Europe is facing a recession if Russian natural gas is cut off, warns the International Monetary Fund. The Guardian. There is a large amount of fear that Vladimir Putin will keep the Nordstream 1 pipeline shut down after it finishes its annual maintenance schedule later this week. If Putin were to cut Europe off from natural gas entirely it could reduce the GDP of vulnerable EU countries up to 6%. The IMF said that the Czech Republic, Slovakia and Hungary would be the worst off but Italy, Germany and Austria would be deeply affected as well. The IMF said that these countries could face a 40% natural gas shortage, which would be devastating to the economy. Some countries would be less likely to face disruptions, such as Greece, Sweden and Denmark.
My Comment:
I think the IMF is being optimistic here. If Russian natural gas is shut off I am expecting a lot more damage to the economy of these European countries. Why? Because it's not just going to be the affects of the gas on the economy, it's going to cause stability issues which will further degrade the economy.
Germany, for example, is going to have an extremely difficult time keeping the heat on for their people. If grandma freezes to death because there isn't enough natural gas the people of Germany are unlikely to blame Russia for it. They will instead blame the government that angered Russia enough to shut off the gas. And they are apparently in a better position than the Czech Republic, Slovakia and Hungary. I am expecting if the gas is cut off than there will be riots and disorder, to the point where governments could fall or violence will erupt.
Will Russia do it? I think they could easily. They have found other buyers for their natural gas and though it wouldn't be a cost free exercise it would dramatically hurt Europe a lot more than it would hurt them. It would put extreme pressure on these countries to give up their sanctions.
Russia has no reason to not to do this and they have a lot to gain. In addition to the possibility of getting rid of sanctions they would also gain the possibility of some of these governments falling. Though there is no guarantee that any new governments will be pro-Russia per se, but I am sure that they would likely less anti-Russia than the current governments.
Keep in mind that all of this is occurring while Russia appears to be winning in Ukraine. The sanctions against Russia has not really damaged them but it has damaged Europe. And the massive deliveries of weapons and equipment have not helped the Ukrainians win. Indeed, Russia appears to have changed strategies from taking territory to destroying Ukrainian units.
Given that being the situation it's insane to me that Europe is not trying to negotiate with Russia directly, without the United States. We all know Biden and his defense team are willing to fight to the last dead Ukrainian and doesn't give a single damn if Europe freezes to death this winter. Given that being the circumstances you would think that Europe would reassess things. Time will tell if they do it sooner or later, but I can't imagine this continuing forever. Either the rulers of Europe will come to their senses or they will be replaced but sooner or late some kind of agreement will have to be made with Russia.
No comments:
Post a Comment