Europe and the Law of Holes 

It hardly comes as a surprise anymore, but senior European figures continue to offer up examples of their remarkable ineptitude. There were two glaring examples of it the past week with regards to the EU economic war against Russia.

The first was provided by the perennially lost German Chancellor Olaf Scholz. Transcripts of a call between Scholz and French President Emmanuel Macron were published by the German tabloid Bild, and they include the two leaders discussing their conversations with Russian President Vladimir Putin. Here’s Scholz’s bafflement over the fact Putin isn’t begging for mercy:

“There is something that concerns me more than the talks: he [Putin] does not complain about the sanctions at all. I don’t know if he mentioned them in his conversation with you. But he did not mention them at all to me,” Scholz told Macron, who replied: “He didn’t to me either.”

The German chancellor remarked that Putin was imposing his vision of Ukraine again: “He was sharing all his ideas on how to find a compromise. He was talking about demilitarisation and denazification [of Ukraine].

Maybe Scholz was so confused because he only gets information that’s contained here in ineptitude example number two. High Representative of the European Union for Foreign Affairs and Security Policy Josep Borrell penned a piece titled “Yes, the sanctions against Russia are working.” In it, he argues the following:

Since the start of the invasion of Ukraine, the EU has imposed 11 rounds of ever-tighter sanctions against Russia. Some people claim these sanctions have not worked. This is simply not true. Within a year, they have already limited Moscow’s options considerably causing financial strain, cutting the country from key markets and significantly degrading Russia’s industrial and technological capacity. To stop the war, we need to stay the course.

Borrell goes on to demonstrate that EU imports and exports to Russia are way down. The problem is that his data doesn’t account for third party countries that have taken up the roles of middlemen.

It’s hard to take Borrell and Scholz seriously because Moscow was clear about its plans to circumvent sanctions from the onset of the war. Last year,  Russia’s Industry and Trade Ministry drafted a list of friendly countries where Russian companies could potentially set up production to help get around the sanctions. Those 14 countries were Iran, China, Vietnam, the United Arab Emirates, Türkiye, Egypt, Morocco, Azerbaijan, Mongolia, Kazakhstan, Kyrgyzstan, Tajikistan, Armenia and Uzbekistan.

Let’s just take the examples of Türkiye. A large number of Russian companies have opened branches in Türkiye and are cooperating with Turkish counterparts that provide a front for their import activities. The Economic Policy Research Foundation of Türkiye reported that Russians established more than 1,300 firms in Türkiye in 2022, a 670 percent increase from the previous year. This has continued despite strong pressure from the West on Ankara. EU imports from Türkiye in 2021 totaled 78 billion euros; exports stood at 79 billion euros. In 2022, imports jumped up to 99 billion euros and exports grew to 100 billion euros – unprecedented leaps. At the same time, Türkiye’s trade with Russia surged 93 percent in 2022. As the Atlantic Council laments:

Türkiye is now a significant supplier of electric machinery and parts, including integrated circuits and semiconductors. Although Turkish exports of electronic machinery, including critical integrated circuits, fell in the immediate aftermath of Russia’s full-scale invasion, they have since recovered and grown well beyond the pre-invasion average. From March 2022 to March 2023, Turkish electronic exports to Russia jumped by about 85 percent…

Integrated circuits and electronic machinery are not the only strategic good Türkiye continues to supply to the Russian economy. Turkish companies export millions of dollars worth of chemicals, plastics, rubber items, and vehicles, all of which help Russia’s manufacturing sector.

Following heavy pressure from the US, Türkiye said it will no longer allow the shipment of Western-sanctioned goods to Russia, but the extent of its efforts remains unclear. Ankara, for example, has not restricted the transfer of Turkish-made products to Russia, even if they include foreign components.

Ironically, while pressure from the West continues to mount on Türkiye, Ankara and Brussels quietly signed a deal earlier this year to join the EU’s Single Market Programme. The agreement gives Türkiye access to certain advantages reserved for the European Union’s common market, such as European aid for its businesses and innovation programs.

