Market Insider, December 2, 2022
The war in Ukraine will see the most consequential changes since WW2. It will fundamentally alter power relationships in the world. Western dominance will be replaced by a multipolar world. Europe’s prosperity of the past few centuries is likely to end because of short-sighted and poorly-thought-out decisions … primarily the ill-considered economic sanctions Europe has unilaterally applied on Russia, and which have started to boomerang on Europe, with the high probability of things getting much worse in the coming months …
Thanks to Jams O’Donnell for alerting me to this, from Seshadri Kumar (Linked-in profile here) in the southwest Indian State of Karnataka. It’s no two-minute read but the first chapter alone, some 4800 words, is pure gold.
Two massive truths have massively escaped most Westerners, caught up as they are in cheering their heroes and booing their (singular) villain in a simplistic morality tale worthy of Enid Blyton or Ian Fleming.
One, even if the barefaced lies – of omission and commission both – told by corporate media and politicians were true, what is unfolding carries the very real risk of going nuclear.
Two, the poltroons 1 in high office – in or out of the EU – have declared and are escalating an economic war of monumental folly on Russia. A war which not only benefits Washington and Wall Street, at eye watering cost to Europe’s citizens and businesses, but which Europe cannot conceivably win.
It is that second truth which Dr Kumar addresses. Here’s the executive summary and chapter headers for his closely argued, occasionally florid but always riveting assessment of the cross-roads at which Europe now stands …
At the start of the human tragedy that is the Ukraine war, I delved into the underlying causes of the conflict from the perspective of a historian and political scientist. That analysis, “Understanding The Great Game in Ukraine,” is available here.
Events have progressed since then, and an important fallout of the war has been economic. In this article, I look at the role and situation of Europe from the perspective of an economist.
The European Union has taken a very definite political stance on the Russia-Ukraine conflict, aligned with the United States. It has applied 8 rounds of economic sanctions against Russia, and at the time of writing, is working on a 9th package.
What has the economic impact of these sanctions been – on Russia and on Europe itself? What will happen in the months to come? That is the focus of the present article. I conclude that
- The war in Ukraine that started on February 24, 2022, is going to be the most consequential change in the world since the Second World War. It is going to fundamentally change power relationships in the world. The dominance of the Western world will end and be replaced by a multipolar world.
- Europe’s prosperity of the past few centuries is likely to end because of short-sighted and poorly-thought-out decisions related to the Ukraine conflict, taken by European leaders with the full support of their people. These have to do primarily with the ill-considered economic sanctions that Europe has unilaterally applied on Russia, that have started to boomerang on Europe, with the high probability of things getting much worse in the coming months.
The analysis presented here is primarily an economic one, and mainly looks at the effect on the economies of Europe of prolonged sanctions (and, in the present context, “prolonged” could even mean another six months) imposed by the West on Russia.
I present evidence that makes the case that Western sanctions on Russia have hurt Europe a lot more than they have hurt Russia in the nine months since they were imposed, and in the coming months will continue to severely degrade Europe’s economies, while only marginally affecting Russia’s. The primary reason for this is that Russia is far more self-sufficient than Europe is. The only action that will save Europe is an unconditional revocation of its self-destructive sanctions and a peace agreement in Ukraine on Russia’s terms.
The only major assumptions I have made in this analysis are that, in the next two to three months,
- The war in Ukraine does not end in complete defeat for Russia
- Ukraine and Russia do not reach a peace agreement, and
- Vladimir Putin is not ousted in a coup in Russia — and hence, the current economic and military policies of both Europe and Russia will continue for the foreseeable future.
Although Russia looks unlikely to be affected very significantly by Western sanctions, and is in a strong position on the battlefield, because of its high inherent economic and military strength (recent reported gains by Ukraine notwithstanding 2 ), I argue that in the unlikely case event that Russia were to appear likely to lose the war on the battlefield or on the economic front, China will do whatever it takes to prevent such outcomes, to secure its own future. 3–
This essay is organized in six chapters, followed by a summary and conclusions chapter:
- Chapter I details the background of the events that have happened since February 24, 2022, until today, especially the West’s economic sanctions as a response to Russia’s invasion, and highlights the fact that these sanctions, as well as the West’s military and economic aid to Ukraine, have not had the effect on Russia that the West had hoped for.
