Western sanctions led Russia to greatly increase trade with Asia, while devastating Europe’s economy. The US tech war against China is damaging its own industry.
by Renate Bridenthal
Part 4 - Western sanctions on Russia backfire in Europe
By contrast, Germany is facing the most collateral damage from the loss to its markets and the sanctions on energy, notably bringing an end to the supply of cheap Russian gas through the Nord Stream 1 pipeline.
In 2020, U.S. Congress imposed secondary sanctions on banks that processed transactions related to the Nord Stream 1 and 2 pipelines and on ship insurers that serviced them.
When construction of Nord Stream 2 was finished in 2021, Washington imposed new sanctions on insurance and certification companies to keep it from opening.
Finally, both pipelines were sabotaged in an undersea explosion in September 2022.
In 2020, U.S. Congress imposed secondary sanctions on banks that processed transactions related to the Nord Stream 1 and 2 pipelines and on ship insurers that serviced them.
When construction of Nord Stream 2 was finished in 2021, Washington imposed new sanctions on insurance and certification companies to keep it from opening.
Finally, both pipelines were sabotaged in an undersea explosion in September 2022.
As a result, the industries that had made Germany preeminent in Europe, such as steel, chemicals, machinery, and automotives, are suffering from high energy costs and the loss of Russia’s aluminum, titanium, and palladium.
As a consequence, one in four German companies is considering moving production to other countries, amid the energy crisis.
While European nations like Germany and France appear publicly to support U.S. attempts to weaken the Russian government, they are furious at the cost to themselves in the form of lost trade agreements and investment opportunities.
As a consequence, one in four German companies is considering moving production to other countries, amid the energy crisis.
While European nations like Germany and France appear publicly to support U.S. attempts to weaken the Russian government, they are furious at the cost to themselves in the form of lost trade agreements and investment opportunities.
Their unease is compounded by suspicion of U.S. cupidity in substituting its energy sources – like liquified natural gas (LNG), which is several times more expensive – for cheaper Russian ones, and by record U.S. profits from selling more weapons.
Furthermore, the Joe Biden administration’s attempt to re-shore manufacturing through its “Made in America” policy has led U.S. allies to charge that such protectionism violates international trade laws.
In addition to the mounting costs of production due to the higher price of U.S. energy, this could push Europe into relative deindustrialization.
Furthermore, the Joe Biden administration’s attempt to re-shore manufacturing through its “Made in America” policy has led U.S. allies to charge that such protectionism violates international trade laws.
In addition to the mounting costs of production due to the higher price of U.S. energy, this could push Europe into relative deindustrialization.
Some countries have reacted by moving their factories to the U.S. to take advantage of the “Inflation Reduction Act”, which would subsidize a factory in the U.S. by up to $800 million.
A move to the U.S. may save some companies, but will only further deindustrialize Europe.
Another strategy being considered is European protectionism, which may put the trans-Atlantic political alliance on shakier footing.
A move to the U.S. may save some companies, but will only further deindustrialize Europe.
Another strategy being considered is European protectionism, which may put the trans-Atlantic political alliance on shakier footing.
Comments
Post a Comment