Türkiye receives nearly half of its natural gas from Russia and a quarter of its oil. Erdogan and Putin have  discussed expanding their energy relationship, which would allow Türkiye to increase its transfer fees when sending gas to Europe – if they want it. Recent gas deals signed between Türkiye and Hungary and Bulgaria has The Center for European Policy Analysis worried about this possibility: 

On the face of things, the deal signed between the Turkish oil and gas incumbent BOTAS and the Hungarian electricity company MVM on 21 August looks very attractive. It arguably ticks the right boxes of supply and route diversification.

In reality, it may be part of a complex and opaque scheme that could see more Russian gas transiting Türkiye to flood Central and Eastern Europe, while blocking real supply diversification. This is a worry and ought to require a response.

Earlier this year, Türkiye said it had signed a 13-year agreement to allow the Bulgarian state gas company Bulgargaz to access gas via its infrastructure. Additional details were kept under wraps and Bulgaria hastened to describe the agreement as containing trade secrets.

Nevertheless, information leaked to the media in July showed that the agreement will in fact allow Türkiye to use Bulgarian companies and the Bulgarian transmission system as a springboard to access all European markets, including Hungary’s.  

Russian Foreign Minister Sergey Lavrov said on Thursday that Moscow is ready to increase gas supplies to Türkiye, which will allow Ankara to set up a gas hub for sales to other countries.

At the very end of Borrell’s piece, he does mention Russia’s efforts to circumvent sanctions but simply brushes it aside, declaring that “EU Special Envoy David O’Sullivan will play an important role.” Well, O’Sullivan took his post as International Special Envoy for the Implementation of EU Sanctions back in January and so far has not been able to wave a magic wand. Nevertheless, Borrell remains undeterred, concluding with the following: “In short: Russia’s decision to attack Ukraine has obviously pushed the Russian economy towards isolation and decline.”

While Russia has managed to reroute trade with the West through third countries, it has also shifted to stronger economic ties with China, Southeast Asia, the Middle East, and especially India. Russia’s economy grew 4.9 percent in the second quarter and is set to expand 1.5 – 2.5 percent this year.

The same cannot be said for Europe’s leading economy. While Scholz is spooked that Putin seems so unconcerned with sanctions, he is now lamenting the state of the German economy but continues to refuse to admit that the disastrous Russia policy has anything to do with it. According to the chancellor, it’s simply a result of the world economy slowing down:

“When the global economy weakens, we feel it particularly strongly. But the reverse also applies: if the global economy picks up again, we also benefit,” he stated.

The chancellor, however, is optimistic about long-term prospects. He said that Germany has “the best pre-requisites to ensure we’ll still be playing in the top league technologically in ten, 20 and in 30 years’ time.” He also rejected calls for higher debt-financed federal spending to boost economic growth.

All the economic news out of Germany is bad, but it is also not the kind that will simply rebound with the global economy. In reality, it was Berlin’s decision to sever itself from Russian energy that made its entire industrial export model uncompetitive. Just this past week Bloomberg reported the following:

German businesses are increasingly curbing investments and eyeing production abroad amid high energy prices at home. Over half of surveyed companies say the energy transition is having negative or very negative effects on their competitiveness, according to a report by the German Chamber of Commerce and Industry.

And now Berlin is saying it can no longer subsidize power prices for energy-intensive industries. From the Financial Times:

Scholz said the best way to deal with the problem of high gas and electricity costs was to increase renewable energy capacity and expand Germany’s power grid. Germany plans to derive 80 per cent of its electricity from renewables by 2030. But [Markus Steilemann, head of the VCI, the chemical industry lobby], insisted that until there was enough cheap renewable capacity available, the government must step in to help energy-intensive sectors such as chemicals. The idea was a “must-have for preventing deindustrialisation”, he said.

Siegfried Russwurm, head of the German Industry Federation, is saying the government is delusional:

Those who believe the energy transition could become the nucleus of a new economic miracle underestimates the fact that investments will largely only replace existing assets and, for the most part, at much higher cost. “This certainly won’t bring us additional economic growth for the time being. An economic upswing doesn’t come on its own. So, there’s no all-clear for Germany as an industrial location. On the contrary: Germany faces a mountain of major challenges….

