Europe has no options

Europe has no options

Sergey Savchuk

The twenty-third of March, without the slightest doubt, will go down in the history of our country as the day when a truly epoch-making event took place. Yesterday, Vladimir Putin instructed the relevant ministries and departments to transfer payments for Russian natural gas exported to rubles. We all have become living witnesses to the birth of a new world currency of increased value, demand and reliability. The last rays of the dominance of the petrodollar, which the entire world economy has worked to ensure after the conclusion of the Bretton Woods agreement, are fading before our eyes.
The importance of what is happening cannot be overestimated. Judge for yourself, according to the World Bank, the total volume of the natural gas market in 2020 amounted to $446 billion. The results of 2021 have not yet been finalized, but the volume of trade is expected to grow to 553 billion, and by 2025, experts predict the gas market will swell to a fantastic 758 billion. When listing the numbers, we, of course, mean the US dollar as the settlement currency, which is absolutely true, since about 80 percent of all banking operations for the purchase and sale of blue fuel are carried out in dollars. This is one of those colossal whales on which American financial hegemony was based for decades.
A new era is dawning, in which countries unfriendly to Russia, as a result of their own actions, are faced with the simplest choice: pay for Russian gas in rubles or go hiking in the market in search of alternative suppliers with gas that is cheaper and can be bought for familiar dollars.
To understand who the innovations will affect, let’s turn to the Decree of the President of the Russian Federation of March 5, 2022 “On the temporary procedure for fulfilling obligations to certain foreign creditors.” Its provisions define a clear list of countries unfriendly to us, which includes: Ukraine, USA, EU countries, Great Britain, Canada, Australia, Japan, Singapore, Taiwan, Norway, South Korea and all sorts of small things like Liechtenstein, Monaco and Andorra. Of all these countries, the United States is in the best position, which is itself the largest exporter of liquefied natural gas, recently displacing Australia and Qatar from the pedestal. But in Europe, which obediently followed the anti-Russian policy of Washington, things are much less rosy.
To disassemble the full list of countries, as well as the schemes and volumes of deliveries of Russian hydrocarbons, it will take more than one hundred pages. Therefore, we will focus only on the most significant ones and try to analyze whether the EU countries can proudly shut off the main valve and refuse to pay in rubles for the delivered fuel to Russia, which emphasizes the fact that it has fulfilled and will continue to scrupulously fulfill its contractual obligations.
As an example, let’s take Germany, our key trading ally and concurrently the richest country in the Old World.
Stubborn statistics report that in 2020 Germany bought and imported 155 billion cubic meters of Russian gas. Recall that Berlin spends only 75 billion to meet its own energy needs, and resells the lion’s share of the rest, putting the profits into the budget poc-ket. If we take into account that under the terms of long-term contracts the Germans get Russian gas for $850, and today’s April futures quotes on the TTF exchange exceeded $1,300 (and a little earlier reached $2,500), it is easy to calculate the marginality of German gas trade.
As if anticipating the coming changes, the other day the German media issued a number of publications that could dishearten any Russophobe in the record.
For example, Economics and Energy Minister Robert Habeck has said that cutting off Russian gas could harm German citizens, resulting in widespread poverty and unemployment among Germans. The country’s economy, which is 55 percent dependent on Russian natural gas, 52 percent on coal, and 34 percent on oil products, simply can’t handle an instant severance of trade and economic ties with Moscow.
Habek’s statement is echoed by the tabloid Die Welt, which refers to its sources in the Ministry of Energy and claims that specialized specialists, using special algorithms, simulated the situation of a complete rejection of Russian hydrocarbons. The simulation results were shocking.
The virtual crash test carried out showed that without blue fuel from Russia, the heating system throughout the country would simply cease to exist, which would lead to a sharp increase in colds, as well as fires and fires, as the population began to use improvised means for heating. A massive shortage of essential goods, medicines is predicted in pharmacies, medical institutions and other social facilities like nursing homes. The gas famine is almost guaranteed to kill the light industry, the food industry and animal husbandry, half of the needs of which are provided by Russian transit.
The sector of bakery products is registered in a separate line. Here, a catastrophic increase in the cost of production is likely, as well as interruptions in the supply of bread, that is, a product of prime necessity. This is due, in addition to purely energy aspects, to the fact that one of the leading exporters of grain are Russia and Ukraine. According to official statistics, they own 26 percent of the total. The sowing campaign in Ukraine has already been clearly disrupted, and Russia, in order to provide for its own needs and the population, has introduced severe restrictions on grain exports, reducing the quota to 11 million tons. The ban is valid until June 30 and can be extended for any period.
The generation sector remains behind the scenes. The rejection of Russian resources, namely: gas, coal and fuel oil, will drop electricity generation by 25 percent at once, and 11 percent of the nuclear sector can also be safely recorded here – in the losses section. Recall that the government of Olaf Scholz decided to close the last three nuclear power units by the end of the year. In total, more than a third of all electricity in a country with a habitually high standard of living and developed heavy industry.
Vladimir Putin ‘s statement sounded like a bolt from the blue for all of Europe and Germany in particular. Only by the end of the day Timm Köhler, head of the industry association Zukunft Gas, being in obvious confusion, was able to formulate that Germany “with great confusion accepted Russia’s demands to pay for gas contracts in rubles.”
Given the realities and using the lexicon of the President of Russia, one would like to answer all our unfriendly partners: “I like it, I don’t like it – pay in rubles, beauty.”

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