offensive”. You’re a typical leftist who thinks free speech means “people are allowed to say things I agree with”
Thereis vastly more free speech in Russia around every single topic outside of cirticizing the government.
Guess what? If you’re arrested and charged with a criminal offence in the UK, you have the option of being tried by a jury of 12 citizens, who – if they deem your words not to be offensive, requires a judge to set you free. Or your actions, as with those Bristolians who pushed a statue into the river.
Does this apply in Russia? Lol.
Try complaining about the people who tipped the statue into the river 😉
Commenting on a site with about 100 subscribers is a tad different than broadcasting the approved narrative on national media.
Tell all the NHS/Health Care staff fired for refusing the now discredited vaccines.
So where Russians in charge of the Germany dash for Green Energy? Or the West’s ‘Lockdowns’ , QE, and fracking bans etc. Russia is still exporting direct to the EU – IF they stopped, the LNG terminals supposedly being built so quickly wouldn’t provide enough to replace what is lost. Ironically the mild winter saved the EU these last few months. Wait until the Fertiliser shortages etc hit home over the next growing season.
“…they don’t put up with BS and being told what they can and cannot think or say”
You mean like in Silicon Valley?
The west has nothing to sell Russia that they can’t buy from China or India/Asia
Incorrect. A lot of technology – especially software – and oilfield services come immediately to mind. Amongst many others.
Buy with what? Roubles? The true value has plummeted. Putin also knows how the CCP and MSS work – he follows the same playbook.
Once Putin demanded that gas/oil had to be paid for in Roubles, the Rouble recovered. Don’t believe all the Western MSM propaganda.
Politico yesterday provided a more optimistic assessment of Europe’s energy situation: US liquefied natural gas saved Europe from energy extortion by Russia. Europe now relies heavily on US liquefied natural gas rather than Russian gas, and Europe’s renewable energy industry has received a massive investment boost.
Politico characterizes Russia’s increasing reliance on China as a major energy market as making Russia a client state of China. No mention of the effect on Europe of its reliance on the US for energy.
Mostly Qatar LNG – and some Azerbaijani – hope Armenia keeps quiet…
And US, Norway and more recently Algeria. Plenty of options.
Ask the 3rd world whose gas contracts were cancelled (Pakistan one I believe) because the EU outbid them and suppliers made more profit selling to the EU despite breaking contracts and paying penalty clauses, because the EU bid so high. There isn’t enough LNG to go around the world. The EU takes what it wants from the 3rd world but at a price. The information is out there, but you won’t find it in any Western MSM outlet. It appears in business or sector news, sometimes on Reuters or Bloomberg. Sometimes in the Oil/Gas industry press.
The Azerbaijan gas redirected to the EU is replaced in Azerbaijan by Russian gas. Indian refineries flog Europe refined products, their feedstock comes from Russia. There is also a reputed 600 vessel ‘Shadow’ fleet that Russia now uses to get it’s oil into the ‘mainstream’ – the irony is that Germany used to ‘launder’ Saddam’s oil and now it is using Russian oil that is ‘laundered’. Those 600 vessels simply turn off their transponders hence the phrase shadow fleet. They don’t need the Western Insurance either.
We should let the 2 antagonists get on with it, the Crimea and Donbas will be Russian – the Soviet drawn borders are no longer sensible in a post Soviet world. Ask the former Yugoslavia. This is Balkans MK2, and WW3 isn’t an impossibility IF the nutters demanding NATO impose a now fly zone get their way. When Putin said Russia was fighting NATO it was false news. When the Ukrainian Defence minister (since removed IIRC) said Ukraine was a ‘def-facto’ member of NATO it wasn’t false news.
Now and again the BBC actually lets through a report that backs up some of the things Russia is accused of lying about. The extent of Ukrainian casualties for one. We should be pushing for peace, and if that means the Donbas and Crimea want to join Russia so be it. The hypocrisy of supporting Taiwan’s independence from China yet supporting Ukraine’s war on the Donbas to force them back into the fold would be, were it no so terrifying, amusing.
“US liquefied natural gas saved Europe from energy extortion by Russia”
You make it sound like a benevolent act!
