Features

Europe will reconcile with Russia, and soon. It can’t afford not to

Sanctions over Ukraine hurt Germany and France far more than anyone else – Moscow included

18 October 2014

9:00 AM

18 October 2014

9:00 AM

After months of escalating tensions over Ukraine and talk of a new cold war, Russia and the West could soon reach a surprising rapprochement. The eurozone economy is suffering badly and sanctions against Russia are partly to blame. Winter is also upon us, and that reminds every-one Vladimir Putin still holds the cards when it comes to supplying gas.

The clincher, though, is that Ukraine is heading towards financial meltdown. Unless an extremely large bailout is delivered soon, there will be a default, sending shockwaves through the global economy. That’s a risk nobody wants to take — least of all Washington, London or Berlin.

Sanctions against Russia were always going to hit western Europe hard. The eurozone did 12 times as much trade with Russia as the United States did last year — that’s one reason Washington’s attitude towards corralling Russia’s economy has been somewhat more gung-ho.

Most big European economies, particularly Germany, only explicitly backed western sanctions after flight MH17 was shot down over Ukrainian airspace in July, killing 298. After that tragedy, which was instantly blamed on Moscow, it was politically impossible to suggest that sanctions might be counterproductive. The result was the biggest clampdown on Russian trade since the Soviet era — mainly targeting energy, defence and financial services companies — and the deterioration of East-West relations to their lowest ebb since the Cold War.

The western economy that’s suffered most, by far, is the largest one in the eurozone. Germany’s manufacturing thoroughbreds have sunk tens of billions of euros into Russian production facilities in recent years. Volkswagen has several full-cycle Russian plants and is the middle-class brand of choice in what will soon be Europe’s largest car market. Siemens is central to the upgrade of Russia’s vast rail network and the specialised manufacturer Liebherr has a big presence too. Numerous ‘Mittelstand’ firms — those are the medium-sized enterprises that account for over half the German economy — have also built lucrative trading links since Russia opened up 20 years ago, selling everything from plaster-board to machine tools. Over 6,000 such of them operate across the country, with 350,000 German jobs directly dependent on Russian trade. And they’re feeling the pinch.

This helps explain why, having grown 0.8 per cent during the first three months of 2014, German GDP shrank 0.2 per cent in the second quarter. The eurozone’s powerhouse is now on the brink of recession. Industrial production dropped 4 per cent in August, the biggest monthly fall since early 2009. Exports were down 5.8 per cent — again, the steepest drop since the Lehman collapse in 2008.

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If German industrialists are quietly angry about ‘America’s sanctions’, French farmers are noisily furious. Moscow’s reciprocal 12-month ban on imported western food, barely affecting US farmers, is causing howls of Gallic protest. A third of the EU’s fresh fruit and vegetable exports were sold in Russia last year, plus a quarter of exported beef. Moscow’s carefully targeted embargo has caused a food glut, driving down European wholesale prices. Mobilising in their usual manner, French farmers have been setting fire to regional tax offices. Combined with German manufacturers, they make a powerful anti-sanctions lobby.

The main reason, though, why East-West sanctions could be dismantled quite quickly is that Ukraine’s economy is imploding, raising the spectre of financial ‘contagion’. In June, the European Bank for Reconstruction and Development forecast Ukrainian GDP would shrink 7 per cent this year.

Last month that forecast was downgraded to a whopping 9 per cent drop, with the EBRD warning of ‘formidable difficulties’ if energy supplies from Russia weren’t fully restored before winter. Gazprom generally supplies over half of Ukraine’s still heavily subsidised gas. But with Moscow and Kiev yet to agree a new price, the tap was turned off in June.

The International Monetary Fund’s existing $17 billion Ukrainian support programme was based on a 5 per cent economic contraction this year and a bounce-back in 2015. Under that scenario, Ukraine’s debt, the IMF argues, remains just about manageable.

