“Euro as dollar”. New European realities without Russian gas

MOSCOW, September 6 – PRIME, Oleg Krivoshapov. The cessation of Russian gas supplies via Nord Stream did not come as a surprise to Europe and Western countries in general. However, the reaction of the markets was much more emotional.

SHARP GROWTH AGAIN

The exchange price of natural gas in Europe in terms of the Title Transfer Facility (TTF) hub index at the opening of trading on September 5, according to the London Intercontinental Exchange (ICE), once again rose above the mark corresponding to $ 2,900 per thousand cubic meters, the growth exceeded 30% .

This happened despite the fact that EU countries filled their underground gas storages (UGS) by an average of 80% (in Germany, the figure reached 86%) long before the deadline set for this year (November 1).

However, another sharp rise in gas prices on the spot market in Europe was not the only unpleasant event for the European community after the suspension by Gazprom of supplies via the Nord Stream pipeline, which he announced on the evening of September 2. Observers in different countries admitted the possibility of such a development of events, and the Western media emphasized that all Russian cuts in supplies to Europe via Nord Stream, regardless of the stated reasons, have a purely political basis. For its part, Gazprom, whenever it cut pipeline supplies, cited technical risks that it saw no way to eliminate due to the anti-Russian sanctions of the “collective West” that hinder reliable maintenance practices for specialized equipment.

And on September 5, the press secretary of the President of Russia, Dmitry Peskov, told reporters: “Problems in pumping arose due to the sanctions imposed against our country and against a number of companies by Western states, including Germany and Great Britain. Other reasons that would lead to problems with pumping , does not exist”.

NOT ONLY PRICES

Nevertheless, the reaction of the markets to the cessation of supplies turned out to be so nervous, as if it came as a complete surprise to Europe. The cessation of pumping not only caused a strong increase in the price of gas on the spot market, but also led to a sharp reduction in the price of the euro and futures for shares of European companies.

The actions of the Russian side signal that “businesses and households are facing a long cold winter,” Bloomberg lamented. The American agency noted that European countries announced plans over the weekend to overcome the crisis in the cost of living and the sharp rise in energy prices.

The single European currency on the morning of September 5 fell by 0.7% to 98.80 US cents, which is the lowest since 2002. Futures for the Euro Stoxx 50 fell 3.3%. German government bond futures rose 80 points to 149.13 ahead of the European Central Bank (ECB) meeting this week.

Expectations are growing that the ECB will raise rates by 75 basis points as early as September 8th. However, such a decision, as Bloomberg noted, will not be easy for Christine Lagarde and her colleagues: the problem of high inflation in the eurozone is now superimposed on recession expectations.

GERMANY IS NUMBER ONE

The German authorities, reacting to the situation, unveiled a plan to help the economy in the amount of about 65 billion euros (or 65 billion US dollars, now it’s the same thing). Finland has said it intends to stabilize the electricity market with a $10 billion program, while Sweden has announced $23 billion in emergency support for its utilities.

However, such measures mean the risk of higher inflation.

At the same time, even before the announcement by the authorities of the aforementioned countries, Goldman Sachs analysts lowered their forecasts for the euro to 97 cents for the next three months from 99 cents, Bloomberg noted, citing an investment bank message dated September 2.

“While the euro area has made notable progress in stockpiling gas for the coming winter, this has come at the expense of a significant weakening in demand driven by production cuts and does not entirely eliminate the risk of a more severe winter disruption,” the statement said.

Even if natural gas storages in Germany are filled with 95% of the “blue fuel” in the country, there will be enough for a maximum of a couple of months, if supplies from Russia do not resume. This was stated by Klaus Müller, head of the German Federal Network Agency (Bundesnetzagentur, BNetzA), which acts as an energy regulator.

“WHAT TO DO” ​​AND “Who’s to blame”

“The position of Gazprom, the position of Russia now, in my opinion, can be described by the following formula,” says Konstantin Simonov, Director General of the National Energy Security Fund (FNEB). “We are not against gas supplies to the European Union and still believe that gas business with Europe is possible. On our part, there is a desire to sell gas, but we will not solve for the Europeans the tasks that they themselves have come up with, and look for a way out of the traps that Europe has created for itself.”

This, in the expert’s opinion, explains the behavior of Gazprom in the situation with the turbine of the first Nord Stream. “That’s why,” Simonov says. “Because Gazprom points to sanctions. Here, a contract with the British subsidiary has been signed, and in Britain, violating sanctions is a criminal offense. “Let them “resolve” their own sanctions. That is, if sanctions interfere with supplies, Gazprom declares a technical force majeure.”

Vasily Koltashov, head of the Center for Political Economy Research at the New Society Institute, speaking about changes in the economies of the EU and the US, which are reflected, among other things, in the dynamics of currencies, notes: “The relative stability of the American economy against the background of the situation in the UK and the EU indicates that that part European business, which abandoned the Russian market, “set up” the European economy and launched processes of destruction in it, creating conditions for the flow of capital to the United States. The expert recalls that liquefied natural gas (LNG) from the United States is supplied to Europe at much higher prices than from Russia. Ultimately, it is beneficial for the Americans that the EU remains in this situation, Koltashov concludes.

“That is, there is an intense robbery of the EU, and here one can not only fix the fact that the sanctions work in the sense that they have a bad effect on Western economies, but also the fact that the United States still got its booty in this game,” – sums up the expert.