Even if they had done it on purpose, the Europeans would not have been able to create an economic and financial storm perfect like the current one. After decades of growth and technological innovation, we have plunged back into the seventies: galloping inflation, war in some strategic commodity producing countries, falling real wages, slowing economic growth, rising interest rates and turmoil in the business arena. Only the Red Brigades, the IRA, the ETA and the military conscription in the US for the Vietnam War are missing to obtain perfect historical de-ja-vu.
In the seventies two wars ended a very long period of growth and prosperity, very similar to what we have experienced in the last thirty years. The war of the Yom Kippur of 1973 and that between Iraq and Iran of 1980. Both caused a contraction in the supply of oil which caused a sudden increase in prices. In the 1970s, however, the importing countries had no power over the producing countries. Today the decision to stop buying oil and natural gas from Russia was taken by us Europeans. Why this decision is important? Let’s see it.
The embargo of 1973 which caused oil prices to quadruple almost overnight was a worldwide event, everyone suffered and therefore had to run for cover using international organizations such as the Monetary Fund. Following the soaring dollar revenue in the balance of payments of oil-producing countries, the IMF began laundering petrodollars, channeling this liquidity into the Western financial system. THE petrol dollars they supported the American and Western economies through mainly financial investments.
Today the situation is completely different. Emerging countries like the China, India and a good chunk of the African continent does not participate in the embargo and buys Russian oil and gas in rubles at preferential prices, established by bilateral contracts. Thanks to fracking, the United States they are once again a net exporter of oil and natural gas, and therefore benefit from the price increase, despite participating in the sanctions. The sudden surge in European energy demand was positive for the United States, absorbing the increase in production capacity that began in 2017 and scheduled to meet the future rise in Asian demand. There Russia, as it happened in the seventies with the Arab oil producing countries, it found itself having to manage a sudden increase in energy revenues in the balance of payment– and already the contraction of European demand has not weakened its finances thanks to the dizzying rise in prices -, revenue apparently largely in rubles. But he certainly won’t come and recycle them from us.
Moral, the situation in Europe is as critical as it was in the 1970s, but not in the rest of the world, and this criticality is highlighted by the return of galloping inflation. In the United States, on the other hand, the surge in prices is due to the sustained growth of domestic demand in post Covid. Just to understand, the price of gasoline in the United States is half of what we pay in Europe, the wages of unskilled workers have increased since 2019 and continue to rise to attract workforce, the supply of work continues to grow. Rebalancing the US economy will be easier because it essentially is a related internal matterrebalancing the European economy is much more complicated due to dependence on foreign oil and gas.
The Americans knew who to launch the campaign sanctions against Russia would it have weakened us Europeans and strengthened its energy economy? It is clear that the answer is positive, Washington would never have made such a bad decision for its economy. We, on the other hand, do.
Now that the war in Ukraine is becoming a long-term reality and that filling up with petrol costs as much as a low cost plane ticket, we realize that we are the ones who are worse off than everyone else. Even the policy of arming Ukraine is more positive for the United States, where the epicenter of the Western war industry is located, and hopes that governments will continue to ship arms and armaments by emptying military warehouses and in doing so making room for purchase. of new, more modern and deadly weapons. Another pillar of the sanctions policy the embargo on all Russian productsand so not only did the Old Continent’s access to energy sources at competitive prices close, with a swipe of the sponge the Russian market for our exporters and for the industry also disappeared. turismo. Voilà, the energy crisis and the return to the seventies in Europe. And Russia? After the initial shock, the economy seems to be recovering, also thanks to the soaring energy prices.
One question: what will happen when the war is over? Assuming Putin loses, what do our European leaders think will happen in Russia? A democratic election? Or the chaos we saw in the 1990s. Whether Putin loses or wins that cheap oil and natural gas we will never see it again! Let us reflect on this point.
The saddest thing is that at the helm of Italy during this foreign policy disaster was the man who saved Europe from the sovereign debt crisis, so it was said. But printing money, it must be said, is much, much easier than earning it.