But these figures, dating from before the worst of the fighting in eastern Ukraine, don’t consider the destruction of factories and transport infrastructure in Donetsk and Lugansk, together accounting for a sixth of Ukraine’s output. Even if the current patchy ceasefire holds, the damage to roads, railways, utilities and airports will take years to repair.

Unrealistic IMF forecasts unravelled in Greece, resulting in a very disruptive €200 billion debt restructuring, made much worse by earlier delays and denial. That’s why IMF supremo Christine Lagarde has just admitted ‘additional funding’ is needed for Ukraine, while adding it would be ‘rather far-fetched’ to assume the IMF can stump up.

Which brings us to the heart of it. In America, and Europe in particular, there’s barely the money and certainly not the political will to help Ukraine. German voters won’t even stomach backing fellow eurozone members. Congress would pay to arm Kiev against Moscow, but the White House has refused. But that makes US politicians even less likely to pay for anything else — not least because Russia holds several huge Ukrainian bonds, and so non-military money would flow straight to Moscow.

The upcoming rescue package, then — an additional $20 billion or $25 billion — will need both Chinese and (whisper it) Russian money. That’s not going to happen until the West drops its sanctions or gives a very clear commitment to do so, allowing Moscow to do the same. For the reality is that the West — or at least Europe — wants sanctions to end much more badly than Moscow.

Russia has so far avoided recession. The ruble has fallen, but that helps manufacturers and boosts (dollar-denominated) oil revenues. Moscow has a fiscal surplus, minuscule government debt and vast stashed sovereign wealth. Oh, and President Putin’s approval ratings remain sky high.

All this explains why Angela Merkel welcomed the Chinese Premier Li Keqiang to Berlin last week — her third meeting with the Chinese government in six months — as she brokers a Ukrainian bailout and related end to sanctions. The US Secretary of State, John Kerry, has since held talks with his Russian counterpart Sergei Lavrov, prior to a meeting between Ukraine’s President Poroshenko and Vladimir Putin in Milan this week.

So we can expect less belligerence between Russia and the West, and a general calming of the diplomatic atmosphere (not least as US intelligence experts have found it impossible to pin the blame for MH17 on Moscow). The global economy is on a knife edge, and a wind-down of East-West animosity would provide some much-needed good news.

Liam Halligan writes the Economics Agenda column for the Sunday Telegraph.

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Show comments
  • AlexParam

    Regardless of what one thinks of Putin and his regime, the West time and again shows that it fears and dislikes Russia and remains its enemy. In such circumstances why would Russia want to allow the West to continue unabated its practice since twenty years ago of extracting economic wealth from Russia? Stoppages on Western trade are likely to remain although probably not in such a transparent form as foods import embargo.

    Things may change only if the West can really change its attitude to the Russians. But is it capable of doing so?

    • Blindsideflanker

      Typical self loathing rubbish , gosh we are in a stand off with a totalitarian regime there for we have to be in the wrong.

      • global city

        whose this ‘we’? The EU?

        The EU or Russia….best definition of democracy?

        Hmmmm…..

        • http://www.localnlive.co.uk/ heenan73

          Back to school for you …

          • global city

            very occasional curse of predictive text!

      • Paul Greenwood

        Russia is not totalitarian – after all Britain has a State broadcaster funded by taxes and democratic centralism in Whitehall

        • http://www.localnlive.co.uk/ heenan73

          You don’t really know what totalitarianism is, do you?
          CLUE: The BBC is not a good example of it.

          • Paul Greenwood

            I do and Russia is not totalitarian it is authoritarian

          • http://www.localnlive.co.uk/ heenan73

            Russia is not totalitarian because the BBC is a ‘state broadcaster’?
            You’re weird.

          • Paul Greenwood

            State Broadcaster is what it says……6% TV Tax levied on British Citizens is used to fund propaganda to foreigners abroad through BBC World Service although it was originally set up by the Foreign Office and paid for by them

          • http://www.localnlive.co.uk/ heenan73

            Your figures are fiction, your understanding of the licensing system is child-like, and your knowledge of the BBC world service is just embarassing.
            Don’t you have access to wikipedia? Or even facts?