In fact, the American government pressured European governments to cut back on Russian gas, and American fossil fuel companies have profited from it.
Similarly, American arms manufacturers are rubbing their hands with glee.
The losers in the war are Ukrainians, Russians and other Europeans.
Certain American interests, by contrast, would love a long war and permanently soured relations between the EU and Russia.
Goebbels wrote much the same about Lend-Lease in 41.
Great argument lol
It took 40 years for us to pay it back, Watson.
Try facts, not historical nonsense. The gas price rocketed in 2021 because of the failure of wind and hydro power across Europe and S America. Both Brazil and Portugal to name but 2 dashed for LNG – there wasn’t enough so prices rocketed. (UK suppliers went bust before any war) In fact the invasion was almost certainly pushed forward on the basis of the LNG gas scarcity, and Russia’s belief the EU wouldn’t be so stupid as to cut off (which they haven’t done completely BTW) supplies from Russia. Now it’s here, there still isn’t enough LNG for the world, but the West and EU in particular can outbid the 3rd world for it. Europe is in a mess, the price we are paying for gas is damaging (see the cost of living demos and riots across Europe) The closure of dutch/Uk green houses due to gas prices also helped fuel the lack of vegetables – tho’ you won’t hear that trumpeted loudly in the European press. The crisis isn’t over yet. Fertiliser production is hammered in Germany as it needs gas as both feedstock and fuel source. China even cut back on exporting fertiliser and the precursors long before the war as gas prices rocketed. You won’t suffer the consequences of that until after the next growing season. Russia and Ukraine not only supply foodstuffs in vast amounts (Sunflower oil a classic example) BUT they also supplied fertilisers, and they aren’t now. The consequences of this war have only begun to be felt, a warm winter also save the EU. It may not do so next year, and Biden isn’t bending over backwards to help frackers. Trudeau too just sent a lot of wannabe customers for fossil fuels packing. The world is a mess, and the West is committing suicide over Ukraine and other issues. We should be pushing for peace NOW.
Funny how the Western sanctions war which began this isn’t extortion, but Russia retaliating is.
This article seems a bit slanted to me. It’s one thing to say that the sanctions haven’t been as paralyzing as some had predicted, which is true, and quite another to say they’re having no effect at all, a claim that beggars the imagination. I’m sorry but this article is far too near to the propaganda that comes out of Russia/China for my liking. Nobody would claim that a business who lost their biggest customer, a customer that accounted for a quarter or more of their sales, would be completely unaffected. Why should anyone believe it about this situation? Absurd.
He isn’t a neocon lunatic like me, so this is “Russian propaganda”.
More accurate than you’d like. There are pipelines supplying China, it is that they just don’t come from the fields supplying Europe. Russia was one of the least indebted and gold rich countries on the planet pre-war. The US freezing Russia’s foreign assets (they had a lot too) is going to, and is, costing the West dear. The 52% of the world by population is now looking to bypass the Western financial system. Even the Petro-dollar underpinned by the Saudi’s which allowed the US to abandon the gold standard and not go broke while maintaining the $ as the world’s reserve currency is now under threat. The Saudi’s have announced they are open to trading their oil in other currencies. This war is a culmination of many events, and to concentrate on the fighting and ignore all that led up to in terms of politics, finance etc does the Ukraine no favours. They won’t get back Crimea – I even doubt they’ll get back the Donbas. BUT they’ll try and IF the West backs them to the extent that they might appear to do so, then this goes Nuclear. Maybe only tactically nuclear, BUT it will happen before Russia accepts losing Crimea. Peace is what we should be aiming for, and don’t give me all that bull about ‘morality’ – the UK sold Tibet for Chinese help and I haven’t notice NATO planning to go to war over Tibet. Why? Because it isn’t in their interests. The question that has to be asked is just whose interests is it to put NATO in the Ukraine, missiles on Russia’s border. Think Cuban missile crises then tell us that Russia doesn’t have a genuine grievance about what is going on with NATO.
The Rouble has done very well since invasion which tells you something.
” no one except speculative traders pays the futures price ”
Apart from every large energy consumer on the planet. That’s what the futures market is for.
In a roundabout way, this explains the emptiness of all the Brexit arguments over trade and the alleged damage to our economy that would result.
