Europe’s economy is struggling with many problems, and a significant slowdown: in fact, it still has not recovered from the 2008 crisis. However, as of the beginning of 2022, EU governments and the media began to effectively downplay the Coronavirus pandemic, and almost all restrictions were lifted. In many countries, data has even ceased to be collected (or is not as accurate as in the last two years) on the number of infections. The main topic was the possible incursion of Russia into Ukraine – which American intelligence reported from December 2021. Of course this change of subject was necessary: because inflation started to rise, and along with it the financial situation of most average Europeans began to deteriorate significantly.
Russia is an easy target for such sleight of hand. It has never been considered part of the ‘West.’ Europe has always treated Russia as ‘barbarians.’ This, despite some periods of relatively greater acceptance: after all, Russia was a member of the Holy Alliance (the alliance concluded by Austria, Prussia and Russia on 26 September 1815 in Paris, after the end of the Napoleonic wars). Moreover, there were family ties to consider, as the Romanov dynasty was related to other European monarchies. In its proper form, modern anti-Russian propaganda developed fully after 1917, when the Bolsheviks took power in Russia. At that point, Russia, or rather the form of socialism represented by the nascent USSR, became a threat to European hegemony.
When Boris Yeltsin came to power after the collapse of the USSR, Europe strengthened its cooperation with Russia, because – to put the matter simply – Yeltsin was ready to sell basically everything to the Western capital. It was then that a whole system of (relatively) cheap gas supplies to Europe was created. It was a great opportunity for the economy of the “Old Continent” (which, as a result of the decolonisation process after World War II, lost its importance and became only a minor partner of the USA). Europe then built its economic potential on the supply of these cheap energy resources. This allowed European industry to become competitive.
It is, then, easy to understand why many European leaders in the early 2000s – including Germany’s Merkel, France’s Sarkozy and Italy’s Berlusconi – maintained a close relationship with Russia’s new leader Vladimir Putin (as prime minster since 1999 and president since 2000). Such close economic relations between the EU and Russia were, naturally, a problem for global US hegemony, which had been unquestionable since 1991 (the collapse of the USSR). Therefore, in 2014, the Anglo-Saxon club of the United States and Great Britain lent their support to the overthrow in Ukraine of President Yanukovych. The new government became immediately pro-Western and one of the first decisions was to limit the rights of the ethnic Russian population in Ukraine (which accounts for about 40% of the Ukrainian population), including the removal of Russian as the official language in Ukraine. As a result, an anti-government uprising took place in the Donbass region, and the Donetsk People’s Republic and the Luhansk People’s Republic weres created. Russia itself was also involved in this conflict, and annexed Crimea after a controversial referendum.
This event resulted in the imposition of sanctions on Russia by Western countries and forced European leaders to cool relations with Vladimir Putin. The West also excluded Russia from the “elite” G8 group (today known as the G7 – USA, Canada, Britain, Italy, Germany, France and Japan).
Nevertheless, continental Europe’s relations with Russia returned to normal fairly quickly. This turn of events obviously did not please the United States and Great Britain, who had been training Ukrainian troops for the future war with Russia as part of secret missions since 2014.
In the case of Europe’s corridors of power, a short conflict, entailing the occupation or surrender of Ukraine after a few days/weeks, would have been seen as beneficial. If this happened, the EU could blame its inflation rates on Russia
It is easy to imagine the reasons for the recent escalation in conflict – which I do not like to call a new war, because conflict in Ukraine never really stopped all the time since 2014 – that began on 24 February 2022.
For the US, the long conflict was strategically beneficial, as a result of which Europe will have to completely cut off from Russia (including its gas). Not so, for Europe.
In the case of Europe’s corridors of power, a short conflict, entailing the occupation or surrender of Ukraine after a few days/weeks, would have been seen as beneficial. If this happened, the EU could blame its inflation rates on Russia. At that time, inflation was driven mainly by factors such as corporate greed to make up for losses after two years of the pandemic, which affected demand, increased inflation and disruption of supply chains during lockdowns. It would all be predicated on a return to “business as usual ” with unwavering supplies of gas, oil and coal from Russia.
