Author Topic: Russia/US-- Europe  (Read 101937 times)

Crafty_Dog

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Prague
« Reply #650 on: September 05, 2022, 12:02:51 PM »

Crafty_Dog

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Well, this is rather eloquent , , ,
« Reply #651 on: September 07, 2022, 04:23:57 PM »
"Russia's melancholy oligarchs," via Financial Times on Russian tycoons "bitter about sanctions that have left them ostracized in the west and impotent at home," including one (Mikhail Fridman) offering to finance Ukraine reconstruction if the U.S. spares him;

G M

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Re: Well, this is rather eloquent , , ,
« Reply #652 on: September 07, 2022, 04:31:48 PM »
We will see how long europe can stick it out.

I bet the Russians will be welcomed back with open arms well before spring.


"Russia's melancholy oligarchs," via Financial Times on Russian tycoons "bitter about sanctions that have left them ostracized in the west and impotent at home," including one (Mikhail Fridman) offering to finance Ukraine reconstruction if the U.S. spares him;


G M

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Crafty_Dog

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Re: Russia/US-- Europe
« Reply #655 on: September 14, 2022, 04:32:24 PM »
   
Daily Memo: Putin and Scholz Discuss Ukraine, Gas
The German chancellor urged Moscow to withdraw its forces from Ukraine.
By: Geopolitical Futures

Difficult discussions. German Chancellor Olaf Scholz urged Russian President Vladimir Putin to withdraw all Russian forces from Ukrainian territory and seek a diplomatic solution to the conflict during a phone call on Tuesday. It was the leaders’ first conversation since late May. According to the Kremlin, Putin said Russia remains a reliable energy supplier and claimed that Western sanctions were to blame for the stoppage of deliveries through the Baltic Sea natural gas pipeline.

Crafty_Dog

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MY: Prague-- fewer Uke flags
« Reply #656 on: September 15, 2022, 02:01:50 PM »

G M

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Crafty_Dog

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Crafty_Dog

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GPF: Russia hits Europe in the breadbasket
« Reply #659 on: September 21, 2022, 07:32:51 AM »
September 21, 2022
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Russia Hits Europe in the Bread Basket
When it comes to fertilizers, Europe has no good alternatives.
By: Ekaterina Zolotova

It’s autumn in Europe, which for European farmers means it’s time to start placing orders for fertilizer for the spring. Of course, prices have been much higher recently. World nitrogen prices are up significantly since the start of 2021, driven by elevated demand for agricultural produce and pandemic-related supply disruptions. European prices of natural gas – a factor in nitrogen-based fertilizer production – since the second half of 2021 have shot up by even more. And the elevated price of nitrogen fertilizers has already pushed purchasers toward phosphorus or potash fertilizers, bringing their prices to multiyear highs as well. Then, in February 2022, Russia’s invasion of Ukraine was added to the mix.

Higher energy and fertilizer prices means higher food prices, without a fanciful surge in output or state intervention. This will increase the risk of social unrest in Europe, a major concern for European governments and the European Union. It’s clear that Europe must do something, but the most important factors in the soaring costs are the war in Ukraine and – indirectly, in the case of fertilizers – Western sanctions against Russia. For Moscow, one of the world’s largest producers of natural gas and nitrogen fertilizers, this is crucial leverage, which it will use to try to extract significant concessions on sanctions. Europe’s next best alternative — finding supplies somewhere else in the next few months – is unlikely to pan out, and it may eventually have to give the Kremlin some of what it wants.

Disruptions, Real and Imagined

Put a large market with lots of manufacturing capacity next to a treasure trove of natural resources, and you get interdependence. Over the years, infrastructure and commercial linkages, made possible by proximity and circumstance, have tied the European and Russian markets together. In addition to being a massive natural gas exporter, Russia supplies approximately 45 percent of the world’s ammonia nitrate fertilizers, 20 percent of potash fertilizers and just under 15 percent of phosphate fertilizers. Most of this production goes to Europe. Russia receives a constant influx of foreign currency, reinforcing the regime’s stability. Europe, most of the time, receives a cheap, steady flow of critical inputs: About 40 percent of its gas imports and, for example, about a third of its ammonium for the production of fertilizers. Roughly a quarter of Europe’s fertilizers are imported from Russia, and together with Belarus, a Russian ally, provides more than half of Europe’s potash fertilizers.

Fertilizer Nutrients and Imports' Share in EU Consumption
(click to enlarge)

EU Fertilizer Production by Nutrient, 2019
(click to enlarge)

Since December 2021, the Kremlin has had quotas in effect on exports of nitrogen and compound nitrogen fertilizers to states outside the Eurasian Economic Union, but those quotas have been gradually relaxed without spurring a significant increase in Russian fertilizer exports to Europe. Western sanctions do contribute, but not directly. There are sanctions in effect that target individuals who run Russian fertilizer companies, but no measures target the fertilizers themselves. The European Union did adopt a quota on the import of Russian potassium fertilizers for one year, but the quota limit is very close to typical trade volumes. Instead, the effect of Western sanctions is mostly transmitted through logistics and finance.

