It is always a temptation for a rich and lazy nation,
To puff and look important and to say: —
“Though we know we should defeat you, we have not the time to meet you.
We will therefore pay you cash to go away.”
And that is called paying the Dane-geld;
But we’ve proved it again and again,
That if once you have paid him the Dane-geld
You never get rid of the Dane.
From “Dane-Geld” (1911) by Rudyard Kipling
Today the editors of the Wall Street Journal react to the announcement that Russia was cutting off the delivery of gas to Poland and Bulgaria in retaliation for their participation in economic sanctions against Russia. After declaiming that Russia’s action should be considered “an attack on all” of NATO, they remark:
European companies have been ordered to set up two accounts at Gazprombank to enable the currency conversion. Countries that refuse, as Bulgaria and Poland have, risk a gas cutoff.
“The request from the Russian side to pay in rubles is a unilateral decision and not according to the contracts,†says European Commission President Ursula von der Leyen. “Companies with such contracts should not accede to the Russian demands. This would be a breach of the Russian sanctions.†Mr. Putin hopes to erode Western sanctions, boost the ruble and divide Europe.
The move can hardly have come as a surprise. No one forced Poland or Bulgaria or, more importantly, Germany to buy gas from Russia. Now circumstances have changed and all of Russia’s present and erstwhile European customers are scrambling to find alternatives. Think of being economically dependent on a strategic adversary as the 21st century equivalent of dane-geld.
It should also be a shot across the bow for the Biden Administration. We can’t allow ourselves to be dependent for strategic materials or commodities on countries that are present or prospective strategic adversaries.
“No one forced Poland or Bulgaria or, more importantly, Germany to buy gas from Russia.”
There was a fellow who admonished the Germans, though. They laughed in his face. Media delighted in showing the film. And in pointing out how this alienated allies. You know, that mean tweet guy. And here we are.
“It should also be a shot across the bow for the Biden Administration. We can’t allow ourselves to be dependent for strategic materials or commodities on countries that are present or prospective strategic adversaries.”
Gee, I wish I’d thought of that. But let’s not make it about me. The mean tweet guy made the same point, and was driving the policy that way. Hence, he had to be destroyed by the fraternity.
The mean guy talked but didnt accomplish much. He wanted NATO countries to spend more just like the prior 2 or 3 presidents. He didnt accomplish that. He talked about Nordstream but it still got built on his watch. He encouraged gas and oil production but when covid came that bottomed out so we dont have it now. Oil companies have their own goals and national security is not necessarily one of them.
Russian oil and gas was the cheapest option for Germany and Poland. A lot of people didnt believe Russia would ever invade another country. Even on this blog with US intel reports people denied Russia would invade. So Poland and Germany put profits/costs ahead of potential national security. What country hasn’t? Look at how we weren’t prepared for a pandemic which we all knew was inevitable. How much of our supply chain relies upon China, India and other countries which are definitely not possible adversaries? I dont believe for a second anyway that given the wide range of materials we now use any one country can economically sustain low costs for the wide range of stuff we need to make our world work. If we insist on being self-sufficient how do we maintain the strong economy we need?
Its easy to fling sh*t at other countries especially when there is no viable plan to achieve what you claim you want.
Steve
Over 15 months of having the Biden Brain Trust making decisions for this country, and look what we have going for us! Biden has virtually upended everything his predecessor put into place resulting in non-stop wrong decision-making. Those who cheered the railroading of Trump out of office will probably continue to either rationalize why the current guy is so much better, or simply soft-shoe around any warranted criticism of Biden’s lack of competence, cognition, and yes, ethics.
In the meantime, our energy independence is gone. We are actually sending needed Strategic oil reserves overseas to others. Our wide open borders are receiving little to no coverage by the complicit media and our worthless, lying Homeland Security Secretary. Nord Stream 2 was foolishly given the go ahead by our equally foolish president. We are giving billions to Ukraine for defense, when earlier Biden dithered about what to do. Zelensky recently asked for 9 billion a month to rebuild his country, and Schumer now wants to raise taxes on us (probably to help out). Biden’s people are pandering to Iran to renew the idiotic deal that was in place under Obama – with the Russians ironically trying to broker the deal. Even though crime is spiraling out of control, a significant majority of people think the country is going in the wrong way, mental, emotional health is on the ropes with record-breaking suicides and overdoses, the Biden people primarily immerse themselves in gender/transgender issues, fighting parents (labeling them domestic terrorists) interested in their children’s education, prosecuting J6 political prisoners who have been locked away for over a year with no due process – these are the arcane matters that swirl around in the heads of our leaders. No wonder we are in such deep trouble!