- Chapter II discusses various indicators related to the Russian economy and concludes that it is in better health than many Western nations, especially in the context of the protracted economic war between Russia and Europe that has been initiated by Europe through the enforcement of Western sanctions on Russia.
- Chapter III talks about Russia’s interconnectedness with the rest of the world and, especially, with Europe, in terms of trade balances, and concludes that Russia is far more important to Europe than Europe is to Russia. It also concludes that an embargo of Russian goods would not fatally harm the Russian economy.
- Chapter IV talks specifically about Europe’s energy dependency on Russia, and shows that Europe’s energy crisis is not one of price but of supply — that the energy supplied by Russia cannot be replaced by any other source; that most European nations are critically dependent on irreplaceable Russian supplies of natural gas, crude and refined petroleum, and coal; that a European energy embargo on Russia will be devastating to European economies and cause the de-industrialization of Europe, while causing minimal and manageable losses to Russia.
- Chapter V talks about the de-industrialization of Europe which has started to happen because of the West’s sanctions on Russia that have resulted in depriving Europe’s economies, not only of Russian gas, oil, and coal, but potentially of food, fertilizer, and several valuable minerals that Russia is a dominant supplier of, and how this de-industrialization is going to intensify in the coming months and years. It also explains how this crisis is two years in the making, and that the war in Ukraine is just the last nail in Europe’s economic coffin. It also talks about the negative consequences on Europe of the impending oil price cap that it plans to impose on Russian oil exports.
- Chapter VI talks about what Europe can do in response to these challenges, by discussing the most commonly floated solutions: gas storage in Europe, LNG (Liquefied Natural Gas), and renewable energy; and shows how none of these options will be adequate to stave off the coming economic apocalypse for Europe.
- Finally, a SUMMARY AND CONCLUSIONS chapter talks about the longer-term impact of the West’s sanctions on Russia, and how they will fundamentally change the power calculus in the twenty-first century.
* * *
- I’m thrilled to be giving ‘poltroon’, first encountered in 1968 in a Dennis Wheatley bodice-ripper, its maiden outing on this site. Not that it applies exclusively to Europe’s leaders. See Australian PM, Anthony Albanese, in Canberra on November 30. Ostensibly he was speaking up for Julian Assange – his every word steeped in caveat and disclaimer – but his abject body language was that of a mid-ranking technocrat under pressure against all his instincts to bring to his Washington masters’ attention a distasteful matter sure to incur their displeasure. So is it with all America’s ‘allies’. As I’ve noted before, with friends like Uncle Sam you don’t need enemies. And by the way, I am not “anti-American”. I have good American friends, while in every field of the arts, American creatives – from Mark Twain to Tom Wolf, Miles Davis to Dylan and The Dead, George Gershwin to John Adams, Francis Ford Coppola to Martin Scorcese – have been my most formative influencers and inspirers. (Yes, they’re all blokes. So am I.) More to the point, mine are ultimately class and materialist analyses, not metaphysical takes on national psyches. I note that while values skyrocket for shareholders of Boeing, Lockheed-Martin, Raytheon et al, America’s military industrial complex, besides enforcing empire will, pumps wealth from America’s many to America’s few.
- “… recent reported gains by Ukraine notwithstanding …” As has become clear to anyone watching the conflict through a lens other than that of western corporate media, we are being lied to as much about who has the upper hand as about why the war is happening at all. Truth, after all, is famously the first casualty. (On media inability to speak truthfully on matters vital to power, despite many if not most journalists being subjectively sincere, see Britain decides! and Monolithic control at the Guardian?)