Russia’s economy is almost entirely internal, with the exception of their energy exports. The UK economy is 85% internal. The big difference is we’re, these days, an importer of energy and, for that matter, food.
Whether or not the UK has a trade deal with Australia, Japan, or even with the EU, only has a marginal effect on the economy. (Note that membership of the Single Market hasn’t led to any appreciable growth in Italian GDP for two decades.) It’s energy security that counts.
Basically, telling us what we knew (or willfully ignored, in some cases) a year ago–sanctions almost never work to modify governmental behavior, at least in the short- to medium-term. Didn’t work against Italy in Abyssinia in 1936, don’t work now. The people who suffer are mostly those with little or no voice in the decisions that led to sanctions. Which is why they don’t work… but they can create real suffering, as in Iraq 1992-2003.
Unless they work in ways you didn’t plan–like US embargoes on Japan in 1940-41, the led the Japanese to war in Dec. 1941.
To have any hope, you need the whole world (e.g., South Africa boycotts in the late 1980s-90s), and they have to really mean it. And a government that cares about the people being affected. Other than that one time in South Africa, that almost never happens.
The current sanctions are little more than a bad joke. Most of the world is not sanctioning, so the sanction regime leaks like a sieve, and even those who claim to be sanctioning don’t really mean it–like the $300Bn of frozen Russian central bank assets that existed in Feb 2022 but now cannot be found. Those dollars didn’t escape by themselves. Or, the EU still buying Russian fuels… from Russia, through middlemen like India (at a huge markup), whatever.
Sanctions are usually a charade to look tough when one is not prepared to actually fight.
Historians will try to sort out why we, mostly the US, refused to negotiate with Russia over negotiable matters, and risked a war that we were not ready to fight. Russia was always clear where they saw red lines, and we chose not to take them seriously–we didn’t try to satisfy them and we didn’t prepare to fight them. Our leaders make Stanley Baldwin and Neville Chamberlain look positively Churchillian.
And while Europeans complain about expensive heat, and Americans increase their insane national debt another few notches, Ukrainians die or are crippled or flee in huge numbers, in Europe’s worst humanitarian catastrophe since 1945.
What a load of nonsense.
Before Russia invaded Ukraine, Urals crude was around $2 a barrel cheaper than Brent crude. It’s now over $30 a barrel cheaper. To argue that “both went down equally” is just wrong.
If the author cannot get the basic and critical statistics correct here, everything that follows is nonsense.
The simple facts are that Russian crude has declined massively in price – so while Russia may be shipping around the same volume of oil, it’s getting paid much less.
And Russian crude is far more expensive to produce due to a) more difficult extration in Siberia and b) (no surprise here) inefficient Russian production (which incidentally relied massively on Western oilfield technology and services which are now gone). Meanwhile, stuff like Saudi oil is still very profitable.
Fact: Russia is now selling at around delivered cost to customers in Asia (which is higher than delivered cost to Europe). So it’s not making any profit.
So the sanctions had no effect on Russia ? Get real.
Germany has built huge LPG capacity to import LNG for Europe. Europe no longer needs Russian gas.
And where is this evidence that “Europe is being starved of energy”. It’s not being rationed here.
UnHerd does publish some rubbish.
Thank you for such a detailed analysis, it certainly helps given all the froth around at the moment.
OK – so why are all 26 European Fertilizer plants which use gas as feed-stock Closed? Maybe because LNG is way more expensive than Pipeline Gas! And why is Germany’s Huge and vital BASF chemical factory dismantling and moving to Louisiana? Because LNG is too expensive.
And why is all Europe printing money like crazy to pay people’s energy bills? And next year said to be worse.
Actually, and as you’ll have noticed, energy bills haven’t risen as much as predicted. Partly due to the weather but also due to the alternative supply.
In fact the story is the pivot to LNG and other forms of energy has happened much quicker than Putin and others thought possible.
and who’s gas are we taking? We, the west are outbidding the 3rd world for the limited LNG supplies that are around. Just like the current veg crisis is hitting West Africa, as Europe pays enough for North Africa to switch the supplies intended for West Africa to Europe to make up for the poor yields that meant they didn’t have enough to supply both markets. Try reading more widely, Below is but one publication printing the truth. So do we still occupy the moral high ground now?
