The Ukraine war – Russia finally retaliates.

Posted by Pointman on May 6, 2022 · 12 Comments 

Over the years, I’ve met and became friends with more than a few Russians. Once you really take on board their habitual and well-justified suspicion of westerners and all things western, then as a people they have a lot of personal qualities I find quite admirable. That’s not a common attitude but then again I’ve never even been placed in the Mr.Popularity steeple chases of life. I don’t think I’d be far off target in thinking the current orchestrated hate campaign being conducted against them by the west at the moment is just par for the course as far as they’re concerned. It’s water off a duck’s back.

Big hate, like big love, blinds you completely, especially if you don’t do your research. A few minutes finding out some basic facts about Russia are quite revealing. They’re a nuclear power with somewhere in the region of 6,000 nuclear bombs we know of, they’re completely self-sufficient when it comes to energy and have absolutely no need to import food because it has more than enough of both of the latter to export the excess to western Europe, which they do or rather did and in vast quantities.

With today’s wonderful globalised trade situation, that complete self-sufficiency in both energy and food is probably unique. Given that situation, you have to ask yourself what sanctions were ever supposed to achieve? When they’ve got vast amounts of energy and food, what the hell else can you sanction that they really won’t notice? The answer to that question is basically nothing. Yes, you can pull your business out of Russia amidst great fanfare but let’s face it, they can somehow limp along in Moscow without an occasional Big Mac and fries which the ordinary Russians consider to be a shit excuse for food anyway.

One thing you can do is steal their money which happened to be parked in your financial system. This has already been done with the biggest bank heist in history being the Russian central bank’s 300 billion in USD that was frozen. In passing, that money is now referred to as being sequestered rather than frozen. For those of you a mite slow on the uptake, that slight change in semantics means stolen rather than frozen. It’s just an intuition, but I’ve a feeling that Russia will get every penny of that back plus interest a few years down the line before they agree to any peace overtures from the West.

In the latest round of increasingly petty sanctions, the EU has just sanctioned the patriarch of the Russia Orthodox church. If anything was guaranteed to harden Russian attitudes to the West, that was the move to make. I cannot believe the sheer stupidity of it. Some friends of mine who come from points east of Berlin really object to their birth countries being referred to as eastern European – we’re central European they insist, but after this mess, my feeling is that they’ll be thinking of themselves as eastern block countries.

They’re the one who have lots of stuff that we actually need and in some cases are absolutely dependent on. Take Albania (please), which for example gets 90% of its natural gas from Russia and has joined the EU charge over a cliff to ban imports of Russian gas and oil without any viable idea of how to replace them. It’s madness of course but a signal was sent by Putin last month. What Russia terms unfriendly countries would in future have to pay for natural gas in rubles. By various devious methods, they’ve all complied but note that condition only applied to Russia’s exports of natural gas.

What is extraordinary and doesn’t appear to have attracted any comment is that apart from that signal, Russia has not retaliated in any significant way to a proxy war by America and the EU on both its economy and supplying weapons to kill its soldiers in the Ukraine. What Putin termed the economic “blitzkrieg” against Russia (he’s a fluent German speaker BTW) has failed abysmally. All currencies have weakened against the dollar and before this all broke out the exchange rate of the ruble to the dollar floated at about 100 rubles to 1 USD.

It now trades at 65 rubles to the dollar. It’s estimated that in the first quarter of this year alone Russian revenue from natural gas exports has more than doubled. Like they say in the stock market – the story is all in the price. It demonstrates the abject failure of the sanctions policy but obscures the fact that we’re the ones actually getting injured by the economic war. Some economic gurus are predicting a strong possibility of the West going into recession. Newsflash gurus, we’re already in one, inflation is running at 8% (why do I not believe that number), the cost of living has shot up and the fed has just raised interest rates by 50 basis points. Too little and much too late.

You may have noticed the bottom fell out of most stock markets this week and perhaps wondered why. The NASDAQ index has just had its worst month since the financial meltdown of 2008. The answer to that question is quite simple. In what’s possibly the most under reported piece of news this year, Putin signed a decree that retaliates against what he terms unfriendly nations that are applying sanctions against Russia. It bans sales or exports by any government or government entities exporting anything to unfriendly countries. We’re talking natural gas, oil, wheat, grain, fertilisers and any raw materials. The whole shebang, not just natural gas but everything.

I’ve yet to determine at what date this directive swings into action, but its effect on western Europe will be economically catastrophic. All that boasting by the EU and various countries about slowly weaning themselves off Russian resources has had the obvious effect you’d expect when you brag to your enemy exactly what you’re going to do against them. Why wait for them to slowly weaken you when you can suddenly pull the complete rug out from underneath them next Tuesday?

The Russians will always have ready and eager markets for their vast natural resources and we’ve just been excluded from any access. Enjoy the spring and summer but as always, General Winter is on Russia’s side and come August, he’ll swing into action while most of western Europe will be figuring out how to pay their heating bill and handle various food shortages.

©Pointman

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