          • Paul Greenwood

            YOU are in the wrong. I know exactly how this is funded and why Hall is asking for more Government money. You are the one with your head stuck in the sand and wholly ignorant of how the BBC World Service is funded

          • http://www.localnlive.co.uk/ heenan73

            On your planet, obviously.
            But, sadly, not on this one.
            I know perfectly well how the world service is funded – and why.
            And how it works.
            And no amount of bluster from you makes any of that relevant.

          • Paul Greenwood

            You never provide anything other than intoxicated retorts

          • http://www.localnlive.co.uk/ heenan73

            Read the thread. Surprise yourself. Learn.
            Then go away and bore someone else.
            I’ll leave you the last word … you obviously need it.
            ‘Bye.

          • Paul Greenwood

            At the start of April the World Service’s funding switched
            from the British Foreign Office to the UK licence-fee payers and to mark
            the occasion Over to You listeners put their questions to the man in
            charge of the World
            Service Peter Horrocks. In the second part of that interview, Rajan
            Datar asks him about how the new funding arrangements have been
            anticipated, and listeners want to know more about the future of
            shortwave, the way the World Service reports African issues, and whether
            there are too many programmes with the word ‘business’ in the title.

            http://www.bbc.co.uk/programmes/p01wgcdy

          • http://www.localnlive.co.uk/ heenan73

            [y-a-w-n]

          • Paul Greenwood

            You have a serious problem in mental capacity. Maybe you should go to the children’s section

          • Paul Greenwood

            I know very well. You in contrast are someone without any cognitive skills

          • http://www.localnlive.co.uk/ heenan73

            Silly boy.

          • Paul Greenwood

            patronising twaddle

      • candice

        if anything british are the biggest problem when it comes to being land grabbers. like 90% of the globe has been invaded by british.

        • http://www.localnlive.co.uk/ heenan73

          So just because British imperialism encircled the world, it’s OK for Russia to do the same? Weird logic.

    • Bob-B

      Putin is continuing the old Russian habit of grabbing territory from its neighbours. Russia grabbed a chunk of Poland in the 18th century and again in 1939 (in alliance with the Nazis), grabbed the Baltic states in 1940, and grabbed all of Eastern Europe in 1944-45. Only if Russia grows out of this habit will it be possible for Europe have good relations with Russia.

      • AlexParam

        Catch 22

      • rtj1211

        We never grabbed anything in our lives did we?? America has never organised coups and installed dictators either…

        A little less of the pot calling the kettle black would be in order……

        • Paul Greenwood

          how did US get Hawaii and Gitmo ?

          • candice

            also diego garcia

        • candice

          who’s land are you in? I believe that belongs to the native Indians.go back to Europe!

      • Anton

        Sorry, I’m russian and I really want to ask these: What about polish invaders in Moscow in the early years of 17 century? What about Sweden agression and Poltava fighting? Are you really sure that our peaceful neighbours preferred to plant dandelions than try to grabbe our lands?

        • Paul Greenwood

          You know history but Britons do not.

          • http://www.localnlive.co.uk/ heenan73

            Previous invasions don’t justify future ones. Really.

          • Paul Greenwood

            Meaningless

      • Paul Greenwood

        Russia, Prussia and Austria partitioned Poland……in 1938 Poland seized part of Czechoslovakia. Poland tried to ethnically-cleanse western Poland in the 1920s, and did so after 1945 when Poland was given 100 mile strip of Germany to compensate for Stalin beinmg given Eastern Poland as Beelarus. Poland seized most of Ukraine in 1920

        • erictheking87

          Enough of these lies and falsing the truth… really Mr. Greenwood, do you think that prorussian version of history won’t be recognised? Maybe read something about ’38 in first place! And about Czechoslovakia’s betrayal during Polish-bolsheviks war! When Poland was fighting for it’s life and non-communism Western Europe Czechosloviaka strook Poland and claimed it’s land. That’s the root of ’38! Ukraine my friend never existed as independent nation before XX century! It was part of Polish-Lithuenian Commonwealth for most of history… And this ‘100 miles strip of Germany’ was actually part of historical Poland… so Poland lost many, many of it’s rightfull territory on the east, just to regain some of it’s historically rightfull territory on the west!
          I know that Americans are ignorants and poorly educated, but to be honest I always was pro-british and thought that Brits are well-educated…. well, now it looks that I made mistake….