Russwurm sees huge challenges ahead in restructuring the country’s energy supply. “The BDI expects the government to quickly come up with a concept that can be implemented and that ensures a secure, long-term supply of electricity at internationally competitive costs. The many state-induced burdens such as taxes, surcharges and network fees must be reduced to make electricity more attractive than fossil fuels,” demanded Russwurm. Equally urgent is the need to build the necessary infrastructure and expand the supply of electricity. The delta between ambition and implementation is growing by the day.

No matter. The German government is determined to keep digging itself ever deeper in Ukraine. Scholz said on Wednesday that Germans support his “carefully weighed” Ukraine policy and that Berlin will soon be sending more “immediately effective” weaponry to Kiev.

This is simply more evidence of Scholz’s talent for ignoring reality. Public opinion surveys in Germany repeatedly show that voters are upset with the economic toll the war in Ukraine is taking on the country. Polls show that a  record high of 71 percent of the German public are not satisfied with the work of the federal government. 55 percent think that more should be done diplomatically to end the war in Ukraine. Already last year, half of the public thought that sanctions were hurting Germany more than Russia.  An opinion survey released last week showed 64 percent of Germans think a change of government would make the country a better place.

The next German federal election isn’t until 2025.

While Borrell is likely to slink off soon to whatever retirement he has planned, and Scholz will almost certainly find a cushy landing spot (he’s paid his dues to the banks and the Americans), who’s going to clean up their mess? Whoever gets stuck with that task will not only have to stop digging but also deal with the equally important second law of holes: When you stop digging, you are still in a hole.

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      1. furnace

        This is depressing. I wonder for how long these people’s cognitive dissonance can hold on. If Ukraine collapses and Zelensky gets killed in a coup or the like, will their brains even be able to take it? After so many memes and stupid images about the Ukrainians being Harry Potter or Star Wars or whatever, I’m not sure if these folks will be able to take reality square on.

          1. Polar Socialist

            Most likely they will say that most of the Ukraine was Russian to begins with, Ukraine should have never fought Russia and what is this Ukraine, anyway?

            1. Amfortas the Hippie

              they’ll switch seamlessly to Xi, Lula or Amlo…or whatever that guy in Niger’s name is.
              its scary, sometimes how on the money Orwell was.

              and on the other side of the coin is the American Right,lol…i’m giving a different dating site a try…”Farmers Only”.(much better rep than the others, and already been catfished, so…)
              every 3rd woman has “GOD” in all caps, and every other woman has “Trump” in all caps.
              much rhetoric scattered throughout about returning to the Constitutional Order(?) and even a few references to “Communists”.
              lots of pics of chicks with guns….even with “Trump!!” superimposed on the pics of them with AK’s.
              its weird.
              i mean, they put this stuff in their profiles,lol.
              they want to be sure you know up front.

              it does make it rather easier to weed out the protofascists, i suppose.

              so, from both “sides”, we’re frelled.
              we’ll hafta go through the Burning Times…not over under or around them.

              1. The Heretic

                Maybe McCarthy’s Judge runs US foreign policy. Or the Joker of the Dark knight series? One who loves chaos and destruction for the sake of chaos and destruction. Or somehow the 2nd and 4th Horseman have become conjoined twins… the Third Horseman (the neo liberals) is already hard at work… and sadly very successful

        1. Louis Fyne

          easy…the Ukrainians were “dumb Slavs” who could not follow the instructions/advice from their betters.

      2. dandyandy

        I don’t think you can assemble that many lobotomised creatures in one sitting for the “comments” section to be real. It must be a troll factory, then. But enhanced with all this mega profitable AI ting everyone is betting their crypto kingdom on.

  1. DJG, Reality Czar

    What is remarkable about Macron and Scholz is that they have cut themselves off from their bases. Jonathan Swift would have placed them on Laputa.

    Here in Italy, I have read an article in La Stampa from Friday, 1 September, so that Conor Gallagher, who follows Italy closely, doesn’t have to indulge in this latest. La Stampa represents the thinking of the alta borghesia of the Chocolate City, so the interview of Nancy Pelosi by the seemingly apolitical mediaworker Simonetta Sciandivasci, who normally is a feature reporter, is worth parsing.