You have brought up a subject that is much ignored. Fertiliser prices and supplies were already hit before any invasion. The 2021 ‘dash for gas’ of the likes of Brazil and Portugal and Europe in general were nothing to do with this war. China had restricted not only Aluminium exports but also fertiliser and fertiliser precursors before 2021. It was because gas prices went interstellar and China decided to cut back on energy expensive stuff, and they cut back the portions for export. This is well known, the fact that Ukraine and Russia are also large suppliers of fertilisers is also known. They haven’t been for a year, and won’t be this year either. Look at Sri Lanka to see the effect of no fertiliser – 20% drop in crop yields. The Ukraine war is a major danger because the West/NATO/US won’t think peace, so nuclear confrontation is a danger. BUT the economic consequences of the policies pursued over the past 13 years haven’t miraculously disappeared. Putin simply gave the idi0ts who govern us an excuse to blame him. Yes, he is going to make it even worse, but it was coming anyway. 20% reduction in crop yields? Wait until the consequences of that hit the streets, after the next growing season probably. The current shortage of veg isn’t all it seems either. The issues in Spain and N Africa were important, BUT the northern green house producers had cut their production thanks to the price of gas, the Dutch finding that even sitting on top of the Groningen gas field didn’t mean they could afford to heat their greenhouses on the scale required thanks to their Govt policies. N Africa also had problems, BUT Europe didn’t suffer all of their issues, They simply diverted the produce destined for West Africa to Europe – again, the west outbids the 3rd world. To be spending the amounts we are on keeping the Ukraine war going is as insane as Net Zero. Potentially more so because Net Zero is only going to kill millions in the 3rd world if we keep it up. Going Nuclear in Ukraine will kill millions across the globe if the nutters in NATO do impose a no fly zone or put Ukraine in a postilion to retake Crimea.
You might be able to argue that sanctions have hurt Russia, but they have certainly hurt europe too.
Well, there is something called “war” going on.
And wars don’t really involve contests about who in a given capital can still buy an iphone.
Far less. And we can take it. It’s a short term hit we can easily survive and we’ll be better off in the end.
and we can win friends in the 52% of the globe that doesn’t support the west with things like this?
The Ukraine war is a consequence of many things, and the stupid belief that we occupy the moral high ground is just that. We are walking a tightrope and disaster is either side. The west is too far down the road with so many insane policies over the past 13 or more years that we cannot escape unscathed, BUT we keep pushing this war by proxy in the Ukraine and one of the disasters could be a nuclear exchange, and I can assure you, Biden won’t be opening the door to his shelter to let you and your family inside, same for our leaders.
Totally agree PB. The problem is one of a deep desire to have a story that confirms one’s prejudice.
World Bank data on Russia is all currently provided by, guess who? Yep Russia. Putin’s 3 times replaced his central bank leads almost certainly to ensure they convey stats and data that are entirely bogus. Nobody really knows what the overall position is because you can’t get any independent data. Quite frankly the World Bank needed to be a little more savvy about what it published on Russia in this context or it’s own credibility further diminished.
We know over 1000 companies have pulled out of Russia. Their stock market hasn’t crashed because they’ve stopped these companies pulling out their assets, so it’s a completely false stock and trading position being reported.
Who’s buying roubles too? Nobody. So they can’t service any debt.
They are selling their Gas at a loss to China.
Try getting a new screen for a broken smart phone in Moscow right now. Yep a bit of smuggling undoubtedly going on and that’ll provide some alternatives, but overall they are in deep deep trouble. Only lies are propping this up for now. Russian lies and propaganda and either duplicitous, naive or easily manipulated western commentators.
Why did the rouble spend months of last year being the worlds best currency? What country had prior to the unprecedented step of the US freezing foreign reserves of a country, some of the largest foreign reserves of any big country? You won’t bring Russia down when half the world supports them. The bad news is that the half the world supporting them contains the workshop of the world and a number of major resource suppliers. The myth that all is well is just that, we are effectively pillaging the 3rd world because we can outbid them for food and gas etc that’s really going to do us favours isn’t it?
