Impact Of Misconceptions
As Russia launched military operations in Ukraine on February 24 (2022), the Global Community is trying to understand what the US and the European Union (EU) missed in their approach to Russia.
According to an article published in Every Morning Asia portal on February 12, the US made the biggest mistake when it blindly followed the myth of Russian decline. Even though Russia’s economy is comparable to that of Spain or even the American State of Texas in terms of market exchange rates, it is still the second largest economy in Europe, and the sixth largest in the world in terms of purchasing power parity.
Russia still has the financial resources to stay somewhat stable, as Russia’s National Wealth Fund accounted for USD 200 billion in 2021, with foreign currency reserves at USD 650 billion, showing that the country is still far away from the stance of a declining nation. On the other hand, GDP as a macroeconomic measure is often a poor indicator of real geopolitical power, as it has been proven in international relations and political economy.
The EU made the biggest mistake when it did not begin to weaken its independence on Russian gas years ago, by accelerating the growth of Liquefied Natural Gas (LNG) terminal infrastructure on its western shores and securing a vast gas supply network within the European bloc. Spain, for example, is Russian-free when it comes to gas imports. Unfortunately for its European neighbours, it is also EU-free of an energy network once the pipeline meant to transport LNG from Spain to France, and therefore integrated Spain in the European energy network, was put on the deadline.
Even so, the LNG, no matter where it came from, could not replace the huge imports of Russian gas. The US LNG export terminals have reached maximum export capacity, while Qatar and Australia are already producing at full capacity. Meanwhile, Iran is still sanctioned by the same country that now urges other big gas producers to help Europe.
For now, all Brussels and Washington DC can do is hope for a very warm winter in Asia, and stay at the mercy of China to let some of the LNG cargoes waiting to be redirected to Europe, in case President Vladimir Putin decides to turn the tap off.
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