          • Paul Greenwood

            Poland was an anti-Semitic Sanacja dictatorship pre-1939 cancelling Jewish passports which caused Germany to expel them as stateless and led directly to Gryznspan murder of Vom Rath in Paris and Reichskristallnacht. Poland seized territory in 1921 before The Curzon Line was designated by Britain.

            It is tiresome to hear self-righteous Polish demands to be regarded as Masters of Central Europe. Poland destroyed the British Empire and will destroy the US Empire

          • erictheking87

            Poland destroyed British Empire??? Stop taking drugs Mr Greenwood ’cause it’s illegal.

          • Paul Greenwood

            There was a British Empire in 1939 and it was gone by 1947

          • erictheking87

            Yeah, and Poland was 4th biggest allied army after Soviets, US and GB, despite fighting in underground most of war, never surrendered to Germans or USSR like France for example.
            GB didin’t fulfill all obligations from its alliance pact with Poland in 1939, and moreover, it betrayed (with US) Poland at Yalta Conference allowing Stalin to put his bolshevic hands on it and thus leaving its ally in darkness of communism for next 50 years.
            And the funny thing about what you write is the fact that if not Polish Air Force pilots who were helping RAF during Battle of Britain, then you probably would write in german right now…
            Battle of Britain was won by very tight margin as many british historicians claim, and this winning tight margin was made by polish pilots. Poland shot down 12% of all Luftwaffe aircrafts during Battle of Britain. Polish #303 Fighter Squadron was the highest scoring RAF Squadron during BoB – they shot down more germans than any british squadron…
            From nature I’m probritish but sometimes the dumbness of some reminds me those ignorant americans…

    • Be Walters

      Why would we, when the old Russian bear is once again trying to shove it’s evil down the throats of people who would rather not be slaves?

  • John Carins

    The EU driven by the US has only itself to blame. As members of the EU superstate the UK meekly surrenders its foreign policy to the EU. Any war of attrition, albeit economic with Russia is not winnable. Putin stands up for Russia and is not going to be pushed around. It’s time to bury the hatchet, lose some face and co-operate with Russia.

    • dalai guevara

      Complete nonsense – who wanted an economic ‘war’? Who is the aggressor? How many journalists die in Russia every year, unreported? Who, if foreign and economic policy was coordinated properly would have no difficulty in responding as a market of 350 million odd people on a per capita GDP that would make Russia blush? Just because we are not no.1 in Europe we do not want to be no.3/4 either? Pathetic little Englanderism.

      • Flower Powerchild

        ‘how many journalists die in Russia every year’

        much much less than in muslim countries, but pointing THAT out woulds be wwacist…

        sometimes i’d like to roughen up John Snow too….

        • Paul Greenwood

          Try Turkish prisons if you want to find journalists

        • candice

          bigger question is why do white people from the stolen west go to countries they are not welcome in?

    • http://www.localnlive.co.uk/ heenan73

      So we should let Russia take back its old empire?

      • John Carins

        A bit late to the debate. The EU is creating its own empire. Expect a reaction. If the Russians are taking back their “empire” then I can’t see how the EU will stop them. The reality is that Putin and the Russians will do what is in Russia’s interest. They are rightfully disappointed in the West and its hypocrisy.

