08.11.2023 17:35 | Monitoring
International Monetary Fund economist Robin Brooks proposes a drastic reduction in the price ceiling for Russian oil and natural gas. This is said to trigger a financial crisis that would collapse Vladimir Putin’s regime and Germany would then have access to cheap natural resources. According to energy analyst Javier Blas, however, it is necessary to take into account the fact that such sanctions will affect us more. According to him, these are a kind of “placebo sanctions” that look good on paper, but are weak and ineffective.
Description: Russian President Vladimir Putin.
Brooks proposed a surprising solution to Europe’s energy crisis on the X network. Germany needs cheap Russian gas. The way to get this gas is said to lie in a regime change in Russia. “Only then can Nord Stream be switched on again,” Brooks is clear.
According to him, the only way to change the regime will be a major financial crisis, which could be triggered by a lower price ceiling for Russian oil and natural gas. “This is in Germany’s best interest,” Brooks asserts.
“I recommend that we aggressively reduce the price ceiling for Russia set by the G7 group. Russia is a one-time pony that finances its economy and invasion of Ukraine through energy exports. If we deprive Russia of money, there is a good chance that it will get into a financial crisis,” Brooks is convinced.
However, Bloomberg energy analyst Javier Blas says that if the current stalemate continues, Germany is more likely to decide to continue doing business with Putin again. “How long will it take for Germany to decide that it only needs point 1 and forget all the other points on the list (just like the US decided in 1995 that it needed the oil that Saddam Hussein produced after all)?” he asks. Blas.
This Blas reaction triggered a split of opinion between the two gentlemen. “It is a mystery to me why you are against Western economic measures against Russia from the beginning. Isn’t lowering the price ceiling within the G7 worth a try, even if it’s not a perfect measure? Isn’t doing something better than doing nothing? Aren’t economic countermeasures better than war?” the economist responded.
However, Blas added that he approves of economic measures and has always approved them, but they must not be ineffective sanctions that look good on paper but hurt us more than Putin. “On the contrary, I have pushed oil sanctions against Russia with ‘shock and awe’ since the first days of the invasion. What I spoke out against (and continue to speak out for) are ineffective placebo sanctions: they are nice, but they don’t achieve anything,” replied Blas.
“I further praised the EU’s 6th sanctions package, which included a complete ban on the use of EU financial, brokerage and shipping services to transport Russian oil. Unfortunately, the EU sanctions that I praised were diluted by the G7 price ceiling,” he is critical of the price ceiling.
According to Blas, he simply does not support such measures that do not reduce Russian monetary income, look good only on paper, but are mainly painful for us and are not thought out in the framework of the overall economic war strategy.
But Brooks insisted that lowering the price cap would reduce Russia’s monetary income. “Reducing the G7 price ceiling will reduce Russian cash receipts. Western ships are at 30% capacity, so Putin will definitely have less income. But here’s my question for you: what do you actually propose as an alternative? You can’t just say nothing works. What alternatives do you propose?” asks Brooks again.
Blas repeats his thesis, which he has been promoting for almost two years. “Full embargo on Russian oil – ‘shock and awe’ in the economic sense to force Putin to the negotiating table. This is my proposal from February 24, 2022,” adds the energy expert.
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author: Jakub Makarovič