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Author Topic: Russo-Ukraine war - economic considerations  (Read 2838 times)

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Online dorbradavid

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Russo-Ukraine war - economic considerations
« on: April 14, 2022, 11:37:26 AM »
Pretty interesting analysis

Dobra David

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Re: Russo-Ukraine war - economic considerations
« Reply #1 on: April 26, 2022, 10:00:51 AM »
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Re: Russo-Ukraine war - economic considerations
« Reply #2 on: May 23, 2022, 07:00:48 AM »
From todays WSJ



Napoleon’s foreign secretary Charles-Maurice de Talleyrand-Périgord once said that “A diplomat who says ‘yes’ means ‘maybe,’ a diplomat who says ‘maybe’ means ‘no,’ and a diplomat who says ‘no’ is no diplomat.”

Talleyrand died in 1838, but the passage of time hasn’t diminished the truth of his words. From debates about an energy embargo against Russia or the prospects of European Union membership for Ukraine, European diplomats are dealing in the art of the diplomatic “maybe.” High-ranking EU representatives are regularly visiting Kiev and promising President Volodymyr Zelensky immense military, economic and diplomatic aid. These promises will be hard to keep once they collide with the cold realities of European politics and the national interests of EU member states.

With negotiations over an EU end-of-year embargo on Russian oil stalling, it isn’t clear when to expect an end of major oil flows from Russia to Europe. And even if a plan were to come together, the current EU proposal is full of exemptions, allowing the Czech Republic, Hungary and Slovakia to continue importing Russian crude until 2024, which would create numerous opportunities to circumvent an embargo. Something similar is under way with natural gas: The European Commission has issued new guidelines on sanctions, effectively allowing European states to pay for Russian gas in rubles as Vladimir Putin has demanded. Most important, the end of 2022 is far away. By then an embargo could be obsolete.

It has become obvious in recent months that many European states care more about ending the war than about who wins. Germany in particular seems to be interested in keeping the option to return to the pre-Ukraine war status quo. Berlin doesn’t stand alone in this. Following his successful re-election, French President Emmanuel Macron has hedged his bets, saying that a future peace in Eastern Europe must not include an unnecessary humiliation of Russia and could include territorial concessions to Moscow.

From the beginning of the war, support on the Continent has been lackluster compared with the responses of the U.S. and U.K. According to the Kiel Institute for the World Economy, in the first month alone, the U.S. dedicated $4.4 billion in equipment and other aid to Ukraine.

If Ukraine survives this war, it will be primarily because of support from Washington and London, plus some Eastern European states, especially Poland. Yet even hawkish countries like Poland wanted U.S. guarantees to resupply their stock of arms before they were willing to send sophisticated weaponry to Ukraine.

Germany increasingly seems willing to provide more and better equipment, but every promise seems immediately to meet some bureaucratic or logistical hurdle that takes weeks or months to be resolved. The latest example is the delivery of the Gepard antiaircraft tank, which lacked the required ammunition for action.

Given these developments, it would be too optimistic to expect imminent Ukrainian EU membership. The president of the European Commission, Ursula von der Leyen, and Germany’s foreign affairs minister, Annalena Baerbock, have signaled that they would support such a move, but they both know that at least one of the 27 EU member states would veto full membership for Kiev. It isn’t clear whether such a veto would come from Hungary, Austria, France or even Germany itself, but Mr. Macron gives the clearest indication of what to expect. He recently suggested the creation of a “European political community”—a kind of purgatory for states that would like to gain full membership but probably never will—in addition to the EU.

Despite the supranational ambitions of the EU and its most ardent supporters, national interests still dominate the political calculations of member states. For Paris and Berlin the Ukraine crisis isn’t only a security issue, it could also determine the EU’s future power distribution.

The most prestigious positions in the EU are held by Western European politicians, reflecting a power imbalance between Eastern and Western Europe, from Ms. von der Leyen (Germany) and European Central Bank President Christine Lagarde (France) to the high representative of the Union for Foreign Affairs and Security Policy Josep Borrell (Spain) and the president of the European Council, Charles Michel (Belgium). Eastern European governments have made clear that this status quo is increasingly unacceptable to them, and the war in Ukraine has given them additional confidence to change it.

The EU is built around Germany and France, and both states have jealously guarded their position as the ultimate decision makers in Europe. Policy makers in both countries are aware that an EU with Ukraine could lead to a competing Warsaw-Kiev axis, something neither France nor Germany wants. Ukraine is politically and culturally closer to Poland than Germany, meaning that German power in the EU could be diminished significantly and replaced by growing Eastern European influence.

These thoughts might seem cynical in light of the heroic struggle of Ukraine and its people, but it would be a mistake to believe that power politics has been replaced by universally held ideals. As Talleyrand pointed out, making promises is part of diplomacy, but ultimately actions matter more than words.

Mr. Schöllhammer is an assistant professor of political science and economics at Webster Vienna Private University.
Dobra David


 

 

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