Thu. Sep 29th, 2022

ST HSIEH

JUNE 19, 2022

The Ukraine war will enter the 4th month this week, no cease effort is insight. Ukraine is in defense and calling for more supports from the west. But the extreme sanctions that the west placed on Russia after the war started on February 24, 2022, do not seem to be effective. Specifically, the sanctions against Russian energy obviously backfired, there is also no short-term solution for EU nations.

The so called “dilemma” faced by EU nations, they will not be independent from Russian natural gas till 2025 or after, looks like an indefensible mistake for initiating the energy sanction in the first place. It is incredible to read the news report that “Six European countries has paid Russia $40 billion US dollars in the three months of the war!” So, what are the “impending bans and sanctions on imports?” Should these “bans and sanctions” rules be overhauled to the extent that no Russian fuels flow into EU nations? Then Russian will have to stop the Ukraine war immediately, case closed.

Of course, it cannot be done this way as all European nations will fall into deep recession immediately and the global economy will tank too.

However, as Ukraine war goes on, leaky sanctions applied against Russia, many European nations are facing severe energy shortages already. The contradiction is, aside from no serious cease fire effort now, these leaky sanctions are expected to last almost forever, even if after the war is over! But let us hope the war end soon anyway and Europeans have a warm season next winter.

“Ukraine is urging the United States and the European Union to slap tougher sanctions on Russia” is asking for real trouble. As noted, sanctions are not leak proof and it hurts both ways. Further, Ukraine’s intelligence services are not top of the world. President Biden recently revealed that Ukraine ignored US warning of imminent Russian actions against Ukraine before February 24, 2022.

It is beyond reasoning that Ukraine, specifically President Zelensky, is accusing anyone for “financing” the war. Ukraine keeps fighting only because foreign nations are covering all the costs. As of now, Ukraine is already ravaged by the four months war, what is Zelensky’s exit strategy? If the war lasts another four month, it is almost certain that Ukraine will be in a weaker position than now to negotiate cease fire with Russia.

These 6 European countries paid Russia $40 billion for fuel in the three months of the war, despite impending bans and sanctions on imports

Zahra Tayeb

Sun, June 19, 2022, 1:00 AM

  • Germany, Italy, and France are among European countries that have been snapping up cheap Russian fuel.
  • Their purchases made up almost half of the to $97 billion in revenue Russia got from fuel exports.
  • The EU plans to phase out Russian oil imports this year — but not natural gas yet.

Six European buyers accounted for almost half of the revenues Russia banked from its fossil fuel exports in the first 100 days of the war in Ukraine, even as the European Union was outlining a plan to ban imports from the country, according to recent analysis by a Finnish thinktank.

France, Germany, Netherlands, Italy, Poland, and Belgium were the top European buyers of Russian fossil fuel exports, including coal, crude oil, natural gas and oil products on the spot market between March and May, according to according to the Centre for Research on Energy and Clean Air (CREA)

European commodity traders have actively shunned Russian cargoes of crude oil and refined products, while most natural gas imports arrive via pipeline and are more difficult to avoid.

In total, those countries shelled out a combined total of $40 billion of the roughly $97 billion Russia pocketed for its fossil fuel exports in that time, CREA said.

Record discounts

Russian oil is cheaper than other grades right now, as Western sanctions and traders avoiding those exports have cut the value of its flagship Urals crude.

A barrel of Urals crude currently trades at a record $30 discount to the global Brent crude benchmark, which  stood at about $120 a barrel on Friday, near its highest in a decade.

To that end, sales of cheap Russian oil and gas are expected to hit $285 billion in 2022 — a 20% increase from its profits from oil and gas in 2021, according to Bloomberg Economics. It’s down to Chinese and Indian purchases of Russian oil, which now account for half of Russia’s seaborne oil exports.

And while demand from China has remained consistent, India has ramped up its buying, to the tune of around 800,000 barrels a day, compared to next to nothing as recently as January.

In response, Russian oil production, which many expected to decline in line with demand, has jumped 5% so far in June in response. Average daily oil production, including condensate, reached 1.46 million tonnes through the first 13 days of June, up 68,000 from May, according to Reuters, which cited data from Interfax.

Meanwhile, European countries continued to buy Russian fuel even after EU leaders reached an agreement to cut around 90% of oil imports from Russia by 2022. But it has no plans as yet to stop imports of natural gas.

The EU has typically relied on Russia for about a third of its oil needs and as much as 40% of its natural gas.