        • http://www.localnlive.co.uk/ heenan73

          The EU doesn’t meet any rational definition of empire; there’s this little thing called ‘choice’. Not to mention democracy and freedom …. I see none of them in Putin’s annexation of Crimea, nor his mercenary-based invasion of Ukraine.
          I agree the west is hypocritical (as is Russia), but if you think that justifies Putin’s behaviour, you must be Russian.

  • Guest

    poor self destructive stupid and dhimmified Europe: already once Russia had to save your dumb backsides from the Nazis, soon to be repeated because now Europe has bent over to the new Nazis. When Europe’s capitals will be burning and beheadings in certain neighbourhoods will become more of a norm, who do you think will have to save your terrorist-appeasing backsides AGAIN?

    And Hamas-loving Britain will come crawling to Israel begging for the Iron Dome defense technology – Britain has already seen 2 beheadings, 7/7, sharia patrol, Trojan Horse, thousands of mass raped young women, vandalising of supermarkets, suicide bombings etc, but apparently all those things will just go away by themselves if you don’t do anything.

    British politicians are traitors to their own, destroyers of their own, yet they have the audacity to tell leaders like Putin or Netanyahu what’s what; at least those 2 are loyal to their people, protect and defend their countries and borders!

    Look at the state of the countries that muslim immigrants come from and ask yourself, is it a coincidence that they are all hellholes? How long until our country looks like that, if certain parts don’t do already.

    Home made missiles will eventually fly into european inner cities, it’s inevitable, then will the Palestinian come and save Britain? LOOL
    No, it will be Russia, and to a certain extend Israel, because they are the ones who have the most experience, and most advanced technology, but why ruin the surprise, soon Hamas-loving brits will see for themselves what it feels like to have rockets raining on your children’s heads day in and day out.

    Stupid Britannia, cowardly Britannia, dhimmified Britannia, you made your bed, now lie in it – on the wrong side since 1948.

    • Andrew Constantine

      If the USSR had not entered into its infamous pact which saw both German
      and Soviet forces invading Poland in 1939, then the outbreak of war in
      September 1939 would presumably not even have taken place. So your claim that Russia (the USSR?) had to save us from the Nazis is not quite so obvious as your post suggests.

      • Bob-B

        The Russians had a certain amount of help from the West – mainly the US – who supplied them with 427,000 motor vehicles, 13 million pairs of winter boots, 5 million tons of food, 2000 locomotives, 11,000 freight wagons, 540,000 tons of rails, among other things. (John Keegan, The Second World War, p.177). They might have struggled a bit without these things.

        • rtj1211

          Agreed. And Hitler might have over-run Stalingrad, Kiev and wherever else had 20 million Russians not laid down their lives….

          • balance_and_reason

            Stalin kind of laid them down for them…remember deserters and backsliders…summary execution by NKVD.

      • Paul Greenwood

        Crap. It was defensive because Admiral Drax visited Moscow but had no negotiating position and Ribbentrop in the room next door did

    • Simon_in_London

      “who do you think will have to save your terrorist-appeasing backsides AGAIN?”

      We’ll have to save ourselves; neither Russia nor China is going to ride in on a white horse to save us like Jan Sobieski. As for the Americans, judging by their past performance in the Balkans they’re more likely to bomb us on behalf of the enemy we’d be fighting. But they’ll call it Humanitarian Intervention, so that’s ok.

    • Innit Bruv

      Is there a full moon tonight?
      Keep taking the tablets,they might still work…

      • Flower Powerchild

        oh look, a dhimmi ^

    • Veronica Lake

      Sadly, he’s right.

    • Mike Barnes

      I read that in a Russian accent. Very entertaining.

    • GraveDave

      I wonder why the nice, helpful, SOVIET UNION suddenly turned on those nasty Nazis.

    • Harryagain

      Before WW2, Stalin had a plan to invade Europe and extend the USSR to Gibraltar.

      Only Hitler with operation Barbarossa forstalled him by attacking him first.

      https://en.wikipedia.org/wiki/Soviet_offensive_plans_controversy

      So the Russians have never been our friends.

