Yves here. Ilargi is more amped up that usual on the topic of Europe’s self-inflicted wounds resulting from joining the US in imposing so-called Tier Three sanctions against Russia. This own goal results from Europe offering itself as as economic shield, since by virtue of having its nations far more engaged in commerce with Russia than the US, it stood first in line in the event Russia decided to respond in kind. And that’s before you throw in that Europe’e economy and its banking system are in far more fragile shape than America’s.
It appears the Eurocrats really believed Russia would not dare retaliate (or maybe more accurately, they had prepared only for Russia hitting back via reducing energy shipments, and they had prepared for that outcome, or at least well enough that they were confident Russia would suffer from lost income well before they depleted their stockpiles).
By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth. Originally published at Automatic Earth
What did I call yesterday’s article again? Oh, that’s right, I called it Europe’s Tumbling, Who’s To Blame?. Well, I’m not a seer, or clairvoyant, but I might as well have used that exact same title again today. Because the same theme plays out again. In a piece initially called Europe’s Recovery Menaced by Putin as Ukraine Crisis Bites, later renamed Draghi Outlook Menaced by Putin as Ukraine Crisis Bites (what’s not to love), Bloomberg spills it all:
The crisis in eastern Europe is showing signs of disrupting Mario Draghi’s economic outlook. Evidence is building that the conflict in Ukraine and European Union sanctions against Vladimir Putin’s Russia are undermining a euro-area recovery that the European Central Bank president already describes as weak. With the ECB expected to keep interest rates on hold near zero today and refrain from any new policy measures, Draghi is likely to face questions on how he plans to keep the economy on track.
The ECB may have few tools left to mitigate the impact of political turmoil that European companies from Anheuser-Busch InBev to Siemens say is hurting their business. A volley of measures introduced in June will take time to work, and policy makers have so far shied away from wheeling out a full-scale asset-purchase program. “The euro-zone recovery is very fragile and the macro situation fluid,” said Andrew Bosomworth, managing director at Pacific Investment Management Co. in Munich. “Expect Draghi to elaborate on spillover risks from the Russia-Ukraine crisis.”
Note that this was first published before Russia announced its sanctions on the west, and before Draghi held a speech in which he said … nothing much at all. Here’s Russia’s sanctions:
Russia has banned fruit, vegetables, meat, fish, milk and dairy imports from the US, the European Union, Australia, Canada and Norway, Russia’s prime minister told a government meeting on Thursday. Dmitry Medvedev said the ban was effective immediately and would last for one year. Russian officials were on Wednesday asked to come up with a list of western agricultural products and raw materials to be banned. The agriculture minister, Nikolai Fyodorov, said on Thursday that greater quantities of Brazilian meat and New Zealand cheese would be imported to offset the newly prohibited items.
Now, if you’re anything like me, you’ve of course always suspected that all Kiwi’s are nothing but a bunch of closet Hobbit commies. And now we have what looks a lot like proof: New Zealand stands to profit handsomely from the sweeping Russian ban of US and EU food products, along with China, Brazil, Turkey.
Well played, Wellington! Better than Helsinki and Amsterdam, the probably hardest hit Europeans, who have registered only surprise, indignation and, yes, anger, I kid you not, at the ban. Guess they really didn’t see this one coming. The Brits apparently don’t get it either (hey, ask New Zealand, you still got the same queen, get her involved!).
There are no grounds for Russia to impose retaliatory sanctions against Western countries, a British Foreign and Commonwealth Office official told RIA Novosti. “There are no grounds for Russia to impose these sanctions. We have been pushing for a strong and determined international response to Russia’s unacceptable behavior in Ukraine. We have been clear that we are prepared to play our part and that there will be some costs, but this does not diminish our commitment. Instead of retaliating, Russia should be using its influence with the violent Russian-backed separatists to stop destabilizing Ukraine,” the official said.
At this point, I’m thinking it’s entirely possible that – some of – the leaders of European countries simply don’t know to what extent Brussels has been involved in Ukraine. That the communication lines between on the one hand 28 separate capitals, parliaments and governments – most of which speak their own separate languages -, and on the other hand Brussels, with its myriad commissions, leaders, parliament etc., its many hundreds of parliamentarians and thousands of translators, simply don’t allow for adequate and speedy decision making. Or is Brussels perhaps also genuinely surprised?