Take the recent Russian withdrawal from Kherson. Here’s what I wrote in footnote 2 to Cheerleading for WW3:
Many saw the withdrawal from Kherson as a turning point. But their position on the banks of the Dnieper exposed 30,000 Russian troops to the danger of deliberate flooding from the massive Kakhovka Reservoir upstream. To what end? To control a largely evacuated city of zero strategic value when Russia is fighting a war of attrition, not territorial conquest. (That’s an alien concept to those who pen Guardian drivel. Ditto Western war strategists who’ve never engaged a peer adversary and whose middle east wars measured success in land taken by their own or proxy forces. Try this discussion between Brian Berletic and Andrei Martyanov, or this interview with US Colonel Douglas McGregor, retired.) Here too those who believe Ukraine is now winning – an opinion not shared by General Mark Milley, Chair of the US Joint Chiefs of Staff – are sorely misled by the know-nothing commentary of Graun, CNN, Economist etc. At root of their fecklessly upbeat assessments is a mix of military ignorance and attributions to “Putin” of goals Moscow never aspired to, before trumpeting Russian ‘failure’ to achieve them.
- “ … in the unlikely event that Russia were to appear likely to lose the war … China will do whatever it takes to prevent such outcomes, to secure its own future …” I made the same point in a November 15 post, Ukraine: more dangerous Guardian drivel:
… anyone looking at this with an iota of clarity and a mental age above thirteen knows that, with Russia defeated in Ukraine, China would be next in line, and vice versa. And that Xi and Putin know it too …
Three cheers for ‘poltroon – but I personally prefer ‘vicious, selfish psychopaths’.
Knaves and varlets …
I had to look up poltroon. Utter coward, craven. Very apt here. What I wonder is how European politicians couldn’t see the self harm they were inflicting on their countries and their people on behalf of their masters in Washington. Did they not know that Russia is far more self sufficient than the rest of Europe?
There’s talk now that Biden is prepared to meet Putin. Let’s see if that happens.
They’d have to up Biden’s meds for that.
all hail davos.
To indulge momentarily the ridiculous personalising our media go in for, anyone who listens to Vladimir Putin’s speeches and interviews can’t but be struck by his gravitas and intelligence. Hard to say the same for Joe Biden.
Of course, very few do listen to Mr Putin. Least of all his most vocal critics – empty vessels make the most sound, no? – a situation assiduously cultivated by our lovely media who offer cherry-picked soundbites at most. And by the censorship of all Russian media.
We can get round the censorship – download the Tor browser, and RT and its ilk become as accessible as Guardian or CNN – but how many will do that? (An underappreciated aspect of censorship is that it is at least as much quantitative as qualitative. It doesn’t matter if a few have access to something resembling truth. Not only do they remain marginalised, but the fact they do have such access aids the myth of an open society of limitless pluralism.)
In any case, what does that censorship by mainstream browsers, search engines and the big social media platforms tell us about Western values?
There are certainly multiple dimensions, aspects and features operating here.
On a less grander scale than that supplied by Seshadri Kumar’s analysis this overview of just one element of the process underway at the Saker is also worth the effort:
If only for this observation:
By forcing European countries to transfer their already limited military equipment to Ukraine, the United States are trying to make the military potential of the European countries totally insignificant. They lose the ability to defend themselves not only individually, but even collectively. The destruction of economic and military potentials tightly binds Europe to the United States in the military-political sphere, making any relations with Europe completely meaningless for Russia (except, again, purely diplomatic ones)….
….The UK, especially after leaving the EU, plays the role of the main “subcontractor” of the US in Europe. In particular, last year it was London that became the main “watchdog” on Ukraine instead of Washington itself”
Excellent summary from the Saker.
Of the many things on which westerners remain blissfully unaware, ill served as they are by corporate media, is how isolated Europe (alongside Antipodes and Canada, Japan and S. Korea) are from world opinion in their unswerving assumption of Russia as the villain. Here, in a map of that much touted “international community”, is why:
And on cue Strategic Culture provides the present Eurozone (excluding UK) self-inflicted inflation data:
But not to worry. The WEF’s ideological Guru (sorry, but I don’t know how to spell sharletan) Noah Harari has the answer:
We just don’t need the vast majority of the population …
Looks like popcorn and guillotines may be in high demand?
Real villain England must be annihilated now-enough of piracy!
Germans are being forced to commit suicide by Americans because England wants usa to bankrupt and destroy Germany and Russia both. As it tried in 1st world war (plotted by Milner group) and 2nd World War.