However, the Anglo-Saxons’ preferred scenario came true. Open hostilities in Ukraine are still ongoing, and in order to save face, the EU is forced to impose further sanctions, which in practice harm it more than Russia. This demonstrates one more, extremely important thing. Europe underestimated the involvement of the Americans in what they considered their “backyard.” Raging inflation, recession and the energy crisis in Europe show the real weakness of Europe as a definitely dependent entity. Samir Amin rightly defined Europe as only the “subaltern allies” of the USA, and not an equivalent entity.
This turn of events is – I think it is safe to say it – a catastrophe for Europe. For, after all, its inhabitants are used to a relatively high standard of living, even though this prosperity has been limited in the last 40 years by neoliberalism. Now the pauperisation is overwhelming.
There is no official data for 2022 yet, but living in Europe I see it with my own eyes every day. We are, however, aware of the following:
“In Britain, 60% of enterprises are on the verge of closing due to higher electricity prices. This is reported by the analytical group Make UK, representing the interests of British industry. 13% of British factories have reduced working hours and 7% are temporarily closing down. Electricity bills have risen by more than 100% compared to last year. In Germany, according to the Leibniz Institute for Economic Research, the number of firms and individuals who went bankrupt in August alone rose 26% compared to the same period last year. The figure was significantly higher than German analysts had forecast. According to experts, during the autumn the number of bankruptcies will only increase.”
The largest European economy, the third largest exporter in the world (after China and the USA), Germany, is in the greatest trouble. Carsten Brzeski, economist at ING Bank and long-time German economic analyst said: “The war in Ukraine puts an end to the German economic business model as we knew it – a model which was mainly based on cheap energy imports and industrial exports into an increasingly globalised world.”
Electricity prices are growing at an alarming rate throughout Europe – for example, in Poland, by about 400% compared to 2021. This causes many companies to close factories or significantly reduce production, because it is simply becoming unprofitable. The largest producer of artificial fertilisers in Lithuania stopped its production due to soaring gas prices. “In the current market situation, most Western fertiliser producers are forced to shut down their factories and Achema is no exception. The record prices of natural gas directly affects the cost of production, and the prices of our fertilisers are becoming uncompetitive in comparison with the production of US and Russian producers,” Ramūnas Miliauskas, CEO of Achema, said.
If it turns out to be a hard winter and the cost of living becomes unbearable, then the situation may change, but so far Europeans are still idealistic that they are a force of good against the “forces of darkness”/Sauron etc.
Of course, the stoppage of production by nitrogen plants does not mean only problems for European farmers next year (from a lack of artificial fertilisers or a huge increase in their prices). The side effect of their production is carbon dioxide, which is necessary in food processing. So, it also means a significant increase in the prices of meat and carbonated drinks in Europe.
A Wall Street Journal article explicitly admitted that there was good news for the US. Author David Uberti writes in the first sentence: “A big winner from the energy crisis in Europe: the US economy.”
Writing further, he notes:
“Battered by skyrocketing gas prices, companies in Europe that make steel, fertilizer and other feedstocks of economic activity are shifting operations to the US, attracted by more stable energy prices and muscular government support. As wild swings in energy prices and persistent supply-chain troubles threaten Europe with what some economists warn could be a new era of deindustrialization, Washington has unveiled a raft of incentives for manufacturing and green energy. The upshot is a playing field increasingly tilted in the US’s favor, executives say, particularly for companies placing bets on projects to make chemicals, batteries and other energy-intensive products.”
The European media is even uniform in its narrative about the Russian-Ukrainian conflict, in which Russia is constantly being demonised. This has important consequences in terms of how it limits the options for diplomacy or negotiations.
The leading theme in our ongoing Western propaganda narrative is that Russia is “isolated” from the rest of the world. From my perspective, it is ‘the West’ (the USA, Canada, Europe, Japan, Australia and New Zealand) that has isolated itself from the rest of the world – if we consider the Global South and its emerging regional powers to be part of the world!
