ER Editor: The article below comes from Moon of Alabama. First, Alexander Mercouris walks us through why Janet Yellen has reached the conclusion she’s come to; how the EU has capitulated to Putin’s demand to be paid in rubles for gas and oil; and why a foolish EU import ban is, happily, not on the cards for the moment.
Alexander Mercouris in the video below (starting at 34 minutes) reviews the changing positions of the EU towards Russian energy, reminding us that the EU was willing to ban Russian gas but not before (today’s) French presidential election so that Macron would not be harmed by rising gas prices. However, even that has fallen by the wayside, with Yellen’s advice not to ban Russian oil and gas being generally taken. And that the EU, even Boris Johnson with UK energy companies, are permitting their gas companies to buy Russian gas in pounds/euros, which then get converted to rubles. It’s a total capitulation.
Mercouris reminds us that the gas-for-rubles scheme that Putin devised (pay in euros first, which then get converted into rubles via Gazprom Bank) is EXACTLY WHAT THE EU IS NOW DOING, without mentioning that it was Putin who came up with it first. As Mercouris further notes, all other schemes such as excessive importing of US LNG, or from other countries such as Qatar, have collapsed. In fact, Mercouris believes it’s just a matter of time before Putin demands (per new contracts) that payment be made in rubles up front. So the EU would have to buy the currency first before purchasing the gas.
So it looks like the import ban on Russian energy has been shelved, at least for the moment. Yellen’s advice is being taken, but her own advice comes from a place about US nervousness over higher gas prices ahead of the November midterms.
At 45:30, Mercouris talks about Biden’s decision to essentially DEPLETE US strategic oil reserves in order to keep prices down, oil which has been finding its way to Europe. Perhaps Yellen’s advice is to shore up the EU situation in order to prevent further depletion of US oil. Mercouris is not optimistic, given current hysteria, over the EU decision to rescind an import ban on Russian gas. Things may change.
ER: We are truly governed by idiots.
EU Commission, U.S. Submit To Reality
MOON OF ALABAMA
Me stating the very obvious on Feb 28:
All energy consumption in the U.S. and EU will now come at a premium price. This will push the EU and the U.S. into a recession. As Russia will increase the prices for exports of goods in which it has market power – gas, oil, wheat, potassium, titanium, aluminum, palladium, neon etc – the rise in inflation all around the world will become significant.
On February 4 Russia and China declared a multipolar world in which they are two partnering poles that will counter the American one. Russia’s move into the Ukraine is a demonstration of that. It also shows that the U.S. is unwilling to give up its supremacist urges without a large fight. But while the U.S. over the last 20 years has spent its money to mess up the Middle East, Russia and China have used the time to prepare for the larger conflict. They have spent more brain time on the issue than the U.S. has.
The Europeans should have acknowledged that instead of helping the U.S. to keep up its self-image of a unipolar power.
It will take some time for the new economic realities to settle in. They will likely change the current view of Europe’s real strategic interests.
I admit that it has been amusing me to watch the process predicted above through the ever evolving headlines:
Europe Rejects Putin’s Demand for Natural Gas Payments in Rubles – Mar 24, 2022, Bloomberg
(Bloomberg) — European Union leaders rejected Vladimir Putin’s demand to pay for natural gas in rubles …
BRUSSELS, April 14 (Reuters) – Payment for Russian gas in roubles by European Union buyers would break the EU’s sanctions regime against Moscow, an internal European Commission note said.
BRUSSELS (Reuters) – EU companies may be able to work around Russia’s demand to receive gas payments in roubles without breaching sanctions if they pay in euros or dollars which are then converted into the Russian currency, the European Commission said on Friday.
Even the U.S. had to submit to reality:
Yellen warns European ban on Russian energy could harm economies – Apr 21, 2022, rfi / AFP
Washington (AFP) – A European ban on Russian oil and gas imports could have unintended economic consequences, US Treasury Secretary Janet Yellen said Thursday. Major European countries including Germany have faced calls to stop buying energy from Russia and starve its economy of revenue in retaliation for its invasion of Ukraine, which has sent more than five million people fleeing.
Speaking to reporters following a meeting with Ukrainian Prime Minister Denys Shmyhal and Finance Minister Sergiy Marchenko in Washington, Yellen said such a ban could ultimately cause more harm than good.
A European energy ban would raise global oil prices “and, counterintuitively, it could actually have very little negative impact on Russia, because although Russia might export less, its price it gets for its exports would go up.”
Referring to a proposed ban, Yellen said, “if we could figure out a way to do that without harming the entire globe through higher energy prices, that would be ideal.”
Folks like Yellen, and the disgraceful President of the EU Commission Ursula von der Lying, are paid way more than I will ever receive for my work through reader donations here (a big thanks for those, btw!). Still, they and their very ignorant but highly paid consultants took weeks to understand the most basic realities of life.
Get used to it.