    Nancy Pelosi is in Venice at the film festival to receive the Diane von Furstenberg award. You can’t make up this stuff. We are in the Laputa of Feminism. (Although Swift maintained that women tried to escape Laputa–but when there is so much to steal, why not Laputa, eh, ladies?)

    Nancy Pelosi admits that she doesn’t know what’s going on in Italy: “non sono abbastanza informata su quello che fa il suo governo in Italia.” Maddai! But she says that Meloni is not good on LGBT rights. Which is true–but Meloni is also lousy in the current debate on a minimum wage.

    Then Pelosi exonerates Meloni by mentioning that Meloni was molto brava in her latest visit to Washington, much appreciated for her “caution” (read: yielding) in relations with China (and the Silk Road), collaboration with the EU, and (!!!) le sue posizioni sull’Ucraina.

    So in Pelosi-Laputa-Landia, what matters is pink-washing even as one sells out the Italian economy for the sake of Ukraine. By the way, La Stampa is thoroughly warmongering, yet it has lately admitted one or two doubts. Its base, the alta borghesia, is starting to be discomfited by the fall in profits.

    One might ask: Can Pelosi truly be this stupid? Of course she isn’t. She is thoroughly corrupt. Power corrupts, and the absolute power of empire has corrupted her absolutely, down to her pink-washed undergarments. She exists to abuse power and engage in dodgy stock trading on insider information.

    And ultra-Atlanticist Meloni is cutting herself off from her own base in the right-wing coalition. To wit:

    Foreign minister Tajani (head of the wreckage of Berlusconi’s Forza Italia) and Confindustria (the big boys and girls of industry) and other members of the alta borghesia are suddenly hinting that Italy requires peace talks. Hmmm. I guess that darn commie Papa Francesco has gotten to them.

    Question: When the head is this rotten, surely it cannot take much to knock if off, right? (Yes, Macron recently has successfully lurched from crisis to crisis.)

    This dry-rotted and looted structure is tottering before our very eyes.

    1. Carolinian

      I see no reason that the “stupid versus evil” calculation means that Pelosi can’t be both. But maybe Nancy just wants a stage–“I’m ready for my closeup Mr. DeMille.” Billy Wilder’s movie was somewhat cruel and cynical but can one be too cynical about our DC gerontocracy who think power trumps ridicule? A nice war against Russia will wipe away those smirks.

      Michael Hudson has said all those Euro poobahs are being paid to do our bidding. Perhaps that’s the simplest explanation.

      1. digi_owl

        Paid, sure. But not with notes in envelopes or anything so crass. But promises of well paid positions in various NGOs etc once their tenure as politicians end.

        1. Piotr Berman

          To be sure, Pelosi is too old, 83, and too rich to be personally affected by the lure of lucrative position. But children, grandchildren, their cousins etc. sure may expect something.

      2. John k

        I’ve long thought everybody in dc was on the take. I confess I didn’t realize until the SMO that Western Europe is, too.

        1. Petter

          The great nations have always acted like gangsters, and the small nations like prostitutes.”
          — Stanley Kubrick

    2. hk

      I’ll trust Pope Francis when he meets Patriarch Kiril in the interest of peace in Ukraine and threatens the Uniate leadership with excommunication unless they stand up for the rights of their Orthodox neighbors currently under assault from the Banderite regime. If not, he’s another sponsor of this latest round of Crusader aggression against the East.

      1. ilsm

        US military actions, weapons, ordnance, real time targeting, etc. that get humans on either side killed are contrary to the Commandments of Christ, even the flawed just war doctrine.

        Rome is derilect! As the Metropolitan.

    3. Bugs

      Mille grazie for this report. I’m planning on moving to Rome in the next year or two and to be absolutely frank, I’m looking forward everything about it, including Italian politics, because it’s so much more interesting than France, lol. Especially for the undercurrents. And the food.

      1. DJG, Reality Czar

        Bugs: Keep me posted. Roma is an amazing place, and I am very fond of it, although I chose the Chocolate City in the Undisclosed Region for many good reasons–which have been borne out in fact.

        Roma is costly, though, and the real-estate extravaganza will take some resolving on your part.