In terms of logistics, Baltic ports that usually receive shipments have become less accessible to Russian producers. Buyers have encountered difficulties chartering large bulk carriers, forcing them to rely on smaller vessels and raising transport costs and delivery times. Financially, some Russian banks are blocked from using SWIFT, the dominant messaging system for interbank transactions. As a result, payments are more complicated, and some potential buyers are avoiding Russia entirely for fear of blowback. In total, nearly 300,000 tons of fertilizers are reportedly blocked from European ports and can’t reach the buyers.

Toliatti-Gorlovka-Odessa Ammonia Pipeline
(click to enlarge)

With respect to ammonia specifically, the war in Ukraine is a direct obstacle to the delivery of supplies. The 2,500-kilometer (1,550-mile) Togliatti-Gorlovka-Odesa pipeline is capable of transporting 2.5 million tons of ammonia per year from Russia’s Volga region to the Ukrainian Black Sea port of Yuzhny, near Odesa. But it also happens to traverse the parts of Ukraine witnessing the most intense fighting, including Kharkiv. And since ammonia is highly toxic and corrosive, the war is a problem.

Europe’s Options

An additional problem for Europe is the lack of alternative suppliers. Domestically, the nearly 30 percent increase in natural gas prices put a damper on Europe’s own fertilizer production. As much as 15 million tons of European ammonia capacity has been shuttered or is at risk of it, equivalent to almost a third of Europe’s annual output. Producers of nitrogen fertilizers face significant competition for scarce natural gas from other industries as well as households. And Europe lacks the capacity to significantly raise production of other types of fertilizers. Ideally, Europe would try to develop homegrown resources –preferably not nitrogen, whose processing for fertilizers requires lots of natural gas. Mines in east Germany have started test-drilling for potassium, but again, it would take time to spin those up to meaningful production levels.

European buyers have reached out to other gas and fertilizer producers in the Middle East, North Africa and Canada. The bloc is discussing natural gas with Algeria and fertilizer with Morocco, which already provides 40 percent of Europe’s phosphate imports and contains more than 75 percent of proven world reserves of phosphorite. But Europe faces obstacles here as well. Gas-producing countries are already taking advantage of their access to cheaper gas and running fertilizer plants producing nitrogen at near full capacity. Quickly raising production of other fertilizers is even more difficult. Lastly, importing more fertilizers does nothing to help domestic fertilizer firms stay afloat.

European Fertilizer Consumption by Crop
(click to enlarge)

Then there are the long lead times. Although fertilizer is usually applied a couple of months before planting season (February-March), farmers usually order fertilizer between September and November. The European Union is working on a strategy to increase domestic fertilizer production, protect and create jobs, and diversify supplies, but such a reform will take more time than Europe has – and possibly more unity too.

This leaves Europe with two options: muddle through, or compromise with Russia. Already, there are indications that Europe is investigating the latter. According to U.N. Secretary-General Antonio Guterres, the West is discussing increasing ammonia nitrate supplies through the pipeline in Ukraine. Ukrainian President Volodymyr Zelenskyy has already given his support to the idea. And the United Nations proposed that gaseous ammonia owned by Russian fertilizer maker Uralchem be piped to the border with Ukraine, where U.S.-based trader Trammo would buy it.

Compromised

But Russia is aware that Europe does not have many options, so Moscow is in no hurry to respond to appeals to make better use of the Togliatti-Gorlovka-Odesa pipeline. The Kremlin intends to squeeze Europe to, for instance, ease restrictions on logistics or payment for Russian goods. Russian President Vladimir Putin recently called on Europe to ease restrictions on port access for fertilizer shipments bound not just for Europe but for non-European markets as well. Several ports, including Rotterdam and Finland’s Kotka, have responded positively to proposals to make exceptions for Russian fertilizers. However, Brussels is nervous that simplifying logistics or otherwise easing up the pressure will restore maritime or rail connections and give Russia more access to foreign currency and trade.

Given the likely shortages of fertilizers for the spring, the prospects for Europe’s 2023 harvest are murky but downbeat. Moscow can use the situation to promote its interests and seek favorable contract terms. It will delay restoration of pipeline supplies for as long as possible under various pretexts, from unexpected repairs to retribution for refusal to pay in rubles. Therefore, food prices are unlikely to stabilize by next summer, and prices in the EU as a whole will remain elevated, heaping more pressure on the bloc.

