Why The EU Will Not Resist Putin’s Ukraine Military Coup

Sunday, March 2, 2014
By Paul Martin

By: Andrew McKillop
Market Oracle
Mar 02, 2014

Gaseuro Recycling and Petrodollar Recycling

Much more discreet and more easily denied than also-denied petrodollar recycling operated by the US and Saudi Arabia, the EU’s gaseuro and petroeuro recycling operated with Russia, especially by Germany, Italy and France but also by other EU states is starkly different to the “petrodollar system” because it is an economic win-win. Because of this, the EU after ritual blethering and cries of alarm will avoid operating economic, trade, monetary or other sanctions against Russia.

Using the monetary and economic leverage of gaseuro recycling, the EU’s national treasuries and financial institutions of the ECB and BIS, as well as private banks, can hope to finance the massive black hole of Ukrainian national finances. Conversely, any sanctions operated against Putin’s Russia will backfire immediately as Russia cuts all gas supplies to, and passing through, the Ukraine triggering an instant continental economic crisis, backed up by Putin’s additional ability to suspend or limit oil shipments to Europe.

The simplest way to understand why the gaseuro and petroeuro recycling system is a win-win is that the EU, led by Germany runs a major trade surplus with Russia. Buying Russian gas and oil, paid for with euros, enables Russia to buy European goods and services, and create credit for further buying. When or if the EU was foolish enough to run sanctions against Russia, this major economic support to the continent’s basically weak and stagnant economy would collapse. It would be lose-lose.

Gas Trumps Oil

World reserves of natural gas are massively larger than oil reserves, although the magic adjectives “conventional and unconventional” heavily change any figure you care to use. One handy figure is that world conventional associated (with oil) gas reserves plus stranded (not associated with oil) gas reserves are roughly equivalent to 100 years of present world total gas consumption. Conventional oil reserves are enough to cover about 40 years of world total oil consumption. Making things a lot more complicated, with little-appreciated but major coming impacts, which include impacts on world money systems and the shadowy but real “petrodollar system”, gas can substitute a lot of oil. It can be converted to synthetic light oil albeit at large energy loss, it can substitute oil for petrochemicals, it can replace oil for road, rail and marine transport. For heating, both industrial and residential, gas is the best and easiest energy fuel. Oil is substitutable.

The Rest…HERE

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