Europe plays Russian roullete…” It is very clear to me that we are willing to push Mr. Putin as hard as is needed to start a war.”
By Bill Holter
GoldSeek.com
Tuesday, 9 September 2014
The sanction game of the West versus Russia is taking another notch upwards. Europe is rumored to announce soon what few believed they would, they are placing sanctions on Russian energy firms Gazprom, Rosneft and Transneft. I am personally quite surprised Europe would go this far.
What surprises me is their lack of future view. Any “thinking” person would look into the future and say “OK, if we do this then what will Russia’s response be”? The response is beyond obvious because Europe is a captive energy customer. Russia can increase prices if they wish or simply cut back or cutoff the supply entirely. For the immediate future, Europe has no alternative whatsoever.
Were Russia to disrupt natural gas supply, Europe’s economy will feel it immediately. Europe is already in a contraction, either higher prices or a constrained supply will be enough to dislodge whatever confidence that’s left. Yes, winter is coming and some people will be cold or possibly freeze, this is known. The other side of the coin is Europe’s farmers will not be selling product to Russia so some Russians will go hungry, this is also known.
What is not known but in my opinion but “soon to be found out” is just how strong of a union the Eurozone actually is? Which country or countries will feel the pinch from these sanctions the worst? Who needs Russian natural gas more than other countries and which country relies on Russian food purchases more than others? In my mind, Europe is playing Russian roulette with these additional sanctions and their “unity” is what is at stake.
First, when push comes to shove, who will break from the union and import Russian gas even if done secretly? I don’t really understand the “sway” the U.S. has throughout Europe to get them to go this far. As I understand it, Germany was not in favor of the additional sanctions and this does make sense. They understand the ramifications to them personally and they also must be angry (if not publicly) about the status of nearly half of their gold. They deposited 1,500 tons of gold with the FRBNY and asked for 300 tons to be returned. They “accepted” a proposal to send this amount back over 7 years but only received 5 tons in the first year. (This is my opinion mind you but I do think they probably asked for ALL of it back, time will tell if this is true or not).
Think about this for a moment, would you personally go out of your way to do something injurious to yourself to help or abide a business associate who owes you money but isn’t paying you back? This, along with common sense may be why Germany does not fully support the further sanctions. I see many dangers in this last round of sanctions. At the least, European unity will be tested thoroughly.
As for Russia, the decision to cut, ration or even discontinue the flow of energy will be an easy one. Russia does have the ability to sell elsewhere and in particular to China. The Chinese connection is also important in the finance department as they can help fund Russia should she feel the pinch from the credit sanctions. Another area which no one seems to be mentioning is in regards to the food sanctions. Couldn’t China just import extra grain or other foods and then turn around and send them to Russia? Would anyone try to slap China for their commerce with Russia (other of course than the U.S.)? So they go to the grocery store and buy some extra food which they then sell to Russia …who would know about it and if they did …”what are you going to do about it, they are our friend”?
It is very clear to me that we are willing to push Mr. Putin as hard as is needed to start a war. Sad to say, I believe this is our “strategy” almost in entirety. As I mentioned last week, “something needs to be pointed at” as the reason everything fell apart, a World War would certainly do it. I also believe a break up of the European union would also work. What will the markets look like were Europe to split into a version of “North and South”? Or what will happen if there is one or more individual countries who can’t take the heat (or lack of) and decide to break away? What then happens to the euro currency? Or Eurobonds? And then of course the word “ripple effect” takes over.
The Rest…HERE