Having terminals to import the gas isn’t the same as having plentiful supplies of the gas to import. The EU has been outbidding the 3rd world for gas. No mention of the ‘morality’ of that, when the EU pays so much that suppliers break contracts with the 3rd world, pay the penalty then make even more profit even after that flogging to the EU. The US might not be able to supply the gas they claim for years. Biden’s ban on new fracking licences in Federal lands isn’t going to help there either. Trudeau in Canada has reputedly just told western enquirers that Canada is going green so they won’t be taking up the offer of contracts for fossil fuels. Smart move, not. The myth in that this is all Putin’s war’s fault. LNG prices went stellar in 2021 thanks to the failure of Wind to deliver power AND the Golden child of renewables, hydro failing thanks to drought. Arguably that is why months later Putin invaded in what looked like a botched plan – rushed maybe to take advantage of the Net Zero insanity that sent prices interstellar. Both sides pump out propaganda, Ukraine has done it best, or it was until a month or so ago, now, like the Covid myths, some of the ‘conspiracy theorists’ or ‘Putin Bots’ as the supporters of the Ukraine war call those making claims about Russia’s successes, are proving to be not so far off after all. We should be looking to broker a peace, not risk a Nuclear exchange.
Short term the Russians have mitigated quite a bit of the pain, and they had been preparing for this – e.g: they pursued policies that made them more self sufficient in food since the early part of last decade.
They can shift fossil fuel sales more to China and India, but that’ll take time and investment as they don’t have the export infrastructure (pipelines etc), and of course China and India will extract a price. Currently they can’t get international credit for such investment and so would have to use their own reserves.
Medium/Long term they are in real trouble. They can’t manufacture the high tech goods anymore like we can in the West. That means over time what they make will become simpler and simpler. And that includes the ability to produce complex, sophisticated munitions.
Fundamentally they’ve a slow puncture and it’ll take a while to run properly flat, but it will the longer this goes on. The West is absorbing pain too but it is much richer and better able to handle this. In some regards the need to reduce fossil fuel reliance on dictatorships is going to turbo charge the pace of development in other sources, and free market economies, if well managed, can respond v effectively.
They’ve also lost hundreds of thousands of their most skilled young people (like IT professionals) who’ve left the country rather than live under a repressive dictatorship that kills journalists and wants to conscript them. And the Western companies tjhat employed many of them have pulled out. Losing their most skilled young workers. Genius !
Russia hackers still seem to manage however.
But Russia can pivot and sell it’s fossil fuels and raw materials to the Chinese, who will provide them with high tech, sophisticated goods. The USA and other Western powers are under the illusion that they remain as a single dominant superpower.
And do we really have a free market? Or just a bunch of crony capitalists in a collusion/revolving door with big government, all in apparent groupthink?
The problem is that shipping energy products to China and India costs more and the products sell for less. So it’s a double loss for Russia if they have to do that.
The USA is the world superpower. A lot of people entertain childish fantasies that this is not the case. But I’m afraid it still is. And it’s not changing any time soon.
I suspect the US being the world power is changing very very soon. First off, the US has bungled every single foreign adventure since the 1960s, from Vietnam onwards. Second the US has an absolutely massive and unsustainable debt. Third, if the US continues going woke, it will soon go broke. Fourth, the wokesters and social warriors in the US are intent on pulling down and canceling the entire Western Cultural cannon. So in the end the western cultural traditions, especially in the performing arts, for example, will be maintained and developed in Russia. Way to go US.
The amazingly successful ‘Race Baiting Industry’ of the Lefty Globalists (Soros and Claus) will manage to break USA society apart within 10 years,
Indeed, Marx foresaw the end of “Kapital” in the 1800s.
Khrushchev said in the 1960s:
“We will bury you!”
Prophecies about Western Capitalism’s collapse are never wrong.
But perhaps just a few centuries too early?