        Food: Excellent. (So long as you steer clear of the places that are too obviously touristy, such as all of the restaurants in the Piazza Navona and the horrific “pubs” in Campo de’ Fiori.)

        Undercurrents? In Roma, it often seems that everything is out in the open. But that isn’t true: There is a private side of the city that I can partake of that is emotionally satisfying and endlessly fascinating.

    4. ChrisRUEcon

      > Question: When the head is this rotten, surely it cannot take much to knock if off, right? (Yes, Macron recently has successfully lurched from crisis to crisis.)

      Indeed, I think the French have the best chance … It’s probably gonna be LePen in the end … JLM is too much of a western-style liberal on Russia … tant pis!

      1. DJG, Reality Czar

        ChrisRUEcon: Mélenchon. Well, maybe. Mélenchon was born in 1951, so don’t count on him being a candidate. I recently read an article about the bench that Nupes is creating. They are quite an interesting group of people, many of whom are from the working class and from smaller cities, now serving in the National Assembly. So Nupes and France Insoumise have depth that the U.S. Democrats (deliberately) lack.

        1. vidimi

          unless their socialist party can find a way to get the US out of french and EU politics, they will be just another Syriza or Podemos disappointment. in that regards, ChrisRUEcon is not wrong about JLM. He says some good things but there’s no plan. You have to get the US out of politics before you can get have anything nice.

  2. The Rev Kev

    There is going to be hell to pay for the de-industrialisation and degradation of Germany by people like Habeck and Scholz. There is also going to have to be a lot of hard questions asked how Germany got itself into this mess and the question of the destruction of the NS2 pipelines will rear its ugly head as that is one question that will not go away. With the end of subsidies for energy, they had better hope that it is not a cold winter this year. The government may think that the police will protect them but how long will that last when those police have to go home to their families in an apartment so cold that they can see their breath in the air? The government may panic and ban the AfD on “security” grounds but who knows what the repercussions of that will be. They tried that little experiment back in the early 30s and it did not do so well. If the AfD becomes the government will they clean house? Or will they fold and do what the US tells them to do? Or maybe the rest of ECOWAS, errr, NATO will announce that they will send in a military mission to restore the true government of Germany. The only thing that is guaranteed is that Germany, along with the rest of the EU, have made a proper dog’s breakfast of it all and the consequences will be years sorting through.

  3. .human

    I’ve had the opportunity to buttonhole senator Blumenthal at Connecticut Ag Fairs the past couple of weekends. I asked him why we were in Ukraine. He replied that he had recently come back from a five day visit to Ukraine and was shown the evidence of (alleged) atrocities at Bucha. He went on to state that the massacre was at the direct orders of Putin.

    When I asked him which Ukrainians he supports, the ethnic Russians fighting to be able to continue to practice their traditions, customs and language or Zelensky’s Nazis in Kiev, he answered by insisting that if we would only supply the Ukranians with enough weapons they could win this war against Russia.

    So sad.

  4. Ergo Sum

    “There is going to be hell to pay for the de-industrialisation and degradation of Germany by people like Habeck and Scholz.”

    I like the sentiment, but will these people be held responsible for de-industrialization / degradation of Germany? Based on recent history, Western government leaders and their underlings got away with more, than some de-industrialization / degradation of a country, like starting wars, overthrowing legitimate government, etc.

    1. Barnes

      It is obviously unreasonable to blame a succession of disastrous economic policy decisions over a period of several years on a few politicians. This is systemic problem.

      Having said that, during Olaf Scholz’s term as first mayor of the city of Hamburg 2016, the city misterously forwent their claim to collect €47 million in defrauded taxes from private Warburg bank. The bank defrauded german taxpayers over years through the cum-ex tax evasion scheme. Scholz even met with one of the owners of the bank, Christian Olearius, to discuss the potential consequences but when the federal parliament of Germany, Bundestag, questioned him in a disciplinary hearing he could “not remember” anything. He became chancellor elect afterwards.
      As of today the whole situation is unresolved and evolving but as opposed to a decade long policy failure the corrupt scheme of tax evasion is rather straightforward and yet Scholz has not been seriously questioned over this.