Crafty_Dog

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GPF: Russia-- Moldova
« Reply #660 on: September 24, 2022, 04:12:28 AM »
Gas prices. Moldova’s National Energy Regulatory Agency said the price of natural gas for consumers will increase by 27 percent beginning Oct. 1, as a result of the rising cost of Russian gas. The government in the Eastern European country is coming under increasing pressure with anti-government protests erupting there already this month.

Crafty_Dog

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GPF: Why would Poland spurn Germany?
« Reply #661 on: September 26, 2022, 09:44:56 AM »


September 26, 2022
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Why Would Poland Spurn Germany?
The answer is domestic and, to a lesser extent, European politics.
By: Ryan Bridges

“We were dependent on Russia, but today we are cutting this dependence,” Polish Prime Minister Mateusz Morawiecki said last week while inaugurating a new canal to the Baltic Sea. The canal’s contribution to this goal is dubious, but it will enable vessels to reach or depart the Polish port of Elblag without needing to traverse Russian territorial waters around Kaliningrad. More interesting was Morawiecki’s next statement: “We are cutting our dependence on both Russia and Germany.” This comes just a few weeks after Poland demanded $1.3 trillion in World War II reparations from Germany.

Warsaw’s reasons for distancing itself from Moscow – a hostile power with a proven history of invading its neighbors – are clear, but Berlin’s offenses are less obvious. Germany is Central Europe’s strongest country, with a latent capability to dominate most of the Continent. The Western powers’ strategy toward Germany since World War II has been to smother it with friendship – integrating its military into a U.S.-dominated alliance with its neighbors and, beginning with the European Coal and Steel Community, giving its economy the keys to a market of more than 450 million consumers and their countries’ resources. Germany’s docility today in the face of Russia’s attack on the NATO-Russian buffer shows that the Western strategy was, if anything, too successful. When it comes to the immediate threat to Poland, Berlin is a friend to Warsaw. Why, then, is the head of Poland’s government trumpeting cryptic plans to reduce ties with Germany? The answer is domestic and, to a lesser extent, European politics.

The German Question

The roots of the European Union lie in predominantly U.S. efforts to find a way to unleash German economic potential while calming German anxieties about potential encirclement. For reasons having to do with geography, climate, culture, history and probably countless lesser factors, the Germans are experts at producing complex industrial goods – far more than the German population could possibly consume. This raises two problems: First, the resources necessary to produce all these unparalleled goods exceed Germany’s own resource pool. The German economy has to get them from somewhere else, whether via cheap trade and investment or conquest. Second, a population of approximately 80 million couldn’t possibly consume all the vehicles, machinery, etc. that German industry can produce. The German economy needs easy access to foreign consumers – again, through preferential trade arrangements or conquest – to offload the excess. The U.S. strategy, which Washington advanced through deft diplomacy, economic incentives and security guarantees despite the reluctance of France and Britain, successfully resolved both German problems peacefully. The European common market was born, nestled in a political framework that had to grow with economic integration.

The resulting union is what Poland and other newly independent Soviet satellites and republics were desperate to join as the Soviet Union started to disintegrate. The EU all but guaranteed explosive economic growth and could open the door to NATO membership – that is, American military protection. Poland applied for EU membership in 1994 and joined in 2004 alongside nine of its neighbors. As expected, NATO invited Warsaw into its ranks in 1997, and the marriage was sealed less than two years later. The Polish economy saw 28 years of economic growth – even through the 2008 recession and Europe’s own subsequent crisis – before shrinking briefly in 2020.

But while this was happening, the post-Cold War world was taking shape. Politically, economically and militarily peerless on the world stage, the United States scrambled to capitalize on its advantage. It pushed for a more globalized world, with more and stronger political and economic bindings. Militarily, it enlarged the trans-Atlantic alliance and, after the 9/11 terrorist attacks, embarked on an ill-fated campaign to spread democracy by force in the Muslim world. The shock of the 2008 Great Recession gravely wounded social cohesion, not only in the U.S., and raised serious questions about the attractiveness and viability of the U.S.-led economic order and leadership. At the same time, America’s disastrous wars in Iraq and Afghanistan and its chaotic interventions in Libya and elsewhere undermined domestic support for military adventurism. By 2022, after some three decades of U.S. preponderance, the world is riddled with crises, and Americans’ willingness to pay the cost of being the world’s policeman has receded. (By how much is an open question. U.S. assistance to Ukraine and sanctions on Russia suggest it’s still higher than some observers believed.)

The Sovereignty Question

Where do Polish-German relations fit into this well-known history? Just as the Americans had their phase of overexuberance after the Cold War, so did the Europeans, including the Poles and other newly independent peoples. EU enlargement wasn’t an especially difficult sell. Incorporating much poorer ex-Soviet satellites and vulnerable states would be expensive, but the potential payoff was irresistible. Western European investors could snatch up cheap land, resources and companies, yielding a healthy profit, while Eastern European workers could flood the EU with cheap labor. Bureaucrats in Brussels gave considerable thought to how best to politically integrate the former communist states. It was not enough to make them see European integration in the same light as the founding members.