The EU is ready to appeal to the World Trade Organization to have the Russian agriculture import bans lifted, a European diplomatic source told ITAR-TASS. “Politically motivated large-scale trade restrictions are a direct violation of WTO rules, which Russia pledged to comply with,” the diplomat said. “These measures will be thoroughly analyzed, and then relevant claims will be submitted with the WTO.” The source added that the European Commission would start analyzing Russia’s ban on imports from EU states as soon as the official list of banned goods would be published.
The EU Council may convene an urgent meeting in connection with Russia’s response to European sanctions. It is early to say whether the EU will take measures in response to the Russian ban on imports of food products from Europe, source told. “First, it is necessary to see and analyze the official list of product that Moscow intends to ban. After that, decisions will be made both at the European and the national level,” the source stressed. The Russian ban on agricultural imports from the European Union is an “irresponsible measure” that can lead to losses of billions of euro for European as well as Russian consumers, the source told ITAR-TASS.
Question: Are you sure the WTO is the right organization to mediate allegedly “politically motivated” restrictions?
I think the EU has different problems here: some of the 28 member nations will be hit much harder by these sanctions than others. Is there a fund in place to assure that the pain gets spread fairly? Also within nations, one sector gets hit, while another doesn’t. Do all nations have such funds ready to go?
It may not look so bad right now, but wait 6 or 12 months. And don’t let’s forget that economically, Europe is already teetering on the edge of the gutter, despite all assurances to the contrary. It’s therefore of course only human to blame the next step in the downtrend on the universal bogeyman Putin. But let’s get real, Europe never needed any help to to bring down its economy, it’s perfectly capable of doing that all by itself.
The US meanwhile? No pain from any of the sanctions.
Since this is a game of, as Paul Simon said: “All along along, There were incidents and accidents, There were hints and allegations, let’s see what, again, do we know for sure so far, what we can prove? Here’s what:
The EU and US instigated, financed and supporetd the Maidan movement, installed their very own handpicked government in Kiev, established an army aimed at eradicating all signs of discontent among Russian speaking Ukrainians in east Ukraine, with crucial parts played by CIA, Blackwater and various other mercenaries, blamed Putin for the downing of a plane without providing any evidence whatsoever of his involvement, announced a second series of economic sanctions on Russia, and then claim Russia has no reasons at all to announce its own set of counter sanctions.
It would be funny if it weren’t so out there.
Did you, in the midst of the 24/7 wall of words, manage to keep track of the fact that no part of any BUK rocket was ever found at the crash site? Are you also wondering where the Ukraine secret service took the Air Traffic Control recordings 3 weeks ago, and what we’ll be told about them, if anything, ever? It took, what, 24 hours, for the ATC logs from the still unlocated MH370 to be made public…
How about the black boxes, that had not been tampered with as Kiev had alleged? All we’ve heard so far out of the ‘lab’ in Britain where they were taken is that there was nothing out of the ordinary on them. So where’s the info? Why not go public with it?
Donetsk “rebel leader” Borodai stepped down today, to give way to some other schmuck, I know, but schmucks are the only thing they have over there. The May presidential election was between one billionaire and the other. That’s just the turf. Earlier this morning, the Ukraine government called an end to the truce on the crash site. One day after Holland announced its experts will leave the site because there’s too much fighting going on.
What truce, what are you talking about? The one you broke mere minutes after you yourself announced it?
Anyway, leave it be. What Europe would like to do is move the blame for its own gigantic economical failure onto Russia. Or make that Putin. It always works better if “it” has a face.
But Putin has nothing to do with anything. Italy was a lost economy way back (Beppe Grillo said years ago when Nicole and I went to see him, that what happens now, would), Portugal was never more than a nice facade, Greece bank rates will soon soar, it’s all just been a thin veil based on Mario Draghi’s “I’ll do what ever it takes”.
Thing is, Mario doesn’t have what it takes, and it’s not even his fault.
Europe shoots itself in the foot, puts it in its mouth, and chokes on it. How does that sound?
Europe’s in much worse shape than anyone’s let on, and they now have a bogeyman to deflect their own guilt and stupidity and failed conspiracies off of.
Only, Russia has nothing to do with Europe’s problems. Europe has fabricated it own problems. The Brussels leaders, though, would be more than happy to go to war against Russia just to hide their own failures and incompetence.
That’s the kind of thing that’s really dangerous, the bloated sociopaths who lead our nations. That and the propaganda machine they control.