Written by – Elijah J. Magnier:
Gas is still flowing in Europe through the Yamal-Europe pipeline, the Blu stream 1 and 2, the Nord-Stream 1 and the Turk stream despite the undeclared war between the US and its European allies and Russia on Ukraine’s territories. However, the West has found an opponent who has many cards to play and is equipped with sufficient capabilities to cause significant pain to those who would impose sanctions on Russia. Indeed, Russian President Vladimir Putin announced that he would prevent the exportation of products and raw materials from Russia until the end of 2023, provided that the Russian government determines the list of unfriendly countries. This decision is a severe blow firstly to Europe and also to the whole world, which will suffer from the mutual economic war between Russia and the US.
Russia exports essential materials and products that the world needs at least in the coming days, months or years. It exports yearly oil worth $141 billion (35% of its export), iron and steel worth $16 billion (4.8 %), precious stones and minerals worth $30.4 billion (9%), grains worth $9.5 billion (2.8 %), machinery including computers worth $8.3 billion (2.5 %), wood worth $8.2 billion (2.5 %), fertilizers worth $7.5 billion (2.8 %), copper worth $5.6 billion (1.7 %), aluminium worth $5.5 billion (1.8 %), and fish worth $4.6 billion (1.4 %).
Russia says it will not stop its exports until a list of its “non-friends” who imposed sanctions and allies is prepared in detail. This means that, sometime in the future, it is likely to stop exporting gas to some European countries with a hostile stance towards it (led by Britain) and other US allies.
Russia will also announce sanctions against the US, the first-ever, particularly in its export of platinum, titanium, palladium, nickel and neon. Moreover, amid the Spring planting season, Russia is dropping European and American farmers in line with the political decision to meet Western sanctions with similar hurtful ones. Russia’s share in the world markets represents a third of the global production of potash fertilizers, about 10 per cent of nitrogen fertilizers, and about 20 per cent of all other fertilizers. Russia is considered the premier supplier of rare natural stone materials.
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It is not known what the world will do, because it has not significantly calculated or estimated in advance President Putin’s reaction- since many Western countries believed that Russia was « just a gas and oil station with nuclear missile capabilities ». This indicates a complete lack of awareness of Moscow’s actual power of sanctions and potentiality. The West’s control of the mainstream media turns a blind eye to the tsunami-like economic earthquakes Russia can cause if willing to follow the US sanctions’ favourite hobby exerted for decades over many populations worldwide.
US President Joe Biden did not hesitate to warn his citizens that they “have to bear the consequences (of the US sanctions) and that the world will be affected by the sanctions imposed on Russia.”
It is possible that the US’s disengagement from international hegemony will be quick rather than slow. That would entail the end of the dollar’s dominance over global trade and, with it, the US’s prestige. In 1973, during the crisis of the Arab-Israeli war, oil was weaponised due to the US for support of Israel. In the last days, oil-rich Arab countries refused to abide by the US demand to increase oil production and supply the market to slow down the increase of global prices and panic hitting the international market. The US has resorted to Venezuela and Iran in a pathetic failed attempt to welcome them back to the worldwide oil and gas markets.
The sanctions imposed by the West will in the first place negatively rebound against the European continent, while Russia will turn to the East, Asia and Africa. Russia has a market where more than half of the world’s population reside and could abandon the West if Europe is insisting on linking its decisions to satisfy the US policy rather than its own. Russia may refrain from stopping the gas to Europe unless European leaders insist on increasing the sanctions on Russia. Germany and France have already detached themselves from the US sanctions on oil. The US imports 700,000 barrels per day from Russia, but Europe’s import reaches 4.5 million barrels per day. The already tired European economy from two years of COVID would suffer dearly if Russia decided to target the continent.
Unless Europe intervenes to find a solution, calling the US and Russia to sit around the table to address their differences, this conflict is expected to last a long time. The effective and workable solution involves reactivating and respecting international laws by all countries equally, preventing invasions, wars and occupations, forbidding imposing sanctions on populations worldwide, and holding governments accountable for their actions, no matter how powerful they are. This solution may not yet be matured but will need to be taken into consideration in due course.
The end of World War I produced the Yalta Agreement between the US, the UK and the Soviets for power-sharing. Is it not time for a Yalta-2 to similarly end unilateralism and impose a new world order?
The sanctions are expected to wreck Europe’s economy. But the US will naturally take advantage of them to augment its hegemony over Europe and spread more US troops across Eastern Europe. Russia was already under sanctions in 2014 and can save itself now by pivoting toward the East and towards other partners willing to work with a country that challenges that US hegemony. These reasons make it necessary for Europe to unite around its own interests by working for a global diplomatic solution.
- Russia is the EU’s fifth largest trade partner, representing 4.8% of the EU’s total trade in goods with the world in 2020.
- The EU is Russia’s biggest trade partner, accounting for 37.3% of the country’s total trade in goods with the world in 2020. 36.5% of Russia’s imports came from the EU and 37.9% of its exports went to the EU.
- Russia is the origin of 26% of the EU’s oil imports and 40% of the EU’s gas imports*. Energy price volatility directly affects the volume of bilateral trade.
- Total trade in goods between the EU and Russia in 2020 amounted to €174.3 billion. The EU’s imports were worth €95.3 billion and were dominated by fuel and mining products – especially petroleum (€67.3 billion, 70.6%), agriculture and raw materials (€4.3 billion, 4.5%), chemicals (€4.1 billion, 4.3%) and iron and steel (€4.0 billion, 4.1%). The EU’s exports totalled €79.0 billion. They were led by machinery and transport equipment (€35.0 billion, 44.1%), chemicals (€16.7 billion, 21.1%), and manufactured goods (€7.6 billion, 9.6%) as well as agriculture and raw materials (€6.9 billion, 8.7%).
- Two-way trade in services between the EU and Russia in 2020 amounted to €27.7 billion, with EU imports of services from Russia representing €8.9 billion and exports of services to Russia accounting for €18.8 billion.
- The EU is the largest investor in Russia. In 2019, the EU’s outward foreign direct investment (FDI) stock in Russia amounted to €311.4 billion, Russia’s FDI stock in the EU was estimated at €136 billion.
UnionThe Eurasian Economic Union (EAEU)
- In 2010, Russia created a Customs Union with Kazakhstan and Belarus. This Customs Union became the Eurasian Economic Union (EAEU) in 2015. Armenia and Kyrgyzstan joined the EAEU the same year. Russia represents almost 90% of the EAEU’s GDP. The EAEU has legal competence in policy areas such as customs, competition, trade defence, agricultural and industrial product regulation, intellectual property rights, and foreign trade, which are relevant for trade between the EU and Russia. At the same time, semi-uniform EAEU technical regulations lack enforcement mechanisms and create additional barriers for trade.
Proofread by: Maurice Brasher