Ukrainians, Led by Alexander Rodnyansky, Are Calling for More Sanctions Against Russia.
The reopening of the Nord Stream 1 gas pipeline disappoints those close to Zelensky.
Nord Stream 1 is working again. The Russian gas is well transported to Europe and this is a relief for the Europeans. Not for the Ukrainians, however.
Alexander Rodnyansky, the young economic advisor to Ukrainian President Volodymyr Zelensky and lecturer at Cambridge University in the United Kingdom, says he is “very disappointed” by the dispatch of the Canadian turbine that allowed Russia and the German Siemens to open the valves of the gas pipeline across the Baltic Sea.
For him, “this decision does not go in the right direction, that of a lesser dependence of the European Union on Russian gas”. This is explained by “a very bad energy strategy followed by Germany and the EU for years”, he considers.
Solutions that are difficult to implement
Our neighbors are still not popular in Ukraine. “They could do more. For example, Germany could restart its nuclear power plants”, considers the adviser of the Ukrainian presidency who speaks from Kyiv.
Overall, “the sanctions are working”, continues Alexander Rodnyansky. They hit the Russians hard. The latest example is that the country of 145 million people produced only 3,700 cars in May 2022 because of the sanctions on automotive equipment, compared to 112,000 in May 2021. Two car factories remain open out of the twenty or so in Russia. This is the great leap backward that the war represents for Vladimir Putin.
But “the problem remains energy”, according to President Zelensky's advisor.
The announcement by the Europeans of a forthcoming embargo on Russian energy has pushed up prices. And in the second quarter of 2022, Russia's current account surplus exceeded $70 billion, a record for nearly thirty years. More than half of the Russian government's tax revenues come from the sale of hydrocarbons. To stop the accumulation of this Russian treasure, Ukraine proposes two solutions: a European tax on Russian energy or a cap on the price of Russian hydrocarbons paid by buyers.
Each one “would melt the profits that Russia draws from its energy exports”, defends the economist, in particular gas, because the latter needs infrastructures in place to be able to be exported whereas oil can travel more easily.
The Asians cannot, therefore, become, overnight, as important clients as the Europeans. However, each solution has its limits or seems difficult to implement. The European tax would have to be extremely high, of the order of 50%, to raise the price of Russian energy enough. The idea is that, from a certain threshold, it would not be the European consumer who would pay, but the seller, thus Russia.
Punish companies that trade with Moscow
The price per barrel would be so high because of the tax that, to sell its production, Russia would be forced to lower the selling price, and therefore its profits. This idea is supported by many economists.
“The price ceiling requires international cooperation”, acknowledges Alexander Rodnyansky.
If the Indians, Pakistanis, and Chinese do not play the game, then Europe will lose out and will see the oil flowing to Asia. However, as things stand, it seems unlikely that the Asian countries, the forefront of which are China and India, will decide to show solidarity with the West. Vladimir Putin is well aware of this.
Ukraine would also like to see all foreign companies that trade with Russia punished, not just Western companies, to strengthen the impact of the sanctions. Since it is difficult to see India or China prohibiting their companies from doing business with Russians, it requires that it is the West that punishes Indian or Chinese companies.
For Volodymyr Zelensky's advisor, punishing all companies “would make the sanctions even more effective against Russia”, which would be even more alone. The case is not without risk. The West is dependent on Chinese supplies, for example. Sanctioning these companies could aggravate the fragmentation of the world and unite the anti-Western front. The passage is narrow.
Moreover, India has become an increasingly crucial partner for the West, both Americans, and Europeans. So it seems illusory that this will happen. The only chance would be for India to decide on its own to stop this double game with Russia by making the defense of freedom and democracy a priority. I might as well tell you that this will not happen unless there is an incredible turnaround.
Putin has been maneuvering skillfully from this point of view since the beginning of the war and he has even managed to unite the countries of the South behind the duo he forms with China to fight against the American hegemony in the world. If Ukraine is to win this war, it will be above all thanks to the support of America and Europe.
Some reading
The Incredible Story of Ernest Shackelton’s Expedition to the South Pole – 4 Leadership Lessons To Remember. To be a great leader requires total devotion.
Abandoned by the World Bank or the UN, Migrants in Africa Are Turning to Bitcoin. Rather than fighting Bitcoin, the powerful in the current system should seek to help the people.
Russian Gas — Energy Companies and EU Members Are Preparing to Do Without Sooner Than Expected. This is something essential to cut off funding for Vladimir Putin’s war in Ukraine.
Winston Churchill’s Tiger, Cow, and Horse at the Heart of Europe’s Problems. This is what we need more than ever: humility, simplicity, encouragement rather than punishment.
This Is How Russian Oil Will Reach Europe and Continue To Finance Putin’s War. The embargo on Russian oil can be bypassed via India.