Western sanctions have caused inflation, unemployment and strikes in Europe itself.
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There is a Russian proverb: “Do not dig a hole for another, you will fall yourself.” It would be naive to deny that the sanctions are hurting the Russian economy. But, as it turned out, not only in Russian. Gradually, many countries, which exactly a year ago began to “shoot” us with sanctions, were surprised to find that they were “shooting” themselves in the foot. And they themselves, due to anti-Russian restrictions, faced serious financial problems. And in a variety of areas.
ENERGY
“Of all the sanctions, the embargo on Russian energy resources imposed by Europe was the strongest blow to Europe,” financial analyst Mikhail Belyaev told Komsomolskaya Pravda. – Gas, fuel and other petroleum products in the European Union have risen in price at times. As a result, the countries of Western Europe are on the verge of a crisis.
Remember that throughout 2022, the EU has been phasing out Russian gas. Although Russia was the main supplier of blue fuel: 36% of the total volume consumed by Europe. But politics prevailed over the economy: purchases were curtailed, and on September 26 the Nord Stream pipeline exploded, making it physically impossible to restore previous volumes of gas supplies.
After that, the European Union introduced two embargoes: on December 5 of last year, on the supply of our oil, on February 5 of this year, on the import of our petroleum products (fuel, kerosene, diesel fuel , etc.). Also this winter, the EU countries with the G7 and Australia set a maximum price for oil and petroleum products for delivery to third countries. Russia has refused to cooperate with buyers who are willing to support the maximum price. All this has caused a shortage of energy resources in Europe.
Of course, the EU countries are trying to replace Russian supplies by buying oil and gas from other countries. But this is still not enough, and it is more expensive.
Energy prices in Western countries have risen. In 2022, the cost of gas reached space $3,500 per thousand cubic meters (in 2021, the average price was at the level of $200-250 per thousand cubic meters).
The price of electricity has risen exponentially. For example, last summer the wholesale price of electricity for next year’s delivery in France and Germany exceeded 1,000 euros per MWh, 10 times more expensive than the previous year.
The situation in Europe is still being saved with a warm winter and large-scale measures to save energy. Many companies have switched to an economical mode of operation, of course, to the detriment of productivity. Therefore, economic development slows down. In addition, at the household level, the authorities have included many restrictions, even recommendations to use less hot water and not turn on air conditioners (and in Spain they are heated in winter).
And the rise in electricity prices has caused a whole snowball of problems that will have to be untangled for a long time.
“If we look at the current socio-economic panorama in Europe, we will see an increase in inflation and discontent among the people, leading to strikes, a jump in food prices and a slowdown in production,” Belyaev lists. – These are the main factors that were provoked by the energy crisis provoked by the West.
Countries that exactly one year ago began “shooting” us with sanctions were shocked to find that they were “shooting” themselves in the foot.
Photo: Ekaterina MARTINOVICH
INFLATION
After gas and electricity in Europe, literally everything has gone up in price. On average, prices in the EU increased by 10% last year. According to the forecast of the European Commission, inflation in the euro area in 2023 will be 5.6%, also a fairly large figure for Europe, used to living with stable prices without economic shocks.
The situation is especially difficult in Bulgaria. Inflation is breaking records here. In 2022, prices increased by up to 15%. Electricity bills have increased by at least 40-50% for several months and in some places even 100%. Housing rent has grown strongly – by 20%. But the most important thing is that unemployment is rising in the country because companies are going bankrupt. Compared to last year, there are 20% more.
In Germany, inflation, according to the German Federal Statistical Office, amounted to 10.4%. This level was immediately dubbed historic.
In the UK, the highest growth was in October 2022: 11.1% compared to last year. This was the highest in over 40 years. Fuel has risen in price by 22.2%, restaurant and hotel services – 10.2%, products – 16.5%.
Prices rose not only in Europe. In the US, inflation was 6.5%, while energy rose 7.3% and food 10.4%.
MASS DISTRIBUTIONS
“Cripple electricity bills are shutting down European factories!” screams a New York Times headline. According to the publication, industrial production in the euro area in the middle of last year fell by 2.3%. Manufacturers are laying off workers and closing lines because they can’t pay for gas and electricity.
For example, the world famous glass manufacturer Arc in the north of France is in a very difficult situation. To turn sand into glass, strong heating of the furnaces is needed throughout the day. Just a couple of years ago, the electricity bill was 19 million euros a year, but last summer it rose to 75 million euros. As a result, a third of the 4,500 employees had to be sent on partial leave, four of the plant’s nine furnaces – on downtime. The remaining kilns will be switched from natural gas to diesel fuel, which is cheaper but harmful to the environment.
Paper and fertilizer producers announced a belt tightening. The European Metals Trading Association noted that half of Europe’s aluminum and zinc production has stopped. Europe’s largest steelmaker Arcelor Mittal has ordered simple blast furnaces in Germany. Alcoa, one of the world’s leading aluminum producers, is cutting production at its smelter in Norway by a third. And the world’s largest zinc producer, Nyrstar, will suspend production in the Netherlands until “further notice.”
But it is not only the production of raw materials that suffers. Hakle, one of the largest manufacturers of toilet paper in Germany, filed for bankruptcy due to the same “historic energy crisis”.
Meanwhile
Photo: Dmitry POLUKHIN
STRIKES
This whole situation has a painful effect on the social sphere. Protests are taking place in many cities across the EU, also in the UK. BBC News estimated the other day that hundreds of thousands of citizens are taking to the streets: workers, teachers, nurses, civil servants and railway workers. The reason is simple: the increase in wages does not keep pace with inflation.
Ambulance workers strike in England, Wales and Northern Ireland. Near
70,000 members of the Universities and Colleges Union are on strike for three weeks at 150 universities across the UK. Demands – higher wages, restoration of pension benefits.
A thousand border guards at the ports of Calais, Dunkirk and Dover, as well as at the Channel Tunnel terminal are also on strike.
