Economic Issues

US fooled Western Europe into high price war against Russia

US fooled Western Europe into high price war against Russia

Mar 5, 2023 10:08 PM

President Macron

Professor Reason McDuff
There was no need from the beginning for Western Europe to be fooled by United States of America into intervening on the side of Ukraine as soon as Russia launched the special military operation in that country.

It was a very bad miscalculation.

From the beginning it was clear that Ukraine was a mischief maker for its neighbour Russia and that there was need for Russia to flog its neighbour into line.

Once Russia started flogging its neighbour into line, the sponsor of the mischief- Untied States of America- immediately appeared in the open and started fooling European countries into joining it.

Now is clear that the war has become too expensive for them. Russia in unrelenting. Russia has been equal to the task.×300&!3&btvi=1&fsb=1&xpc=2nhcNRBSFx&p=https%3A//

Forget the US propaganda and that of EU countries, Russia has taught them a big good lesson in Ukraine.

The price Western Europe is having to pay is too high and the events at the just ended G20 Summit are telling.

There was no resolution there. There was no joint statement. There was clear disagreement.

What is Ukraine’s economic value to western Europe and is Europe ever going to recoup the military investments in the aftermath of the war, after all Russia is steadily winning the war.

The disagreements at the G20 Summit, tell a story that the ministers of finance in Europe are beginning to question the logic of investing in the Ukrainian war.

They are seeing a dead end. An abyss. They fell short of just saying, “Look. It is foolish to continue pouring money when its clear that Russia is making steady gains in the war despite huge military investments by Europe.×300&!4&btvi=2&fsb=1&xpc=v9BkyPkvia&p=https%3A//

One year into the Russia-Ukraine conflict, France and the rest of Europe are finding themselves in a delicate position, teetering under the impact of inflation, an energy crisis, and slowing economic growth.

The Russian-Ukrainian conflict has pushed up inflation in France. Price hikes have reached record level in the country since February last year.

Data from the National Institute of Statistics and Economic Studies (INSEE) show that France’s annual inflation rate stood at 5.2 percent for 2022, after 1.6 percent in 2021 and 0.5 percent in 2020.

Energy prices alone have increased by 23.1 percent yearly, followed by 6.8 percent for food and 3 percent for manufactured goods and services.

Energy prices in the country reached record high in 2022, with natural gas traded at 340 euros (364 U.S. dollars) per megawatt-hour (MWh) on Aug. 26 last year, against under 30 euros (32 dollars) per MWh at the same time in 2021.

Faced with soaring energy prices, the tariff shield introduced in 2021 by the French government has been extended, particularly for small businesses. An Energy Sobriety Plan was officially unveiled on October 6 last 2022, aiming to reduce the country’s overall energy consumption by 10 percent within the next two years and by 40 percent by 2050.

France’s energy sobriety plan will cost 800 million euros (785 million dollars) to the country, Minister for Energy Transition Agnes Pannier-Runacher said.

Public lighting in the streets are on for less time and less intensively, companies must commit to switching off the lights in unoccupied buildings, and working from home is encouraged in public administrations.

The plan also requires that heating should be lowered in offices, swimming pools and gyms, and the use of hot water must be reduced in offices.

Impact on living

Baguette, essential for the French, is an indicator of the cost of living in France. In 2022, its price surged several times, passing the threshold of 1 euro (1.07 dollars) per baguette in many bakeries.

At the same time, the price of wheat fluctuated from 180 euros (US$ 193 dollars) to 460 euros (US$ 492 dollars) per tonne at the beginning of the Russia-Ukraine conflict, to stabilise at around 360 euros (385 dollars) per tonne. This surge in prices has directly affected consumers’ wallets.

“Before, I did not pay much attention to the prices when I was shopping, but with inflation, I watch more carefully,” a woman named Helene told Xinhua.

Many French people have chosen to lower the temperature of their houses to reduce expenditure. Daphnee, who lives in an old house covering an area of 130 square meters, has drastically lowered the temperature at her house in fear of a high energy bill.

“I feel cold, so it was a sacrifice, but in the end, I realised that we were fine at home with 18 degrees Celsius, all you need is a hot water bottle for the night,” she said.

Last October, over 300 companies alerted the French government to the negative effect of the surging energy prices.

More than one out of two French industrial companies said they had suffered consequences from the energy crisis and their production bottlenecks had affected business profitability.

A survey conducted in October last year showed that 80 percent of the country’s small and medium-sized enterprises worry about their survival.

And the trend continues. According to a study on corporate insolvencies, the rebound in bankruptcies that began in 2022 is not over and companies face a triple threat of weaker growth, reduced margins and deteriorating financing conditions in 2023.

France is just one example, all EU countries are in trouble.

The European Commission forecasted that the French economy would grow by 0.6 percent and 1.4 percent respectively for 2023 and 2024, and the German economy would grow even lower, by 0.2 percent and 1.3 percent respectively.

Agnes Pannier-Runacher

In the fourth quarter of 2022, six of Eurozone countries showed negative economic growth, including Germany and Italy, whose growth declined by 0.2 percent and 0.1 percent respectively.

The two countries were hardest hit by the Ukraine crisis, as both have export-driven economies and depend heavily on natural gas from Russia, which has been disrupted following sanctions against Russia.

With access to Russian gas becoming increasingly difficult as a result of the crisis, European countries had to switch to much expensive American liquefied natural gas (LNG).

However, the United States sells its LNG to Europe at “four times” the price at which it sells to American suppliers, said French Economy and Finance Minister Bruno Le Maire last year, who feared that the US could benefit from the situation to the detriment of European interests.

He insisted on the need to build “economic relations that are more balanced on the energy issue between our American allies and the European continent.”

Le Maire’s remarks came just days after French President Emmanuel Macron expressed his dissatisfaction over LNG imported from the United States and Norway.

“We are going to say with great friendship towards our American friends, our Norwegian friends, that “you are great, you provide us with gas.” But there is one thing that cannot work for a very long time, that is we cannot pay for gas that is four times more expensive,” he said.

According to data and analytics firm Kpler, the EU imported a total of 94.73 million tonnes of LNG in 2022, and the United States accounts for roughly 41 percent of the imports, becoming the EU’s top LNG supplier. Besides, the consequences of the Inflation Reduction Act, a massive United States plan of 369 billion dollars of industrial subsidies announced in the summer of 2022, poses a new trade threat for Europe.

There are no guarantees that was they are investing in the war will be recouped. Reason McDuff is a professor of political science based in Paris, France.

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