Vladimir
Putin has been silent lately. But if anyone thought he had been shamed
into defeat or marginalized, then think again.
In the
last few hours Russia has announced two key strategic decisions that show
they are not going to stand idly by while their economy and way of life are
destroyed by Western forces.
First, presumably
in response to stiff sanctions leveled by the United States and the European
Union after the annexation of Crimea last year, Russia has cut off 60% of
Europe’s gas supplies right in the middle of winter. This has caused an
almost immediate crisis in six European nations that have seen a complete
cut-off to their supplies – Bulgaria, Greece, Macedonia, Romania,
Croatia and Turkey – with more to follow. According to reports via Zero Hedge, the effect has been almost instantaneous.
Without
Russia residents across Europe have no way of staying warm.
Vladimir Putin ordered the Russian state energy giant Gazprom to cut
supplies to and through Ukraine amid
accusations, according to The Daily Mail, that its neighbor has
been siphoning off and stealing Russian gas. Due to these “transit risks for European consumers in the territory
of Ukraine,” Gazprom cut gas exports to Europe by 60%,
plunging the continent into an energy crisis “within hours.” Perhaps
explaining the explosion higher in NatGas prices (and oil) today, gas
companies in Ukraine confirmed that Russia had cut off supply; and six countries reported a complete shut-off of Russian
gas. The EU raged that the sudden cut-off to some of its member
countries was “completely unacceptable,” but Gazprom CEO Alexey
Miller later added that Russia
plans to shift all its natural gas flows crossing Ukraine to a route via
Turkey; and Russian Energy Minister Alexander Novak
stated unequivocally, “the decision has been made.”
Russia
has taken similar steps in the past because of non-payment but turned the gas
supplies back on once deals were reached.
This
time, however, there won’t be a deal.
Russia
says it will deliver the gas through Turkey, and then it’s up to the European
Union to build the infrastructure that will transport it to the rest of the
continent, as noted by Bloomberg.
“Transit
risks for European consumers on the territory of Ukraine remain,” Miller said
in an e-mailed statement. “There are no other options” except for the planned
Turkish Stream link, he said.
“We have informed our European partners, and now it is up to them to
put in place the necessary infrastructure starting from the Turkish-Greek
border,” Miller said.
…
“The
decision has been made,” Novak said. “We are diversifying and eliminating the
risks of unreliable countries that caused problems in past years, including
for European consumers.”
Europe,
of course, does not have the necessary infrastructure in place for this, and
Vladimir Putin most certainly knew this before he shut off the spigots.
Second,
and perhaps even more significant than the overt move to show Europe who’s
boss, Putin took a direct shot at the United States.
Also
from Zero Hedge:
As Bloomberg reports Russia “may unseal its $88 billion Reserve Fund and convert
some of its foreign-currency holdings into rubles, the latest government
effort to prop up an economy veering into its worst slump since 2009.”
These
are dollars which Russia would have otherwise recycled into US denominated
assets. Instead, Russia will purchase even more Rubles and use the proceeds
for FX and economic stabilization purposes.
“Together with the central bank, we are selling a part of our
foreign-currency reserves,” Finance Minister Anton Siluanov said in Moscow
today. “We’ll get rubles and place them in deposits for banks, giving
liquidity to the economy.”
Call it
less than amicable divorce, call it what you will: what it is, is Russia
violently leaving the ranks of countries that exchange crude for US paper.
What we
are seeing are the strategic moves that will eventually catalyze the next great war. And make no mistake, this is exactly
what’s in store for the world should these escalations continue.