CREA’s report showed Germany was the second-largest importer of Russian fuel after China, buying $12.6 billion’s worth, while other major EU importers were the Netherlands, Italy, France, Belgium and Poland. Those six paid a combined $40 billion for a combination of coal, natural gas, crude oil and refined products from February 24, when Russia invaded Ukraine, to early June.

Against this backdrop, it points to show the EU’s continued reliance on Russian fuel despite efforts to reduce its independence on its energy resources. That was only reinforced by Russian President Vladimir Putin who said that the West won’t be able to cut off Russian energy resources over the next couple of years.

Ukraine is accusing a major Russian bank of financing the war

Natalia Kolesnikova

Dan De Luce

Sat, June 18, 2022, 1:30 AM

Ukraine is urging the United States and the European Union to slap tougher sanctions on one of Russia’s largest banks, Gazprombank, which is still able to operate freely around the world because of its central role in Moscow’s gas trade.

Ukraine’s government says the bank, which was set up to service Russia’s state-owned gas company Gazprom, is helping to bankroll the Kremlin’s war in Ukraine.

“The U.S. and Europe should sanction Gazprombank, not just for its role in helping Russia accrue revenue from its energy sales, but because Gazprombank is directly involved in supporting Russia’s military, state-owned companies, and other institutions that are sustaining the invasion of Ukraine,” Andriy Yermak, chief of staff to Ukrainian President Volodymyr Zelenskyy, told NBC News.

The question of whether to tighten sanctions on Gazprombank illustrates the dilemma facing Western governments as they try to squeeze Russia’s economy in the wake of its invasion of Ukraine. Europe still relies heavily on Russian natural gas, and uses Gazprombank to handle payments for its gas imports. Most European governments remain reluctant to penalize the bank and risk cutting off the flow of natural gas completely, Western officials and experts say.

According to Ukraine’s intelligence services, Gazprombank handles the payment of wages to at least some Russian troops taking part in the invasion of Ukraine, as well as payments to families of troops killed in the war.

The Russian federal agency that manages civilian foreign aid and cultural exchange, or Rossotrudnichestvo, has explored the possibility of using Gazprombank to arrange cash transfers to one of its offices in Portugal, according to the intelligence services.

Rossotrudnichestvo did not respond to a request for comment.

The Biden administration declined to comment on the information cited by the Ukrainian intelligence services.

Gazprombank did not respond to a request for comment.

A Department of Treasury official said the Biden administration is tracking Gazprombank’s activities and has not ruled out any future actions against the bank.

“We continue to monitor Gazprombank to see if they are doing business with sanctioned entities,” the official said.

“To date, I think we haven’t made the decision to place full blocking sanctions on Gazprombank,” the official said, adding that a range of options remain open.

The aim of U.S. financial sanctions is “to deny Russia access to revenue they need to prop up their economy and build up their military industrial complex” and to disrupt supply chains for the country’s defense industry “in order to make it harder for them to project power today and to project power in the future,” the Treasury official said.

Agathe Demarais, a former French treasury official, said Europe would be in “a tricky position” if Gazprombank were shut out of the international financial system.

“The U.S. knows if it were to put Gazprombank under U.S. sanctions, it would cause huge issues in the E.U., it would send the eurozone into a deep recession, and it would create a big rift between the E.U. and the U.S. on the sanctions front,” said Demarais, now the global forecasting director at the Economist Intelligence Unit. And the Biden administration is keen to avoid a clash with its European allies, she said.

Some sanctions experts said Gazprombank might try to avoid risky transactions that could attract the attention of U.S. or European authorities and jeopardize its crucial link for channeling natural gas revenue to Moscow.

Last year, Europe relied on Russia for about 45 percent of its natural gas. Europe has reduced imports of Russian gas this year and the E.U. has set a goal of cutting the imports by two-thirds by the end of the year.

But Europe remains heavily dependent on Russia’s gas and, this week, Moscow slashed deliveries of natural gas to Europe, prompting calls for conservation measures as governments prepare for the winter.

Russian officials said the supply reductions were due to maintenance problems, but Germany accused the Kremlin of using energy as a political weapon.

“Sanctions on Gazprombank would be equal to an embargo on Russian gas, which is now not in the cards,” said Simone Tagliapietra, a senior fellow at Bruegel, a Belgium-based think tank focusing on Europe’s economy.

“The E.U. first needs to implement its embargo on Russian oil, which will start at the end of the year.”

The E.U. plans to cut off 90 percent of its Russian oil imports by the close of 2022.

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