      • Flower Powerchild

        muslims are our friends though, you know, how they dance and celebrate the 7/7 attacks, and we give them money and send the NHS to Gaza to bandage injured terrorists – they were handing out candies in Gazan streets when brits got killed!

        No matter how different a russian might be, he’s still closer to us than a muslim!

      • red2black

        So why didn’t the Russians just keep going, rather than halting in Germany?

        • Harryagain

          Because the allies including the USA had a massive military presence in their path.
          And nuclear weapons if necessary.
          Some American generals wanted to continue the war against the USSR after Germany was defeated.

          • red2black

            More likely all sides had had enough in Europe. Perhaps Allied troops would have rebelled if ordered to attack the Russians, or vice-versa. The war against Japan still had to be continued.

  • Gerschwin

    Frack. Frack. Frack.
    Problem solved.

    • Simon_in_London

      Far too easy & sensible to happen!

  • Diggery Whiggery

    What a colossal waste of time this has all been.

    Ukraine is a buffer state and a very necessary one.

    • global city

      It should happily face both ways, as should we.

  • Roger Hudson

    The most sense i’ve read about Europe -Russia relations for months, I just hope Merkel and Cameron ( and that French buffoon ) read it.

    • http://www.localnlive.co.uk/ heenan73

      Can’t beat surrender and appeasement, eh?

  • Bonkim

    I thought I told you so not many weeks back – so what is new?

  • http://twitter.com/#!/DavidWLincoln David W. Lincoln

    There is another oil producer, Saudi Arabia, and they are taking measures into their hands. One way is to weaken her enemies, of which Russia is counted as one, because Putin continues to allow Russian arms merchants to continue business with Assad.

    Well, given Assad & Daesh are on the wrong side of the issue, those who continue to back either are in store for more turbulence, rather than smooth sailing.

    After all, why should Putin continue to run Russia into the ground, because no favours are done to anyone living in Russia, but not in Moscow or St. Petersburg.

  • Simon_in_London

    This is all very ironic considering the neocon stuff eatlier this year about how sanctions would bring Russia to her knees. So the reality is that sanctions are hurting France & Germany and leaving Russia pretty much unscatched – fewer Liebherr refrigerators and French champagne, but I suspect they’ll survive.
    Europe needs to mend fences with Russia, agree a reasonable deal over Ukraine, and resolve to be a lot less of a poodle in future to Victoria Nuland & co.

    • lobotomisedjournalist

      No, of course they are not leaving Russia unscathed – they are biting very deeply into the economy, far, far more deeply than in Europe. The problem is that Russia is not massively indebted, so a contraction in GDP is not so serious. The Russian population can withstand shortage, whereas decadent Europeans cannot even withstand a slight reduction in growth.

      Italy’s economy is on the verge of collapse: 137% of GDP in debt, combined with even slight deflation soon raises that figure, which could set of a bond market sell off. No one can rescue Italy, least of all France, which is also overspending and totally averse to reform. Europe is a debt-addict and it leads to fragility and instability. Russia is debt free, and Russians will eat their boot soles if necessary and still praise their saviour Putin if he frames his ‘fascist threat’ narrative right.

      • Paul Greenwood

        Italy in No3 borrower on earth – it should wash away the Western banking system when it folds

    • Be Walters

      You don’t make deals with Satan. That just encourages more aggression. Eventually, history tells us the only way you finish off a bully is with force.

  • montague_stjohn

    “there will be a default, sending shockwaves through the global economy.” Err. Ukraine’s creditors are mostly Russians.

  • Veronica Lake

    The Ukraine issue has always been a nonsense of the EU’s own making : luring into the Union a huge, useless, mendicant economy that it never had any intention or capacity to finance or defend, all the time being aware of its status & value to Russia as part of its “near abroad” . Russia was offering to pay Ukraine’s tab.(Ongoing)

    What national or continental interest does Ukraine serve?
    Our primary interests are served by working with Putin where we can against common threats. Its not a question of who’s a nice fellow. Idiots.

