Lord Ismay, NATO's first secretary-general, said in the beginning of the fifties that the purpose of NATO was "to keep the Russians out, the Germans down and the Americans in". Today this hasn’t changed. Due to Washington's confrontation strategy - partly through NATO - the US succeeded to oust Russia from the European energy market. Remember how president Trump imposed sanctions on the Nord Stream 2 pipeline in 2019 targeting companies involved in its construction as part of a policy to disconnect Germany from Russian energy supplies. The US became the world's largest exporter of liquefied natural gas (LNG) during the first half of 2022, filling partly the vacuum left by Russia. This year alone, between January and October, approximately 48 billion cubic meters (bcm) of LNG was exported from the US to the EU, which is 26 bcm more than for the full year of 2021.
For the roots of the current economic war between the West and Russia over Ukraine, we have to go back to 2013 when Kiev was under pressure to choose between an Association Agreement with the European Union or a Customs Union with Russia, Belarus and Kazakhstan. The industrialised eastern part of the country was more likely to benefit from good trade relations with the old Soviet Union countries to the east. For the more Europe- and world-oriented agricultural West, an association agreement was more interesting. At the time, Kiev’s choice for a customs union led to a popular uprising in Kiev and the fall of Yanukovych. A war of nationalist character broke out in the Donbass, home to a large minority of ethnic Russians. Four months later, the European Union and Ukraine signed an association agreement. The change of power in Kiev led Russia to annex Crimea to prevent Ukraine's pro-Western course from ending the Russian military presence in the strategic peninsula.
Soon after Russian troops invaded Ukraine in late February 2022, NATO member states and their allies opted for a massive arming of Ukrainian troops coupled with economic and financial sanctions in an attempt to weaken Russia on all those fronts. The sanctions have three components. One part of the sanctions targets the oligarchs with the seizure of overseas assets and the imposition of entry bans. In addition, extraordinary financial sanctions have been declared, such as freezing central bank reserves and cutting off key Russian banks from the SWIFT system. Finally, heavy restrictions on technology exports to Russia have been coupled with pressure on Western multinationals to move out of Russia.
As a result of the sanctions, almost half of the $640 billion in foreign reserves have been frozen. The embargo on parts of electronic components vital for both military and civilian products is also already making itself felt. Russia is a major importer of high-tech. More than 1,000 multinationals stopped or reduced their trading activities. Hundreds of oligarchs have been individually sanctioned. The impact of the sanctions comes on top of war costs and the brain drain of young Russians trying to escape military mobilisation or authoritarianism. According to several recent estimates, Russia's economy will shrink by 4% this year. But the impact is much less severe than planned.
The economic war is killing people
Months later, it appears that the sanctions are not having the intended effect: bleeding the Russian war machine to death. In fact, the sanctions are having a perverse effect. Due to scarcity and speculation, oil and gas prices have soared, allowing Russia to earn unprecedented revenues even with reduced exports. Moreover, Russia is in the process of gradually adjusting to the sanctions and is counterattacking by cutting ties with the West and redirecting exports to countries like China and India.
On the other hand, the effects are being felt worldwide and a recession is looming. A Russian countermeasure – decreasing gas supplies to Europe - caused sharp price hikes on the energy market that put the European economy in serious trouble. Large energy-intensive companies are already having to shut down. In sanctioning countries, inflation rates of more than 10 per cent are now being recorded and this is severely affecting purchasing power. Even worse is the impact on the poor countries of the 'Global South' where the number of people suffering from hunger and forced to live in extreme poverty is increasing at a frightening rate. According to the International Food and Agriculture Organisation (FAO), food prices have risen 20% this year. 345 million people in the world -primarily in the global South- are in acute food insecurity, a tripling compared to the period before COVID-19.
As in any war, there are war profiteers such as currently the energy companies, the arms industry and the big players within agribusiness. The four major agro-multinationals that together control more than three-quarters of the global grain market have seen their sales and profits soar. In the energy sector, Britain's Shell already posted $30 billion in profits this year. US oil giant ExxonMobil is even heading for $50 billion in profits this year. With many people unable to pay their energy bills and far too little investment in clean energy sources, the energy giants are planning an increase in profit distributions,
The price increases are thus exacerbated by speculative stock markets and are a consequence of the monopoly position these multinationals have.
Ukraine's successes on the military front are now reviving hopes in NATO capitals that Russia can be defeated on the battlefield. But that seems - not in the short term anyway - to be a viable option. The war strategy, aimed at weakening Russia rather than bringing a swift end to the war, threatens to further increase its catastrophic 'fallout'. The Kremlin will not surrender unconditionally - it still has nuclear weapons in reserve - and the potential for further negative consequences is undeniable. In an extreme scenario, social discontent grows in the global south (food riots, uprisings,...) and in Europe (popularity of the far-right, riots,...). It is necessary to put a quick end to the violence in Ukraine for many reasons. First, to stop the huge loss of young lives in both camps and further destruction. Second, to protect people's purchasing power, avoid further world hunger and poverty and stop the war profiteering. Third, to avoid a dangerous nuclear escalation. The scenario for a military victory over Russia has another major drawback. It will hamper a political solution for the nationalist conflict in the Donbass. Moreover, this could lead to a dangerous destabilisation of the Russian federation, not an attractive scenario with a nuclear armed power.
It is therefore necessary to obtain a ceasefire as soon as possible to create space for negotiations that can bring a just and lasting peace agreement that also offers a political way out for Russia. In the words of Pope Francis, "Let the guns be silent; let a universal ceasefire be declared at once. Let negotiations capable of leading to just solutions for a stable and lasting peace be activated soon before it is too late. Let dialogue be resumed to nullify the threat of nuclear weapons.”
At the beginning of November, 100,000 people took to the streets of Rome in a rally calling for a ceasefire and negotiations, while expressing solidarity with Ukraine and condemning Russian aggression. That so many people took to the streets was partly due to the active mobilisation by the trade unions. In their appeal, they highlighted the global social and environmental costs of the war. "The war swallows up everything and blocks the hope for a more just and sustainable future for generations to come." Let’s follow the example of Italy and work on the creation of a global anti-war movement with the active involvement of trade unions and other social movements!
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