  5. JBird4049

    I doubt it as His Darkness Henry Kissinger just had his 100th birthday and is doing fine as a respected elder statesman.

    On some days, I do hope for a Hell.

  6. Susan the other

    I don’t quite understand how destroying Germany, and thus the EU, helps our MICC defeat Russia. Pelosi, Blumenthal, Romney, looney Lindsay, the ghost of John McCain and etc. really cannot be that stupid or ignorant. And I think the only reason is to plunder Russia but to what end? Are we taking the ball and going home? If we can’t be the hegemon nobody can? The EU was a powerhouse until Russia and China proposed the Eurasian Economic Union. Michael Hudson clearly saw this coming. We must have been angry that the new world powers were taking a free ride on our prosperity: “Oh you want to trade with the EU do you… we’ll then you’ll have to subsidize it yourself.” Which Russia was successfully doing with natgas until Nordstream. This seems more like America’s existential crisis than Russia’s. Especially since it appears we have plundered our own country in order to maintain our obsession with controlling the rest of the world… which control appears to have gone poof. Losing control is very unnerving. I’ve got that sick feeling that we really do not know what we are doing.

    1. Mikel

      “I don’t quite understand how destroying Germany, and thus the EU, helps our MICC defeat Russia.”
      Yes, it’s more about the imagined spoils from a defeated Russia. The empire wants control of it ALL.
      One way to secure hold over what they have is to try to make sure there is no option or any option is co-opted and perverted.

      “I’ve got that sick feeling that we really do not know what we are doing.”
      I’ve got that sick feeling they do. It’s the same reason to have enough nukes to destroy life many times over:
      If they can’t have the world, nobody can. That’s the ultimate place where this rabid greed leads.

    1. vidimi

      i have yet to fall in such a way that bruises my face. strange story. i’m guessing there’s no video of him falling? he’s such a cuck it’s more likely that his wife’s lover beat him up for walking in on them.

  7. dandyandy

    I don’t quite understand how destroying Germany, and thus the EU, helps our MICC defeat Russia

    Respectfully, it doesn’t. “Our MICC” has only one function, and that is to regurgitate collosal amounts of money skimmed off your (USA) taxpayers, to lubricate Mr Big Guy and his minions as well as an assortment of fossilising thieves controlling your legislative system. Whether it’s Libya, Syria, Yugoslavia or Russia, the goal is always the same; force a maximum amount of money into the “problem area” so that a maximum amount of commission money can be skimmed along the way.

    It is very simple, just an accounting exercise.

  8. Aurelien

    Just to make the point that we are obviously dealing with two very different discourses and documents here. National leaders generally talk according to a loose script and set of points, but in the case of those who know each other well, as Macron and Scholz do, you can occasionally get a hint of what they actually think, especially if (as here) the leak of the conversation seems to be unauthorised. Clearly, neither leader is actually able to grasp what is going on, which is much what we thought, but it’s nice to have it confirmed.

    By contrast, the document that Borrell approved (it’s unlikely that he wrote a word of it) is best understood as a defensive act, and a consequence of the inability of the EU to admit it was wrong, and still more to find a way out. This is typical of the behaviour of large groups of states, where actually changing something can be incredibly difficult, since, whilst there may be a lot of states unhappy with how EU sanctions have turned out, there is no possibility of an agreement on what to do instead. As a result, all that you can do is to cross your fingers and hope …

    1. Ignacio

      It must be frustrating to see how EU policies are damaging the economy of the country you try to rule with little margin of manoeuvre and at the same time asking for ever increasing budgets to help a project that is doomed and, simultaneously, see that EU structural programs suffer from delays etc. The tipping point might come when people at large start to change their vision and vote intention, if this ever happens…

  9. Andrew

    “This is simply more evidence of Scholz’s talent for ignoring reality”. Sums up the entire Western leadership these days. Sawing off the branch they are sitting on. Whilst blaming anyone but themselves.

  10. Louis Fyne

    …“There is something that concerns me more than the talks: he [Putin] does not complain about the sanctions at all…

    So I guess no one in the Establishment West reads Marcus Aurelius anymore?

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