From the world wars, many Europeans and most Germans learned that European nationalism must be contained in the name of peace. During the Cold War, the early members of what would become the European Union got decades of practice trusting one another and cooperating for mutual benefit. But across the Iron Curtain, Moscow was stamping out European nationalism in its own way: using brutal covert and overt repression. While Western Europeans were discussing deeper political, economic and monetary integration in the late 1980s, the Soviets’ dire economic situation was depriving them of the ability to contain nationalism in Eastern Europe. By 1990, nationalism and democracy had won out in Central and Eastern Europe.

But democracy alone is not enough. Whereas Western Europe’s collective identity over decades had focused on multilateralism and compromise, its liberated neighbors to the east had been learning the value of cohesiveness, national pride and sovereignty. Without those things, they would not have regained their autonomy. Where a West German saw the loss of some national sovereignty to Brussels as the price of prosperity and peace – and thus a net positive for Bonn’s sovereignty overall – a Pole was mistrustful of any appeals to share decision-making power.

National identities form over generations, and changing them is hard. Poland’s current leadership, the Law and Justice Party (PiS), is particularly committed to Polish nationalism and conservative values. Its largest political opponents are pro-European liberals and centrists, closer to the prevailing politics in Western Europe, where the bulk of EU decision-making power lies. Drawing on their cultural and historical memory, Polish national-conservatives are xenophobic, especially Islamophobic, and generally intolerant of social diversity. (The Western European experience, despite its imperfections, is simply different.) The prevailing ideology in Poland, while reserving its most intense disdain for the Kremlin, is highly mistrustful of Germany’s relative social liberalism.

More important, PiS wants to make fundamental changes to the Polish judicial system, but it has failed to convince most of the EU that its intentions are good and its concerns legitimate. Brussels and most Western European capitals suspect PiS is working to weaken or eradicate Polish political and social liberalism, a challenge to their own regimes but also to the EU, which is founded on liberal ideas like compromise, diversity, civil rights and the rule of law.

Germany Is the Rock, Russia Is the Hard Place

The main battlefield between PiS and Brussels is over the reversal of some Polish judicial reforms and the delivery of 35 billion euros ($34 billion) of EU money for Poland’s economic recovery from COVID-19. The European Commission set milestones for the reversal of PiS’ judicial reforms that it says Warsaw must meet before it will transfer the funds. Obviously, PiS wants to concede as little as possible, but the economic slowdown, rising interest rates and the war next door are pressuring it to get the funds soon. What’s more, Poland is scheduled to hold parliamentary elections by November 2023, and if it doesn’t receive the assistance before then, PiS will be gambling its electoral fortunes on an orderly end to the war in Ukraine and an economic rebound, ideally by the summer.

The Polish government’s rhetorical assault on Germany, therefore, is part of its power struggle with the EU, as well as a backup campaign strategy. Germany is the most influential member of the European Union, but it cannot single-handedly decide whether Poland will receive its 35 billion euros. Poland’s prime minister knows this. But Berlin is a popular object of antipathy for his party’s base – much better than targeting the EU itself, which is immensely popular with Poles. Anti-German rhetoric signals PiS’ resolve while leaving the EU room to maneuver. And if the EU calls PiS’ bluff, then as a last resort it could go into the election blaming the Germans for allowing Russia to invade Ukraine, not doing enough to stop the war and withholding needed financial assistance that rightfully belongs to the Poles.

Whether this strategy will work depends on how the economic situation evolves in Poland, as well as political and social stresses in Europe as a whole. At the moment, there’s little reason to expect a dramatically improved economic situation over the coming months. And EU institutions, with sufficient backing from the member states, do not seem to be in a compromising mood. The United States could try to intervene, but Washington usually steers clear of EU internal politics, and the Biden administration would likely prefer a more liberal government in Warsaw anyway. Most important, the U.S. does not want to risk widening any rifts in Europe at a time when its days of significant involvement on the Continent are ending. If the U.S. is going to reduce its trans-Atlantic commitments while leaving Europe intact and able to defend itself, then it will need the Germans to take the helm.

Poland is unlikely to make a full climbdown on its judicial reforms, but Brussels has most of the leverage. A cease-fire where the EU gets most of what it wants and PiS lives to fight another day – after next year’s elections – is probable. Most important, even a PiS-led Poland is unlikely to actually reduce its dependence on Germany. This would be tantamount to reducing ties to most of Europe, and with the Americans having one foot out the door to Poland’s west and the Russians knocking on the door to its east, that is not an option.