Nothing like engaging in a little revising of history, Steve.
https://www.usatoday.com/story/news/world/2019/01/27/nato-chief-credits-trump/2695799002/
Furthermore,, Trump was instrumental in putting sanctions on Nord Stream 2, which Biden promptly took off. Trump also built good relations with countries like India and ones in the Middle East. India is now drifting over to China and Russia. The ME won’t even take Biden’s calls. Even France now is not inclined to talk to Biden, as was the case with Macron having an aide handle Biden’s congratulatory call after his re-election.
It says that in a year they will increase spending. Did it happen? Every administration has extracted agreements to spend money but it didnt happen.
Steve
Everything is just great under Biden; so much better than under Trump. Just look around you.
Steve
I dont know how to read so I missed the fact that Steve didnt say anything about Biden. Think I will go back to making up stuff about Trump.
Drew
Despite the name, Russia is not insisting the Europeans pay for oil in Rubles — an explanation is here.
TL;DR. The scheme’s purpose is to make it impossible for European to sanction accounts holding their payments after they have been made.
By the way, its easy to say don’t depend on your adversary or an unstable if you are resource rich like the US or Russia; much harder for the EU/Japan/India/China. Lets do an exercise.
Assume that land area is linearly correlated with how rich in natural resources one has. The EU has a bigger population and 1/4 the land area of US/Canada, it has 3 times the population and 1/4 the land area of Russia. In relative terms; it is resource poor and needs to trade what it isn’t self-sufficient in. Outside of US/Canada/Australia, there are few countries that are net exporters of resources that are friendly to the West and politically stable.
This is not to say the Europeans didn’t decide to use an excavator when they already were in a hole.
@CuiousOnlooker, I’ll have to read your link later, but as to your larger point: While its true that Russia has energy resources that the rest of Europe lacks, Russia is itself dependent on the West for a lot of technology now unavailable due to sanctions. The Russian military stated in 2018 that they were dependent on the West for something like 600 – 800 items that Russia does not produce. Presumably the goal behind the announcement was to identify a security risk that needed to be addressed at some point. Maybe they started addressing, but I don’t think the idea of mutual trade interdependence through trade is a completely silly idea as a form of deterrence. Its just not always sufficient.
That link identifies one of my points of confusion. Russia made this threat earlier, the EU ignored it and Russia backed-off because it is dependent on the sales. So I’m not sure what has changed.
@PD Shaw,
Russia didn’t back off from what I can see; although it was sold as “Rubles for Oil”; but what is implemented was the heart of the proposal. For Russia — ensuring the payments cannot be seized after being made was non-negotiable — otherwise why bother selling?
The other point isn’t that Russia is self-sufficient in everything; otherwise, why would Russia trade. The point is for Europe is its physically impossible for Europe to be self-sufficient and it implies they need to trade for those resources and that it colors their approach to regimes like Russia / Iran. Even the most clear-eyed EU would be funding either Russia / Iran / Saudi Arabia….
Even if you can be self sufficient, and i am not sure anyone can do that, I doubt anyone does it cost effectively. If economic prosperity is a key to your national safety self sufficiency may not be compatible with that goal. Selective self sufficiency seems doable.
Steve
One of the real effects of sanctions is to create protected categories of businesses that are not subject to competition from imports. Russian businesses have steadily entered the fields abandoned by European and American businesses, and the number of items Russia needs to import have steadily declined.
The flip side is that American and European businesses lose markets and income, and American and European workers suffer job losses.
There is a persistent fable that the Russian economy is as small as Spain’s (a gas station with a country, J. McCain). Wiki says that on a PPP basis, Germany’s economy is at least 10 to 20% bigger than Germany’s. Considering the vast number of things Russia makes and does that Germany does not and cannot do, Russia’s economy might be as much as twice Germany’s, or half ours. And their economy is one of making things, whereas our is one of paper shuffling.
According to Forbes, the US economy shrank by 1.4% in the 1st Quarter 2022. It had been projected to grow by at least 1%.
†Russian businesses have steadily entered the fields abandoned by European and American businesses, and the number of items Russia needs to import have steadily declined.â€
That adage of “for every action there is an equal and opposite reaction,†is applicable to Russia and the world of sanctions being thrown at it. Since the invasion of Ukraine, Russia has shouldered the disdain and punitive reprisals of the EU and the U.S., to only have the ruble increase in value and it’s revenue go up. While we are recklessly doling out money to Zelensky’s demands for “more,†China and Russia have forged a closer relationship, moving India into their newly formed huddle as well. In the meantime our own GDP has entered negative territory, inflation is nibbling at the household income of everyone but the elites, our abandoned southern border continues to be an unchecked turnstile for millions of illegals, from over a hundred countries, as our national security and economy is being negatively impacted.
So, who is really benefiting from how we and others are responding to the Ukraine-Russia conflict?