Who pays the costs of major geopolitical conflicts?

Who pays the costs of major geopolitical conflicts?
Who pays the costs of major geopolitical conflicts?

To date, six months after Russia’s invasion of Ukraine, it has been proven that:

1. Putin fell out in his assessment that, in a few days, he would occupy Ukraine and impose his geopolitical choices.

2. Washington and Brussels fell out in their assessment that, by imposing economic sanctions on Russia, they would bring it to its knees economically and force it to withdraw from Ukraine.

Now, everyone is walking a tightrope, measuring their strength, but neither side seems to be changing their basic options. The West, especially the EU, will pay a heavy political price until it becomes independent of Russian natural gas and can mitigate the dramatic economic and social effects on its countries.

On the other hand, Russia will have lost the large revenues from the sale of natural gas to the EU countries and the effects on its economy and society will be much greater.

But we know that these developments will have greater political implications inside the EU and the US than in Russia, due to the difference in the political cultures of their societies and political regimes.

Until then, we should prepare for a winter where electricity and natural gas should not be taken for granted, regardless of their cost.

But how will the next Winter turn out, maybe the next two?

The EU and Washington clearly underestimated Russia’s capabilities, and even more, the impact on their own economies of Putin’s use of natural gas as an economic and political weapon. Its leaders smugly declared that, by the end of 2022, they would have stopped importing natural gas and oil from Russia, thinking they would scare Putin, who either knew better the West’s needs and limited alternatives or no, he suddenly found himself having the upper hand.

Now that they have realized it in the West, from the wild food they ate, from the “invisible hand” of their own markets, they do not have many options available, since they cannot go back in time and plan their options from the beginning .

They must immediately decide:

  1. To reduce electricity consumption, over the 15% they decided and still have not implemented, especially our own government, fearing the political cost, to the limit, which will not endanger the health of citizens, the production of goods and the provision of services. This measure is the first that can directly lead to a reduction in the prices of electricity and natural gas. The reduction in electricity consumption will bring about the decline of growth, mainly inflationary growth, the reduction of government revenues and the increase of unemployment, but it will decisively help to reduce inflation and the large gnawing of the purchasing power of the vast majority of citizens .
  2. The decoupling of the price of electricity from the price of natural gas. This can be done by setting a reasonable price for natural gas, which will not allow uncontrolled speculation in the electricity market, a measure that Spain is already implementing, at great fiscal cost. This in turn will lead to a large drop in the price of electricity, which will stop the real and mainly speculative increase in the price of goods and services. This development will also put a brake on inflation, inflationary growth, which irresponsible governments like ours want, to boast about the prosperity of the numbers, and the possibility it creates for them to give benefits, from overtaxing consumers , and businesses.
  3. The re-operation of several lignite units, as well as the extension of the operation of nuclear power plants.
  4. Of course, the acceleration of the construction of renewable energy units, the drastic increase in funding, to promote the construction of electricity storage and transmission systems, greater support for the production of green hydrogen, which will change all the facts, and of course, a decisive strengthening of energy saving policies energy, with the energy upgrading of buildings.

These options will unfortunately suspend for some time the reduction of pollutants that cause the greenhouse effect, a key factor in the climate crisis.

As it is easy to understand these options, the more outrageous they are, the higher the cost. The leaders of the EU, especially the strong economic countries, must understand that this can only be done with brave Community support, similar to the Development and Resilience Fund, to deal with the recession caused by the pandemic.

There can be no half measures, the subsidies of precision cannot continue, the big geopolitical games, even when they do not involve direct military conflict, have great financial costs. However, this cost, until now, is mainly paid by the weak economic strata and it is doubly unfair, when in fact, there are many people who are speculating in the countries of the West.

To date, six months after Russia’s invasion of Ukraine, it has been proven that:

1. Putin fell out in his assessment that, in a few days, he would occupy Ukraine and impose his geopolitical choices.

2. Washington and Brussels fell out in their assessment that, by imposing economic sanctions on Russia, they would bring it to its knees economically and force it to withdraw from Ukraine.

Now, everyone is walking a tightrope, measuring their strength, but neither side seems to be changing their basic choices. The West, especially the EU, will pay a heavy political price until it becomes independent of Russian natural gas and can mitigate the dramatic economic and social effects on its countries.

On the other hand, Russia will have lost the large revenues from the sale of natural gas to the EU countries and the effects on its economy and society will be much greater.

But we know that these developments will have greater political implications inside the EU and the US than in Russia, due to the difference in the political cultures of their societies and political regimes.

Until then, we should prepare for a winter where electricity and natural gas should not be taken for granted, regardless of their cost.

But how will the next Winter turn out, maybe the next two?

The EU and Washington clearly underestimated Russia’s capabilities, and even more, the impact on their own economies of Putin’s use of natural gas as an economic and political weapon. Its leaders smugly declared that, by the end of 2022, they would have stopped importing natural gas and oil from Russia, thinking they would scare Putin, who either knew better the West’s needs and limited alternatives or no, he suddenly found himself having the upper hand.

Now that they have realized it in the West, from the wild food they ate, from the “invisible hand” of their own markets, they do not have many options available, since they cannot go back in time and plan their options from the beginning .

They must immediately decide:

  1. To reduce electricity consumption, over the 15% they decided and still have not implemented, especially our own government, fearing the political cost, to the limit, which will not endanger the health of citizens, the production of goods and the provision of services. This measure is the first that can directly lead to a reduction in the prices of electricity and natural gas. The reduction in electricity consumption will bring about the decline of growth, mainly inflationary growth, the reduction of government revenues and the increase of unemployment, but it will decisively help to reduce inflation and the large gnawing of the purchasing power of the vast majority of citizens .
  2. The decoupling of the price of electricity from the price of natural gas. This can be done by setting a reasonable price for natural gas, which will not allow uncontrolled speculation in the electricity market, a measure that Spain is already implementing, at great fiscal cost. This in turn will lead to a large drop in the price of electricity, which will stop the real and mainly speculative increase in the price of goods and services. This development will also put a brake on inflation, inflationary growth, which irresponsible governments like ours want, to boast about the prosperity of the numbers, and the possibility it creates for them to give benefits, from overtaxing consumers , and businesses.
  3. The re-operation of several lignite units, as well as the extension of the operation of nuclear power plants.
  4. Of course, the acceleration of the construction of renewable energy units, the drastic increase in funding, to promote the construction of electricity storage and transmission systems, greater support for the production of green hydrogen, which will change all the facts, and of course, a decisive strengthening of energy saving policies energy, with the energy upgrading of buildings.

These options will unfortunately suspend for some time the reduction of pollutants that cause the greenhouse effect, a key factor in the climate crisis.

As it is easy to understand these options, the more outrageous they are, the higher the cost. The leaders of the EU, especially the strong economic countries, must understand that this can only be done with brave Community support, similar to the Development and Resilience Fund, to deal with the recession caused by the pandemic.

There can be no half measures, the subsidies of precision cannot continue, the big geopolitical games, even when they do not involve direct military conflict, have great financial costs. However, this cost, until now, is mainly paid by the weak economic strata and it is doubly unfair, when in fact, there are many people who are speculating in the countries of the West.

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