The EU will have to find ways to circumvent its own sanctions

The European Union agreed on the eighth package of sanctions against Russia, and the most notable part of it was the ban on sea transportation of oil to third countries at a price higher than the established one. Prior to this, in September, the G7 countries agreed on a price ceiling for Russian oil.

However, as Viktor Khaykov, chairman of the board of the National Association of Oil and Gas Services, a member of the public council under the Ministry of Economic Development of the Russian Federation, said during a press conference at the DOS, in the near future the European Union will have to look for ways to bypass its own sanctions. The EU countries may find themselves in such a difficult situation due to the OPEC + agreement on reducing daily oil production by 2 million barrels per day, concluded on October 5, which is the largest reduction since the start of the global coronavirus pandemic, when production around the world stopped.

According to Viktor Khaikov, after the agreement between the OPEC+ countries, it is unlikely that the restrictions proposed in the eighth package of sanctions will work in full:

“This is explained by the fact that there will be a very limited amount of oil on the market, and it will not be possible to simply take and get rid of Russian oil, since there will be no possibility to replace it. Because OPEC+ is a large part of the countries that produce oil, and those countries that are not members of OPEC+ (for example, the United States) will not be able to compensate for the volumes of oil that Russia now supplies to the world market. Therefore, I believe that the restrictions announced by the EU are likely to be adjusted, and it will be very interesting to see how the EU will circumvent its own sanctions.”

Vasily Koltashov, head of the Center for Political and Economic Research at the New Society Institute, noted that, judging by the fact that oil prices began to rise immediately after the OPEC + decision was announced, one can count on the fact that the damage to the Russian economy from the eighth package of EU sanctions will be minimal:

“In addition, the European Union has already made some reservation in favor of the shipping offshore companies of Greece, Cyprus and Malta, according to which they will be able to transport Russian oil so that others do not. Because otherwise, a “revolution of flags” will begin, when transportation companies begin to leave these “wrong” offshores and move to countries that can provide them with political protection and provide them with orders.”

At the same time, as Vasily Koltashov emphasized, it is important to understand that behind all these sanctions there is not only the desire of the United States to weaken the Russian economy, but also two more tasks that are very remote from this goal:

“The first task is to reduce world oil prices. Prior to that, they made a maneuver to increase the key rate of the Federal Reserve System (Fed), which is now 3.25%. And they promise to raise it to 4% in order to cause a reduction in the real sector and trade, primarily in their own West. This maneuver is being repeated by the Bank of England and the European Central Bank. Moreover, the Bank of England lags behind by 1%, and the European Central Bank – by 2% in the rate of the US Federal Reserve System, and all this contributes to a decrease in business and consumer activity. Against this background, the United States wants to achieve lower oil prices and at the same time an influx of capital to itself.

The second task they solve is to eliminate excess capacity. The fact is that economic growth is, first of all, filling voids. This has always been the case in economics. But sometimes voids need to be created, and sometimes these voids are objectively long overdue, but you have not allowed them to form for many years. That is, with the help of cheap borrowed funds, due to the low and ultra-low rates of Western Central Banks (this was the situation in all previous pandemic years. – S.I.) you just kept a huge number of enterprises afloat. And the US has now reached a situation where the debt has already reached certain limits (about 31 trillion dollars), as a result of which the possibility of borrowing is decreasing, and confidence in the American economy is decreasing. The moment has come when the Western world must allow the fall of the economy, and he allowed it. This is a conscious action. If someone understands the actions of the European Union solely as a fight against Russia, then this is not so. The European Union is implementing the US program to eliminate its economy!”

According to Vasily Koltashov, this contraction of the economy should have happened after the 2008 crisis, the only question that remained for the United States was where this reduction should take place: in the USA and Canada, or it would be mainly the European Union, England and Japan:

“Naturally, they chose England, Japan and the European Union. This choice allows American industry to survive and even grow at the expense of companies from other countries moving their business to the United States.

Vasily Koltashov illustrated the already ongoing contraction of the European economy with statistical data: for example, the production of nitrogen fertilizers in Europe fell by 70%, aluminum production fell by 25%, and thousands of companies go bankrupt in Britain … In this situation, according to Vasily Koltashov, Russia and the OPEC countries + should take into account that the demand for oil in the West will fall, and in this situation there is no need to help them and play along by providing them with low prices.

Sergei Ishkov.

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