Difference between revisions of "Russia Energy Ban Myth Buster"
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= MYTH #2: Russia can sell oil & gas to China and elsewhere, so we’d only be hurting ourselves. = | = MYTH #2: Russia can sell oil & gas to China and elsewhere, so we’d only be hurting ourselves. = | ||
| − | <span style="color: red; font-weight: bold;">FALSE:</span> | + | <span style="color: red; font-weight: bold;">FALSE:</span> a complete substitution towards China is infeasible given the scale of European imports: [https://www.eia.gov/todayinenergy/detail.php?id=51618 we buy 49% of Russian oil and 74% of Russian gas]. And if China becomes nearly the sole buyer, it will bargain hard, limiting the revenue flows. Ultimately, if Putin did not need our money, he would have turned off the tap already. |
| − | will bargain hard, limiting the revenue flows. Ultimately, if Putin did not need our money, he would have turned off the tap | + | |
| + | = MYTH #3: Russia would circumvent the sanctions by selling via third parties. = | ||
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| + | <span style="color: red; font-weight: bold;">FALSE:</span> secondary sanctions may be employed ([https://sgp.fas.org/crs/mideast/RS20871.pdf Iran] provides a recent [https://www.cnbc.com/2021/03/23/these-6-charts-show-how-sanctions-are-crushing-irans-economy.html example]). We are already seeing private businesses staying away from Russia in fear of breaching sanctions (e.g. see [https://www.cbsnews.com/news/shell-russia-ukraine-stop-buying-oil-natural-gas/#:~:text=Energy%20giant%20Shell%20said%20Tuesday,over%20the%20invasion%20of%20Ukraine here]) | ||
Revision as of 23:28, 6 June 2022
Frequent arguments against taking action now, and why they don’t stack up -- by @lukaszrachel
Original version: https://t.co/L26ZGfX9IK
MYTH #1: We are not financing Putin’s war (b/c of sanctions, he cannot use the billions of euros/dollars we send him anyway)
FALSE: there’s no doubt that a ban would drastically limit the real resources available for war. Existing sanctions are inherently leaky. They limit the availability of the stock of Russia’s reserves, but the flow of energy revenues on the order of 700 million euros per day is more than enough to hire mercenaries, buy weapons and destabilize EU politics. Over 40% of Putin’s budget revenues derive from energy exports - without this income, enormous cuts to public spending across the board will be required. Printing rubles does not help: without the backing of the real resources obtained through energy exports, the empty rubles would fuel (hyper)inflation and an economic collapse. Currently, forex revenues are sold to support the ruble (which has appreciated most recently), limiting the impact domestically. So yes, there is no escaping it: our energy purchases are directly funding Putin’s war machine. See numbers here and more analysis here and here. See also top Russian economists – the most informed voices on these issues on the planet -- forcefully argue that the energy ban is our best chance to stop the war early (in German here).
MYTH #2: Russia can sell oil & gas to China and elsewhere, so we’d only be hurting ourselves.
FALSE: a complete substitution towards China is infeasible given the scale of European imports: we buy 49% of Russian oil and 74% of Russian gas. And if China becomes nearly the sole buyer, it will bargain hard, limiting the revenue flows. Ultimately, if Putin did not need our money, he would have turned off the tap already.
MYTH #3: Russia would circumvent the sanctions by selling via third parties.
FALSE: secondary sanctions may be employed (Iran provides a recent example). We are already seeing private businesses staying away from Russia in fear of breaching sanctions (e.g. see here)