What risks Europe if “Vlad the Mad” invades Ukraine

Suddenly, it seems to have set back decades. Russia assembling troops on the borders of an Eastern state denying any desire to invade, NATO alarming, tension rising, the United States threatening retaliation, the Europeans trying to negotiate in dribs and drabs. Meanwhile, the roar of the engines of planes ferrying troops to Germany and Poland, fighter jets whistling along the eastern borders of the Atlantic Alliance, fleets touching in the Mediterranean and Black Seas.

Vlad the Mad

The game is complex and has geopolitical implications of huge significance, especially for Europe. And it is made even more complex by the fact that Western chancelleries are unable to decipher the attitude of Russian President Vladimir Putin. To put it with the FinancialTimes, they cannot understand if they are facing “Putin the rational” or “Vlad the Crazy”, Vlad the crazy. In the first case, the crisis could be a complex game of chess in which the threat of invasion would be functional to build a new balance between Russia and NATO on the European continent. In the second case, it would be the result of a delirium of omnipotence which could only lead straight to war.

When Americans and Russians shoot each other…

In both cases, in comparison with the United States and Europe, Russia has at least three factors in its favour. The first is that there is no possibility of deploying American troops or vehicles to Ukraine on the table. As United States President Joe Biden said, “When the Americans and the Russians start shooting at each other, it’s a world war.” And this also applies to the rest of the NATO countries. The second is that, despite a certain and very belated reconsolidation, not only are the United States and the European Union playing two different games, but, as was the case at the time of the war in the former Yugoslavia, in the bombardments Libyans and on a thousand other occasions, each of the European countries, in turn, plays its own which may coincide in all, in part or not at all with that of its allies. The third factor, closely related to the second, is the fact that, more or less, most countries of the old continent depend on Russian supplies of raw materials.

A game upside down

If the crisis were to precipitate, the only certainty is that the United States and the European Union would trigger a system of very severe sanctions aimed not only at Russian interests, but at the personal interests of crucial figures in power in Moscow and perhaps Putin himself. Inevitably, the Kremlin would apply counter-sanctions, in a bullish game that could come at a high cost to both sides, but in which the EU is at a disadvantage.

The energy you give me

Europe’s greatest weakness is of course energy: around 40% of natural gas and 30% of crude oil imported into the EU comes from Russia. While efforts are being made to find immediate alternatives such as liquid gas shipments from Persian Gulf countries or the United States, the truth is that Russian gas is vital for Europe. Now more than ever the resource is scarce, prices are skyrocketing and each nation’s strategic reserves are at an all time low. A conflict would lead to a reduction in supplies and a further rise in the price which could reach the 180 euros per megawatt known last December. European economies would be in for sure trouble and if power rationing were to be carried out, last year’s growth rates would quickly become a distant memory. The only consoling news is that, no matter how rushed relations between the two blocs, Russia would never completely turn off the taps, both because it would deprive itself of its main source of income, and because it would too big a step too. for Putin, at least the “rational”.

The world is not made of gas

But it’s not just gas that provides Moscow with an additional weapon. From Russia, EU countries import all types of raw materials, from palladium, used for catalytic converters, to titanium, on which Airbus and the entire aerospace industry depend, then vanadium, aluminium, nickel, copper, platinum. , molybdenum. To complicate matters further, the exposure of European banks to both Russia and Ukraine, $60 billion in the former, $23 billion in the latter. And finally there are exports, which however represent perhaps the least critical element. Over the past five years, after the Crimean crisis, Russia’s share in the total exports of major European countries has fallen, stabilizing below 2%. Direct (non-financial) investments have suffered a similar fate, now worth $6 billion, less than half of a decade ago.

Threatened growth

As the President of the ECB, Christine Lagarde, reminded us, the precipitation of the crisis could have an impact on the prospects for European growth, already reduced by the rise in energy prices and the shortage of containers available on the main routes to and from Asia, pushing prices even higher. This would be an additional shock that would hit the European economy in the difficult transition from the policy of “whatever it takes” to that of a return to normality. A very complicated course to manage for the ECB itself, whose movements will have to be calibrated with extreme caution both in terms of timing and intensity. A task that has been compared by some to landing a giant jumbo jet safely in a storm. If Vlad the Mad ordered his tanks to cross the border and head towards Kiev, the risk of a failed landing and going off the runway would increase significantly.

Mary I. Bruner