In 2nd world war plotted by england to make Germany fight Russia and destroy each other, the Soviets lost 27 millions while Russia lost 20 million people but england and usa combined lost only 700 thousand people. All because 3/4th of German army fought on Eastern front and 80 percent of German causality was by the soviets. English, as usual were watching the war from side after putting light to the fuse.
All wars in Europe have been consequence of english plots to make two European nations (usually the two strongest ones) fight each other. Including 1st world war and then 2nd World War.
Gulf war was plotted by witch thatcher, first Iraq war by criminal tony blair- this Syrian war again by english rats which borne their ugly child ISIS.
Tony Blair, who, when occupied Iraq, claimed that “we will become the British Empire again,” meaning that he will occupy the rest of the world too!
Now the british are repackaging their dream as global Britain. Only when wars become unpopular, the english stop taking credit for that and let blame be placed on Jews.
and stupid people including hitler blamed jews while it was all along the english parasites who l destabilise, plot and run the war (but those cowards do not fight in beginning-they come late to feast on already weakened enemy of the day.).
NOT Caucasian by the criteria of the scientist Johann Friedrich Blumenbach who first coined the Word “Caucasian”. He specifically excluded the english race
Anglo americans from the Caucasian race.
English and by extension anglosaxon are neither Europeans nor indo europeans.
They have zero gene of R1a1 which is a marker of indo european otherwise called aryan race. .
In fact English race or anglosaxon are derived from misgeneasis between Neanderthals and Phonecians living in Bogland ( Swamps, muddy flats) of Northern Holland.
This needs be said because English are the most racist disease on the face of earth and they have been waging war on all non Anglo races one by one-it their
Race war by English on other Races of the humanity.
The they have also grabbed the biggest land mass of earth in Australia Canada and USA as illegals.
So the world needs to be prepared to
confront that evil.
how england has used jews for the benefit of english race only and for deliberatily creating disruption in Europe.
England had threatened israel in 1948 during israeli war of indepdence that england would use atom bomb agaisnt israel unless israel stop ddrowning royal air foarce palnes and pilots who were helping Jordan against israel.
the same england was in upsroar in july 1981 when isrea;l attakced iraq’s nuclear reactor-just check out theier papers of the time
the same england was leading charge agasint isreal in june 82 when isreal attacked palestinain terrorists inside lebanon-that was at t time when england was in illegal occupation for malvinas island.
that is short glimpse of how much england and anglosaxon race care about jews and israel.
look at editorails of the times, the newsweek during those crucial perios of june 82 and see how they(the TImes, the gaurdian, BBC, ITV) were suggesting that israel or atleast tel aviv should be bombed.-just chek the british papers and bbc clips from april 82 to august 82.Also check those british bastrds joutrnlism hist in the month of summer 1981 when iraqi nuclear planty was bombed by the isralis and the british were the first-along with iraq -to protest agasint the israeli action.
It is very interesting that the same type of english people(who are anti-communists, anti-blacks, anti-muslims, anti-catolics)started the same sort of propaganda(like used against russians and communists) against The Germans.the Frenchs and Europeans in general. First England did not want germany united(though during cold war it suggested that only Russians are against it). soon after German reunification and even before disintegration of Soviet union ,England changed the lie-tactics(through media and government) against Europe. There is one more thing. nato was supposed to counter warsaw pact, with the latter gone there was no discussion as to nato should be wound uop or not. Europe does not need nato. Europe can have and s
Well once I’d ploughed through the bloodcurdling …
… the mix of truth …
… with preposterous assertion …
… unsourced and highly unlikely attribution …
(Blair is weak, venal and unprincipled but not stupid. He’d have been crucified for such an utterance. Is this what you meant?)
… the anachronistic …
(In 1948 one country alone had the bomb. USSR would get it the following year, Britain four years later in October 1952.)
… the irrelevant, gob-smackingly non-sequiturial and half-bakedly scientific…
… laced through and through with a ton of other eyebrow raisers I haven’t time or energy to address …
… I finally got to something I could wholeheartedly agree with:
” …As it tried in 1st world war (plotted by Milner group) and 2nd World War…”
The reference to Milner is a tell.
Thanks to Dave for the link he gave. And to Philip for the long and important article from Left Brain Wave.
I had to look up the Milner group on a Wiki entry which houses this gem: