‘Athens News’: Sanctions – ruin for Europe, gain for others

Sanctions against Russia led to an energy crisis in EU rising prices and closing factories. At the same time, the US, China and other countries benefited, notes ‘Athens News’.

Sanctions. The word sounds almost like a spell, causing as much anxiety as promise. On the one hand, this is a weapon that restrains and destroys, but – ah, there is always this “but”. It turns out that by pointing the tip at one enemy, you can inflict a wound on yourself. In the EU, no matter what they say at official meetings and in ministerial cabinets, they have already felt this.

Energy crisis: A fire from within

When sanctions hit Russia, Europe unwittingly threw itself into the fire. Yes, Russia, of course, was the largest supplier of gas – 40-45% of EU consumption was covered by its resources, and countries such as Germany and Italy depended on it for 55-60%. No matter how strong the slogan “energy independence” was, when the gas tap was turned on, Europe felt a real chill.

And gas prices soared. If before 2022 30 euros per megawatt-hour (MWh) seemed to be the norm, then by August of the same year the numbers skyrocketed, reaching 300 euros per MWh. Tenfold growth is not just a crisis, it is a disaster. This is more than the numbers on the stock exchanges; These are closed factories, laid off workers, costs that crippled even those who had built their businesses on solid foundations for years.

Metallurgy? 10% of capacity had to be closed, not to mention the fact that prices for raw materials and energy for chemical giants like BASF jumped by 60-80%.

Oh yes, and oil. Before the sanctions, Russia provided 25% of the oil that flowed through pipes and by sea. But now that the flow is blocked, the cost of a barrel of Brent has remained at $100-$130, which is 50% higher than in previous calm times.

Inflation: The silent killer of wallets

Now let me talk about inflation. Consumers feel it, as if invisible forces are stealing their money right off the store shelves. 8.4% inflation on average in the eurozone is a figure that has not been seen for decades. In the Baltics, this figure is even worse: Latvia, Lithuania and Estonia see inflation above 20%. Well, in such a world, even a simple loaf of bread seems like a luxury.

Food products have skyrocketed by 15-20%, and transport costs have also risen: diesel now costs 2 euros per liter, and this is hitting the wallets of ordinary people and the pockets of large carriers. Whatever one may say, this wave is overwhelming everyone.

Business closures: The bitter taste of iron

Those who hoped to wait out the storm found that it dragged on. Factories are closing not only in panic, but also because it has become impossible to conduct business. Metallurgy, chemical industry, fertilizer manufacturers – they all felt the economic scissors sliding across their throats. Fertilizer plants such as Yarasuspended their work altogether, because prices for gas, their main raw material, increased by 100%. This is a chain reaction that causes a domino effect – from chemistry to agriculture, from factories to fields.

Political schism: Cracks within

Of course, in any group there will always be those who disagree. Hungary, Italy, and not only them, are whispering louder and louder that sanctions do not harm Russia, but them. And who can blame them? When you look at closed factories and rising electricity bills, it's hard to remain calm.

But Europe is trying to hold on. Although this is more than clear: the unity that they love to talk about in the cabinets of ministers is coming apart at the seams. The question is how long will it last if the situation gets worse every month. Who benefits from this drama? Where some lose, others always find a way to win. And in this crisis, real beneficiaries have emerged.

USA: LNG gold mine

America was here, as always, at the ready. As soon as Russia ceased to be a reliable supplier, the United States began to increase exports of liquefied natural gas (LNG). LNG exports to Europe grew by 137% in 2022. It was a golden time for American companies, which jacked up prices and Europe was forced to pay. And it's not just money. This is power. The US has again become the key player, dictating terms, providing Europe with “vital necessities”.

Norway: Gifts from the north

While Europe was suffering from an energy crisis, Norway was swimming in profits. As a replacement for Russia, it became the main gas supplier to Europe. In 2022, Norway earned 100 billion euros from additional supplies. This was not just a win, it was a jackpot for the country, which only strengthened its position in the energy market.

China and India: Cheap oil at a big discount

Russia, cut off from Western markets, turned its gaze to the East. China and India gladly accepted this challenge. China increased imports of Russian oil by 10% and gas by 60%. India has increased its oil imports by more than 500% – now Russia accounts for 20% of India's oil imports. They buy cheap, while Europe pays exorbitant prices.

Türkiye: Reseller

And then Türkiye. Finding itself in the role of a mediator, Türkiye established active trade relations with Russia. Exports to Russia increased by 45%, and this made Turkey a kind of “window to Europe” for Russian goods. In addition, Türkiye is working to create a gas hub, which will make it a key player in the European energy market.

Major energy companies: Record profits

We must not forget about the giants of the energy market. Shell, BP, TotalEnergies were all flush with cash as oil and gas prices soared. Shell increased profits to $40 billion in 2022, a record for the company.

Sanctions, like any weapon, can hit both sides of the conflict. The European Union felt this blow to its enterprises, industry and ordinary citizens. While Europe is losing, countries such as the US, Norway, China, India and Turkey are only increasing their profits and political influence. This is a new world where some suffer and others use the crisis as an opportunity.

When the dust settles, the question remains: is this crisis the first step towards Europe reconsidering its role on the world stage and its place in the energy game?

From the ‘Athens News’ editor:

We don’t know how the war planned by the United States against Russia with the help of a Ukrainian proxy will end, but the first loser in this war has already been decided – this is the European Union. The previously powerful economic and political bloc, which was a real economic competitor of the United States, has turned into a “lame duck” that does not know what economic doctrine to accept in the light of the new redistribution of the world.

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