playing chess with a pigeon - I mean Putin!

This week has not finished yet, but it has already brought some interesting news from the political and business fields. Whilst everyone is keeping eye on the situation in Gaza – the European Union under the enormous pressure from the Netherlands, decided to make radical changes in EU-Russian relations. To be frank, I was shocked to hear the number of sanctions that was implemented by the EU! Of course I knew, after the tragedy where so many innocent people were killed (mostly Dutch residents) in eastern Ukraine - something will be done to stop Russia from supporting the rebels. However, even having no specific expectations from the EU, the news about the sanctions has literally raised my eyebrows!  On that day, once again my theory that says “there is nothing that is not humanly possible” was confirmed in Brussels!

Unsurprisingly, my mind had two completely different reflections on that issue!

One side of me which is mainly based on business feelings said the following things;

Gosh, Europe isn’t ready yet for such a drastic move toward Russia! Almost the entire EU pretty much depends on Russian gas,, and what is more, as the figure shows in some cases, gas pipes from Russian supply hundred per cent of gas to countries such as: Lithuania, Estonia, Finland and Latvia! Someone could say, yes, but these countries don’t have an impact on the European core – maybe that’s right but my sense tells me that this could be a good element of prolonged debate! But what about Austria where the number almost exceeds 60%, Poland 59%? Arguably, as it stands now, Europeans don’t feel the impact but that is about to change in a few months time! Eurpean countries do not depend on Russian gas in the summer, but they do refill their storage facilities with it then. But yet the $292 bilion’s worth trade market ( in 2013) comprises other areas where money flows between two economies. One of them is undoubtedly the financial sector. Only French banks lent Russia c.$49bln in 2013. Italy c.$29bln, Austria c.$21bln and so on. Aforementioned examples are only a drop in the ocean. Although, they are already alarming my vision about how the European economy, slowly bouncing back from the financial crisis, would adopt to new reality. In theory, the sanctions would explicitly worsen the stabilisation process! Luckily, that doesn’t translate to anything at the moment, as this is only my rhetorical assumption.  Having said that I meant to wrap up this part of my perception of how I see the situation from my business point, but I decided to briefly add additional sentences,  because while I’ve been writing this post, new information related this issue appeared online.

Apparently, Angela Merkel has been working behind the scenes directly with Vladimir Putin on a secret plan to broker a peaceful solution over the Ukraine. As a part of the deal Russia would compensate Ukraine with a billion dollar package for the historic rent it used to pay for stationing its fleets in the Crimea and at the port of Sevastopol on the Black sea. Until Crimea voted for independence in March, Russia paid rent to the Ukraine for the use of the port, vital to Russia’s access to the Mediterranean. Lastly, Ukraine would be offered a new long-term agreement with Russia’s Gazprom, the giant gas supplier, for future supplies and pricing. As it stands now, there is no deal in place, thus Ukraine’s gas supplies are running low and are likely to run out before the winter, spelling economic and social ruin for the country.

Angela – Ich liebe dich and I don’t care what others think

And of course there is part of me with more human elements that essentially supports the recent EU decision! Furthermore, I wish to see the EU putting almost enormous pressure on Putin so he would end up in a situation where people in Russia would demand for him to resign from the presidency! However, practically this is not going to happen anytime soon! Hence my support for Merkel’s secret plan, which involves negotiating new deals with Putin. Hypothetically speaking, in consequence of that talk, Europe together with Ukraine could get back on the right track and think about the upcoming “warm winter”!

Bottom line – if the EU has already started playing a taught game with the almighty gas supplier from far East, maybe it’s time to immediately invest in the fuel of the future which at the moment is shale gas! That would help Europe to reduce reliance on Russia! I know, eco-friendly supporters would burn me for that statement, but Hey! Oil-and-gas exports make up 70% of Russia’s $515 billion annual exports and 52% of the federal budget, according to America’s Energy Information Administration so if we have already joined the game, let’s make it even more interesting! No pain, no game!