There comes a time when ideology runs headfirst into the monolith of unwavering reality. Today, during a press briefing as a part of the IMF World Bank Meetings [TRANSCRIPT HERE], Treasury Secretary Janet Yellen was forced to admit the sanctions against Russia have hurt the EU more than Vladimir Putin and the Russian economy.
Secretary Yellen was asked about the need for increased western government bans against Russian exports.
Yellen was faced with the discomfort of admitting the global market is still open to receiving Russian products, specifically oil and gas, and that banning the EU from receiving those products only drives the EU prices higher, which has already led to unsustainable inflation.
Key Segment:
…”Europe clearly needs to reduce its dependence on Russia with respect to energy. But we need to be careful when we think about a complete European ban on say oil imports. We want to harm Russia – that would clearly raise global oil prices would have a damaging impact on Europe and other parts of the world. And counterintuitively it could actually have very little negative impact on Russia because although Russia might export less, its price for its exports would go up.”
The EU is already experiencing massive energy price increases. Yesterday, Germany announced manufacturing price increases of more than 30% following increased energy costs exceeding 80%. The current western government sanctions against Russia are hitting the EU economy harder than they are hurting Russia as alternative customers (India, China) for Russian energy exports are still purchasing.
In essence, the EU has partly removed themselves as a customer, but the seller, Russia, is still selling; only now they are getting higher prices because the EU and U.S. are disrupting oil and energy production in an effort to chase their climate change goals.
Putin’s Ukraine timing, to coincide with the progressive west trying to limit oil/gas development, was perfect. The citizens of the nations, who are participating in the sanctions against Russia, are seeing higher energy inflation. Ultimately this is going to lead to massive food inflation and overlay the increased costs of farming production via fertilizer, and, well, support for more sanctions against Russia only makes things worse.
WASHINGTON – […] “Despite wide-ranging sanctions on the Russian government financial sector and the mass exodus of dozens of businesses, Russia has been able to limit the economic damage thanks to a steady stream of oil and gas revenue. But the U.S. has resisted pushing Europe to ban Russian energy imports despite growing pressure from lawmakers in both parties and the pleas of Ukrainian government officials.
“Proceeds from sales of oil and gas are an important source of income for Russia. It would be very useful to try to devise a way to reduce Russia’s proceeds from those sales,” Yellen said.
“That really is the proper objective of a ban. But if we could figure out a way to do that without harming the entire globe through higher energy prices, that would be ideal. And that’s a matter that we’re all trying to think through together,” she continued. (read more)