Still, there is always 2123 to shoot for…
unfortunately I haven’t got the link to hand, but a US/China war over Taiwan was ‘war-gamed’ by a US institution a number of times. The outcomes were somewhat chilling. Most of the time the US won, but its Pacific Naval fleet and so Naval air power was more than decimated even in victories, and, more surprising, it actually lost in some scenarios. A US carrier has thousands of crew, airmen etc. The wargames resulted as I said, even in the victories in catastrophic losses to carrier groups. Think that many dead and what will be the response of the current US population? They abandoned Vietnam and Afghanistan because of the body counts, they won’t put boots on the ground in Ukraine because of body counts. They are devaluing the $ daily and the Petro $ which is the foundation of the $ as the world’s reserve currency, underpinned by the Saudi’s only accepting $ for oil, is threatened. The Saudi’s floating the idea they could accept other currencies. How much that is bluff to hit Biden is open to discussion, as the Saudi’s hate Biden. In fact when he turned up cap in had in Saudi, the didn’t welcome him as most countries on the planet would and they didn’t give him what he wanted. Which is another reason for not thinking the world will be awash with replacements for Russian oil or that the US continuing as it is will remain the global hegemon. In fact if Ukraine goes Nuclear, the US isn’t likely to come out of that as global hegemon and perhaps the UK and Europe not come out of it at all!
The number of Americans renouncing US citizenship has been growing exponentially.
The tax laws of the US are becoming more onerous than those of EU countries. That, in combination with the totalitarian woke thought control going on, will eventually mean that the US will soon experience a massive brain-drain as the smart and the rich leave for greener pastures, much like what is happening in California, but then on a more global scale.
There are plenty of low-tax states in the US.
And I love that “totalitarian woke thought control!”
Greta Thunberg will soon take Big Brother’s place.
What ‘woe is me’ rubbish. Where are they going to go exactly? To work under the FSB or MSS control?
‘Very, very soon’? Your prediction as to how ‘soon’ JS?
That aside there is an article to be written I think about the paradox in how so many anti-wokers also seem to be apologists for Putin’s barbarism. There may be something psychological at play here. Anti-wokers generally claim to be some last bastion of cultural protectionism, yet are myopic about how defending Putin goes firmly against so many Western cultural values and historical legacy. I suspect many anti-wokers lack real grasp of their own history and therein lies much of the problem.
Nobody is apologizing for Putin’s brutality, anymore than anybody would apologize for Saddam Hussein’s, Xi Jinping’s, or any of the other tin pot dictators out there. But that doesn’t mean that the West should interfere in far away border disputes that have nothing to do with us and are of no security concern to us.
I was just looking at “The Edge of War” last night, and at one point in the movie, Chamberlain says to the main character: nobody in Great Britain would go and fight for a border dispute that they couldn’t even place on a map, referring to the Nazi takeover of the Sudetenland. I suspect he was right at the time, and it is far from clear whether Britain and its allies would even have been in a position to interfere and stop Hitler in his tracks in the 30s. The caption endings of the movie were also interesting because they ascribed what Chamberlain had a achieved in the infamous “Peace in our time” declaration” was in fact to buy time for Britain to rearm.
The problem JS is your analogy doesn’t hold on many historical levels. The Czechs didn’t fight. We negotiated a huge chunk of their territory away for them before any Panzer rolled over the border. We never did the same in Ukraine, and furthermore the Ukrainians shown a desire to fight heroically for their freedom. Furthermore our sacrificing Czechoslovakia ‘blue lighted’ Stalin to do a deal with Hitler as the example indicated we’d lost our morale authority and ‘martial vigour’. So you see it created a ripple that made things worse.
But it touches also on the broader connection I was making – Churchill clearly thought we were wrong not to stand up for these countries earlier. And when we were alone he crucially conveyed we want to still fight and please help arm us USA. The analogy is so clear Zelensky has a bust of Churchill in his office now. And yet one suspects many contending we ‘pull the plug’ on our support now would in so many other arguments pull on WSC’s cultural and historical legacy, thus missing a key fundamental. Who therefore is protective of our values and history?
Ironically for all those liking Putin to Hitler, Poland had a very interesting bit part in Czechoslovakia as Hitler stepped in. They took some of it too. The excuse made for that act nowadays?
“The area was small and majorly Polish, and local Poles were persecuted by Prague.”
