The US-led sanctions campaign against Russia has done nothing to stop the war in Ukraine or hurt Vladimir Putin, but the toll continues to mount on Western economies and there are increasing signs that Europe is facing a major economic crisis.
The euro has reached a 20-year low against the dollar, inflation is at a record-high 8.6%, and economists are predicting a recession if the EU is cut off from Russian gas. Russia has already stopped supplying some EU members for their refusal to pay in rubles, something Putin required in retaliation for sanctions that targeted Russia’s use of the dollar and euro.
The Nord Stream 1 natural gas pipeline that connects Russia and Germany is currently shut down for routine maintenance, but there are growing fears that the pipeline might not come back into service. The Russian gas company Gazprom delivered a letter to European buyers dated July 14 that said they cannot guarantee gas supplies because of “extraordinary” circumstances.
Russia already reduced the amount of gas Nord Stream 1 carried by 40% in June because a turbine being serviced was stuck in Canada due to Western sanctions. Canada eventually agreed to return the turbine, a move that was denounced by Ukraine.
Germany and other European nations are preparing to ration gas for the coming winter. Bloomberg reported Monday that a halt of Russian gas supplies to Europe could potentially reduce the EU’s gross domestic product by as much as 1.5% if the winter is cold and the EU doesn’t take enough measures to save energy.
Meanwhile, Russia is making more profit from oil sales than before the war and the ruble is the strongest performing currency of the year as Russia had worked to shield itself from Western sanctions. Russia defaulted on its foreign debt, but it’s not a true default since it has the funds to pay, but its foreign currency reserves have been frozen by Western sanctions.
The US is mulling ways to correct its failed sanctions campaign, including by trying to implement a price cap on Russian oil. But the plan is doomed to fail as it would require the cooperation of Russia and its new top oil buyers, China and India. Analysts have warned attempting the price cap could send global oil prices to over $300 per barrel if Russia retaliates by reducing production.
27 thoughts on “Europe Facing Major Economic Crisis from Sanctions Campaign Against Russia”
“Should’ve shot yourself in the foot while it was in your mouth” – Aesop Rock
So FINALLY an admission that sanctions are hurting Europe and America MORE than the sanctioned nation -RUSSIA.
Is it not time to stop this nonsense and go back to the basics of the war STOP THE EXPANSION OF NATO will be a good start.
Too true. We all saw what happened to The Donald when he proposed a new fp, … they’re (the Deep State) still doing it.
WWI became a big mess because of far fewer and simpler entangling alliances than NATO is now.
If/when Israel attacks Iran or gets the US to do it, the Russian oil sanctions will be the least of the problems.
The Persian Gulf oil tanker lanes will be shut down. They run for hundreds of miles along and right under the Iranian mountains, in full sight of Iran. They will simply stop, like grain did out of Ukraine.
Once the world oil supply from the Persian Gulf is shut off, we won’t have an oil price problem. The world economy will crash so badly that oil prices will no longer be the big problem.
The US won’t be able to end the wars it started. Wars are always harder to end than to start, and Biden/Blinken have demonstrated total incompetence.
So don’t worry about $300/oil. That is just a hint of the problems pulled down on us.
America will benefit from the EU shut down of industry.
There is a sucker born everyday and that sucker is Germany.
Russia probably should just help their European neighbors meet their energy goals ahead of schedule. Europe burns while they dump their climate priorities, but they can get divesting from Russia done right now and make everyone so darn happy.
They absolutely should. Russia should charge an “EU Premium” of at least 30% on all energy shipments going through their pipelines.
That’s already happening.
I have said many times the EU Elite will see their country men and economies trashed just to serve their masters in Washington , until Europe gets from under the jack boot of the US little will change , in effect Europe is occupied by the USA has been since the end of WW2 ,the UK / Europe claim to be independent sovereign nations but that is a myth , the same as their claim to have free speech
I read somewhere yesterday that Fed reserve would purchase all the the EU countries’ bonds if they go belly up. They are following uncle Sam’s orders after all.
Militarily fight Russia to the last Ukrainian and economically fight them to the last German factory … the question is, why are the Europeans volunteering to be the whipping boys?
For some unknown reason, Europe has a Death Wish. Shutting down nuclear power generation while increasing dependency on foreign energy, and then sanctioning their foreign energy suppliers is something only a lunatic would consider.
Yes, lunatics … or leaders with different loyalties than to their common population. Hmmm … sounds familiar.
Russia didn’t “default” at all; the West, by freezing Russia’s foreign currency reserves, refusing to allow Russia to convert rubles to dollars, and refusing to allow payment in rubles, has cheated its own investors by refusing to allow them to accept payment. That’s not on Russia, that’s on the West.
And, I love the crying and crocodile tears; if all the hardship was being borne by Russia, these effete bureaucrats would all be grinning and shaking each other’s hands; once they have to share in the suffering THEY CAUSED, it’s all whining, crying, and excuse-making. F them all. They are cheating and harming their own citizens while refusing to negotiate and condemning thousands of Ukrainians to death and poverty. I wouldn’t think it possible, but the US and EU governments are making Putin look like the only real statesman in the bunch.
Have you considered that it might be part of a plan? In other words, a demise of civilization that they will capitalize and become wealther and more powerful than ever from?
The potential for well connected people to profit from the business losses Biden has manufactured (Gazprom Germania come to mind), and to acquire assets that would have been off-limits from an anti-trust perspective, is considerable. I assume that he knows he’s doing this. But I can’t tell if he is profiting from it personally.
I’d suspect that what Hunters job is.
To Joe Biden I would like to say: smooth move exlax…………………real smooth
I feel sorry for EU people forced to take cold showers and eat cold sandwiches this winter…!
Netman, while we’re busy sending billions in instruments of death to Ukraine, the guvvmint might get the idea to send billions worth of Carharrt coats to those chilly Europeans.
Biden with the help of his secretaries Austin, Blanky, and Yellin’ had a pawwa and came up with the great idea of price cap for Russian oil. They all were so happy about their great idea. If we pay them less for their oil, they make less money, said Blanky. Yellin, yelled so loud admiring Blanky, that made Austin fall off of his chair, and Biden to wake up. It all reminds me of going to the super market trying to buy a carton of milk, I had left my wallet at home, trying to add all the coins in my pocket, and lost under the carpet of my car, to see if I need to go home, to get my wallet, or I have enough for some milk. You put a cap on Russian oil, they will increase their price. The braniacs in Washington, are clueless, at best, and deeply incompetent at worse.
Maybe Europe could find a way to bottle all that warmth from their present heat wave and save it for winter.
I think their plan is to collapse our economy and get rid of the old people, then middle and upper middle classes, personally. They’ll all be rich regardless, they are under the umberella. Thanks you brainless jack wads, an amateur could have predicted this, and yet…..
They are messing around with untested waters. The rich might find themselves being eaten in the end.
I think advances in technology, AI and cloud computing along with 5G have emboldended them. I think Covid19 and government response was just a litmus test and we all saw how quickly it can happen.
German is a target of sanctions as much as Russia is. US did not like the close business relationships that Germany had developed with Russia over the years inclusive of Nordstream2. New trade deals that EU signed with China will also be scuttled. This could be the beginning of Germany’s deindustrialization.
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