    • rtj1211

      It’s all about American multinationals you fool. Monsanto, Cargill and the like. It’s called prime Ukrainian agricultural land.

      America is driving this, as it always does.

      And the only intended winner is America……

      • Grace Ironwood

        Re “you fool” comment. You may or may not have wondered why no reply from me. Out of pure generosity I advise you that if you wish to engage in debate or conversation, leave out the abuse.

  • VT

    It takes a Conservative newspaper to tell it as it is in this appalling neocon- and NATO-made Ukrainian debacle. In the meantime, Europe’s lost huge chunks of its reputation around the world, its discredited political elites pursuing utterly irrational, war-mongering policies at the behest of neo-Nazi-loving State Department crazies.

    Let’s not forget that in May 2013, and with Washington’s blessing, that same elite rescinded the EU ban on buying oil from Syria; since June 2013, an undisclosed number of EU countries have been finanicing ISIS and Al Nusra by purchasing Syrian oil from them.

    • Harryagain

      Bashir (and Hussein and Gadaffi) were good guys, running their countries as they need to be run.
      I would have thought that was apparent to the most dopey by now.
      Bush and Blair are responsible for hundreds of thousands of deaths, social turmoil and economic catastrophy.

      • Simon_in_London

        I can’t consider Saddam & Gadaffi ‘good’, they were evil but they may have been necessary. I’m not sure Bashar Assad even counts as evil by Middle Eastern standards.
        Bush & Blair killed hundreds of thousands, but they meant well so that’s all right then, in their own minds at least.

        • Harryagain

          Mean’t well!
          They were after the oil that’s all.
          That pair of buffoons are war criminals.
          Also had an overwhelming desire for fame.
          All the present troubles in the middle East can be laid at their door.
          (I have visited Iraq and Syria, wonderful places prior to all this Western instigated trouble.)

    • Simon_in_London

      “neo-Nazi-loving State Department crazies”

      They don’t really love them (Right Sector et al), it’s more a dirty hook-up than a long term relationship. The Neocons need expendable street fighters to do their dirty work in Ukraine while the fires are burning, but they won’t still love them come the cold morning light.
      They are crazy, though.

  • El_Sid

    Moscow has a fiscal surplus

    Their own forecasts are for a deficit of 0.6% of GDP this year – assuming $100 Brent. Figures vary on the oil price they need to breakeven, most commentators are in the range $105-115 Brent.

  • A Simple Guest

    Baba Vanga
    “Everything will melt away like ice yet the glory of Vladimir , the glory of Russia are the only things that will remain. Russia will not only survive, it will dominate the world” (1979)

  • Flower Powerchild

    trust your european leaders, Europe: Putin is the devil, immigration is enriching and Islam is the religion of peace
    tata Europe

    • GraveDave

      Yes, I thought it was all about ‘the economy stupid’, We need to stop seeing ourselves as the moral policemen of the world, and start putting our needs and people first. As for gays and Ukrainians and others here with a vested interest in p i s s i n g off Putin, while they’re here and one of us, they must see that too.

    • EricHobsbawmtwit

      Unfortunately you’ll never know whether or not Putin is actually the devil. Journalists who try to find out usually end up with a bullet in the neck.

  • JabbaTheCat

    Lolz…Putin apologists and useful idiots out in full force on this one?

    • Mark

      Hey, cool. A talking cat. You don’t see that every day. Talks shite, but still.

  • Phil Hove

    This Ukraine crisis is such a dangerous game, which could easily escalate with disastrous consequences.

    In my view it could have been easily avoided.

    NATO and EU have both prodded the Russian Bear without necessarily thinking through the end game, just like Bush & Co with Blair did in Iraq and Afghanistan.

    This East European incursion was not directly threatening our security until we decided to go against agreements made when the Berlin Wall came down.

    http://www.spectator.co.uk/features/9304652/russias-nato-myth/

    What was the point of going further than mutual beneficial trading partnerships with traditional ex-Russian lands, (for example Kiev was the first East Slavic State
    capital – Kiev Rus – and Crimea was only handed over to Ukraine by
    Khrushchev in 1954).

    It is certainly asking for trouble with Russia psyche if one is going against agreements made as the Berlin Wall came down, that ‘NATO would not move a centimetre to the east’.

    In my view Putin’s strong defensive actions in Ukraine were so predictable, after Georgia and Chechnya .

    We would have been much wiser keeping our noses well out of it since our security was not at stake and the EU MEPs were crazy to stoke the fire by going on the street demonstrations in Kiev last year giving false hopes.

    Now we are thinking of exacerbating the world financial crisis, particularly in EU and a WW 3 scenarios building another Iron Curtain along the Polish/Baltic States line.

  • AJAX

    Liam Halligan’s a good economic reporter, but he’s got a lot of professional vested interest in being a cheerleader for Moscow. As long a Putin sits in the Kremlin Europe & the Anglosphere cannot rest easy with Russia.

  • mikewaller

    If only Lord Halifax had had Halligan and Carins on his team, it would have all turned out so differently.

  • Name withheld

    The USA shafted its allies.

  • balance_and_reason

    Russia is also suffering; the pain must continue, then a good deal done if they behave.

  • EricHobsbawmtwit

    Perhaps it’s time for France and Germany to start relying less on Putin’s Mafia state for their economic well-being?

  • eugah

    The MH-17 massacre may have been a cause for the latest round of sanctions on Russia, but it is by no means the only one. The Minsk agreement requires Russia to stop funding, arming and replenishing rebel forces in the Donbass. Merkel is pretty explicit about Russia being required to work out a mechanism for monitoring the Russian Ukrainian border in order to prevent the movement of men and weapons. These are tougher hurdles to meet than allowing inspectors to visit the MH-17 crash site. And by the way, it was German intelligence that concluded that MH-17 was shot down by the rebels. Perfectly ok to pin that on the Russians. They are their guys.

  • Johnny van D

    Let’s all face it, we, the europeans will suffer the most from the US sanctions that we are forced to lay on russia like puppets on the US string, very sad.

  • Bob

    It is almost the new year, and none of these fears came to pass. How embarrassing. Russia backed down.

  • candice

    Europeans are not even geographically indigenous to anywhere on this entire planet. you white people are straight out AlieNS”””” no land is yours and you dont belong anywhere here.

  • candice

    America is FinisheD”””’

  • Allen Victor Cox

    Why do the West allow themselves to be Drawn into the Meddling,s of US of Slaves surly the west must see US is on a downward slippery slope “The Collapse is Neigh”
    USA are behind the fall of Ukraine? But you think they care They stole 40 Ton of Gold? let alone what they are withholding of Germany,s
    Show the so called Evidence of Russian Missile attack US? you stated you Held?
    As to whom Shot Down MH17? To close to home to produce your made up lies eh?
    And whilst your about it! Explain the Trade Center Odessa Massacre that was witnessed by the world as to what these fascist are capable off! Any Justice for those who perished?
    And Congress wants to send these Maniacs Arm,s
    USA lose what over their demanded sanctions? With their biliousness Attacks of Propagandize against Putin & Russia who were our Allies in last War against Fascists Nazi,s Now we see US Support for this Scum?
    As for Nato it should be Shut down money put towards supporting Greece not Un-winnable War Rhetoric?
    And the West suffers from these ridiculous Sanctions? “Peace Bro”

  • http://www.localnlive.co.uk/ heenan73

    Silly article.
    Doesn’t even address the key issue of how the West can conceivably ‘surrender’ while the Red Army occupies chunks of Ukraine.
    I’m sure the West would love to back down (if a suitable cover story could be found) – that’s been true from day 1, by the way – but wishes and reality aren’t necessarily congruent.

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