Correct, one of the first things he did was to start a massive rebuilding & modernising of the RAF fighter command. Like the myths surrounding WW1 being exposed in time, history has a habit of revealing the reality. Russia has shown more restraint, even with a Putin in charge, over the continued threatening of its borders than the US did when it came to Cuba and missiles.
Or they know more of European history – including NATO promises to Russia, Maidan Square and Victoria Nuland ‘addressing the crowd’. Curiously in the US when Trump, a US president, addressed a US crowd, who then had a fancy dress day out in the Capitol, took selfies,got bored and went home, it was a insurrection. When it happen in Kiev and the crowd was Ukrainian Nationalists and the speaker a US politician, it wasn’t anything sinister at all and the resulting coup had nowt to do with it 😉
There were no promises BB. It’s a myth. And furthermore NATO never invaded any country.
As regards Putin showing restraint – constantly striking residential areas with missiles and mortars? Bucha and other atrocities? Good grief what on earth would you deem a lack of restraint?
Gulf War 1 was a win for them. Even then there was the offstage chorus of….
‘G. W. Bush is a wimp. Why didn’t we just finish off Saddam after we kicked him out of Kuwait’
The answer to that refrain is by now very clear.
Yes PB. Evidence that Russia is actually making a loss selling to China/India at the moment. It’s costing them more, esp as the conveyance mode much more expensive, than they are recouping. Thus in some regards what we want is for them to sell even more to these countries under the current pricing as they’ll go broke quicker.
I wonder if the Taliban agree with that? Or Japan, who seem to think that perhaps the US can no longer be trusted to provide their forces to protect them and so are re-arming and interpreting their ‘defence force’ constitution somewhat liberally.
Except that apart from Germany the West has lost its entire manufacturing base to China! So we in the West don’t produce anything either. I suspect that the Russians can get on just fine without the West, especially since they can always deal with China.
Not sure they’ll get on fine. They wanted to be a great power and be treated with respect not China’s vassal state
38 Gigabattery manufacturing factories in Europe alone.
Yes Pandemic and elements of Cold War 2 will force reappraisal of some supply chains and increase in insourcing, but the West (N America/Europe/ AUKUS/Japan) have reservoirs of strength the totalitarians can only dream of.
Russia dealing with China – yes to a degree but at a cost both economically and politically. An eastwards pivot can’t happen quickly either. And China has it’s own struggles too.
That slow puncture is happening.
Flat Gigabatteries aren’t of much use. Where is all that power coming from to charge them? Lignite in Germany? So much for Net Zero and their Green Energy drive. Then as the boss of KIA pointed out last month – usual Korean diplomatic language “Cheap mass production of EV’s is problematic.”
Dyson discovered that years ago when he scrapped his EV project.
Net Zero is insanity, and that alone is going to bring down the Western economies. The latest reports are that the amount of copper alone for net zero would require a 4000% increase in mining activity to produce what is needed. I must admit I wondered if they’d added an extra 0, BUT even if they did, 400% increase in mining activity? That for copper alone! Dream on.
Surely, you don’t actually believe Russia won’t be able to but high tech equipment? India, China, Brazil etc. will sell it to them.
I’m sure they can source some things from others but these countries don’t manufacture high tech in anything like the volumes/sophistication of the West, for now at least. Furthermore those countries risk Western sanctions. These are not easy judgments for either Russia or these potential suppliers.
Conveniently ignoring the critical fact that most high tech equipment and software *needs factory support*. From teams of trained field application engineers who train users, helps them use stuff and work to get bugs fixed and improvements made.
Even if Russia can acquire bootleg tech, they’re off technical support and maintenance now. Good luck with that. It’ll be like trying to use an Abrams tank without and training, maintenance or support.
People are posting all sorts of childishlly simplistic nonsense here that simply will not work in practice.
One of the ironies of your post is the reason the US went all Chinaphobic was when the Pentagon realised that many of its sophisticated weapons systems relied on Chinese imports. Mind you in the 1st world war Germany and Britain traded via Switzerland. We sold them rubber and they flogged us telescopic sights amongst other things IIRC. Though I suspect China if war broke out wouldn’t be so ‘civilised’ as to trade anything with the US, other than missiles.
The main outcome of this war is that Europe will never use western Siberian gas again.
Russia has lost its best customer, as Europe switches to other fuels.
But this is really just the eternal story of Russia. At various times it adopts the current European economic model. But it can never really become part of the continuously innovating North American/European civilization. Without Rule of Law, Russians dare not trust one another.
So the country immediately falls behind and collapses, because of its own internal hatreds and contradictions.
It’s happened four times:
1) Ivan the Dread’s regime collapses in the Time of Troubles.
2) The Romanovs’ empire collapses in 1917
3) the Soviet Empire collapses in 1991
4) And now Putin’s dwarf empire collapses in 2023.
Moreover, besides the traditional gas, oil and grain. Russia’s only real export is arms. But since it has lost almost all of the weapons it produced over the last 70 years, it has the impossible choice of either losing all income from weapons sales, or beggar itself to produce new arms for Putin’s moronic invasion.
So be glad you won’t be living in Moscow for the next decade or so.
It’s going to get wiiiild!
“And now Putin’s dwarf empire collapses in 2023”
I could not resist.. Haven’t you been saying “2022” previously? 🙂
Keep the alarm on to switch to 2024 accordingly!
No, I just said that the direction is steadily turning against Russia.
But you already knew that.
Might want to read about the actual war sometime, though.
We would if it were reported regularly and accurately. Curiously every so often the BBC puts in an article that makes one wonder. eg
a) Pre Xmas BBC reported US Generals reckoned Russia and Ukraine had lost similar numbers of men – another article had Zelensky saying how many men a day they were losing in the Donbas – a quick multiplication to bring it up to men per month and lo and behold it was the same as the BBC said Russia was losing – what happened to the Russian catastrophic losses of previous reports?
b) Again a month or so ago, BBC had a report quoting a Ukrainian soldier ‘The Russians were learning fast, their use of combined arms was improving rapidly, the biggest fear was Ukrainians didn’t hear the low flying Russian jets until they were on top of them and the Russians were increasingly punishing Ukrainian supply lines and getting better at protecting theirs. “We need to learn faster than the Russians” the headline IIRC – now which is right? These odd reports that get thorough or the ‘Russians are being annihilated” reports?
c) Then Bakhmut – one moment it is a strategic position that Ukraine has defended brilliantly, next it is a non-strategic position that Ukraine defends brilliantly for no satisfactory military reason at great cost and US urges them to pull back.
All of the above has appeared on the BBC at one time or another. What is true and what isn’t or don’t they know?
Reliance on the economic aspect of this war to change or alter the outcome is a fool’s errand.
Past wars have caused real privations to the winners. But they still won.
Indeed, economic considerations were at the heart of Putin’s invasion plans:
–The EU would fold because it couldn’t do without Russian gas
–Ukraine’s economy couldn’t sustain a war
–The US wouldn’t bother providing tens of billions to Ukraine
–The Third World would demand an end to the war because Ukrainian grain was blocked
–Ukraine would fold because of attacks on its infrastructure
None of that materialized.
So the author’s real argument is that–like a broken clock–some sort of economic shock–somewhere–somehow–will still get Putin what he wants.
But isn’t all this military stuff sooooo boring–when the REAL struggle is the culture war?
You certainly have some die-hard fans, Martin!
I am astounded by the writer’s last remark about “high energy prices.”
It’s a Russian troll talking point, of course, but my bill is virtually the same as last winter.
You’re a neocon troll
My bills and forecasts by my supplier are lower than last year and that’s before the subsidy is taken into account. No car/van because of impaired vision. Free bus pass in South Wales and it’s been too cold to go very far on my eTrike. Add to that using lower power on my “Ham” transceivers and I’m almost in a win-win situation.
The subsidies get cut in April.
You must be a UK Government minister, my bills have rocketed they are now 40% higher AND that with Government support. Come April I dread to think what they’ll hit AND people think ‘price capping’ is the answer. Stand by for another raft of company bankruptcies. You can’t sell for less than you buy and expect to survive. The biggest scandal is how the West is paying higher prices to strip the 3rd world of not only its gas, but in the last month or so, of food. North African veg producers diverted produce destined for West Africa to the European market. How to win friends and influence people?
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