Carsten Brzeski, economist at ING Bank and long-time German economic analyst said: “The war in Ukraine puts an end to the German economic business model as we knew it – a model which was mainly based on cheap energy imports and industrial exports into an increasingly globalised world”
And yet, in a certain sense, this conflict is an achievement of sorts by the West. We have to consider here the effects of the emerging new world order – perhaps a multipolar one, although it is difficult to definitely decide at this stage. In that context, it is possible to argue that this ongoing conflict has consolidated ‘the West’ too.
As is rightly noted by Prof. Prabhat Patnaik:
“The world appears to be on the cusp of a change that the western powers are desperately trying to prevent by taking an ultra-aggressive stance. It is a fear of this possible imminent change, with the decline of western hegemony and the emergence of China and Russia as alternative centres of power, that is binding the western countries together as never before, including even the Scandinavian countries. The change in the stance of the Scandinavian countries, therefore, far from exhibiting Russia’s ultra-aggressiveness, is symptomatic of Western powers’ ultra-aggressiveness in a situation where their hegemons are being threatened because of their being engulfed in a protracted economic crisis.“
However, apart from Sweden and Finland’s willingness to join NATO, the attitude of Switzerland – a country whose neutrality is acceptable on the international stage – seems extraordinary. In February this year, the Swiss government announced that it would join the EU’s sanctions against Russia.
Of course, it is also impossible to ignore the second “winner” of this conflict, next to the United States – i.e. Norway! Many European countries started to buy gas from this Scandinavian country to fill their warehouses. In July 2022, Norway made $13 billion in natural gas sales, an increase of 332.7% over the previous year.
Two more questions remain to be discussed: whether the citizens of European countries in the face of winter, inflation and energy shortages are ready to make such a sacrifice in the name of helping Ukraine, and whether – as journalist Benjamin Norton is trying to suggest in one of his articles – in the face of this crisis, neoliberalism is falling?
In my opinion, first of all, it is necessary to understand that this crisis is the effect of neoliberal policies implemented in Europe (but also in the world with the Washington Consensus) for over 40 years. And yes, neoliberalism is imploding.
However, I am not entirely optimistic about the consequences of this implosion. Because we know from history that the crisis of capitalism in the face of the weakness of communist and socialist forces (and in Europe, such forces are now very weak) is a chance for power to be seized by fascist, fascistic, quasi-fascist, semi-fascist or other ultra-right forces. In the 2022 presidential election in France, Marine Le Pen was once again close to winning the presidency, and her National Rally party won 13 times more seats than in the previous elections (7 in 2017, 89 in 2022). In Sweden, the far-right Sweden Democrats took second place for the first time, ahead of the traditional main centre-right party Moderate. In Italy, a right-wing coalition led by Giorgia Meloni have won a stunning victory in the September 25 elections.
Besides, European governments really have no alternative to neoliberal policies. The idea of each government ultimately comes down to paying the poorest. This is not surprising, as inflation is the easiest way to lower (the value of) the wages of workers under capitalism. This is evidenced by the record gains of oil companies. As reported by The Washington Post:
“BP posted second-quarter profits worth $8.5 billion, its biggest windfall in 14 years. ExxonMobil went one further – it’s $17.9 billion in net income was its largest-ever quarterly profit. US company Chevron, London- based Shell and France’s TotalEnergies also recorded blockbuster results. Put together, these five major companies made $55 billion this past quarter, as hundreds of millions of people around the world bore the brunt of surging prices at the pump. And it’s not just oil and gas – coal, which climate campaigners are desperately seeking to phase out, is surging, too. Glencore, the world’s largest coal shipper, generated record profits in the first half of 2022 and plans to pay out an additional $4.5 billion in dividends and buybacks to shareholders.”
Austerities have become a leitmotif across Europe. The EU recommends only 19°C in apartments in winter. The Spanish “socialist” prime minister during the summer urged people working in offices to “not wear ties,” so that they would not have to use air conditioning. The Polish government came up with the idea to guarantee electricity prices for households at the 2022 level if they do not exceed 2,000 kWh per year. Otherwise, the family will pay for electricity at much higher prices. The pinnacle (ironically) of Thatcherism is the policy of the new British prime minister, Liz Truss. It has announced an aid plan worth £120 billion, which is in fact a huge bailout of private energy companies (because there are only such in Great Britain). It is to consist of guaranteeing prices for two years (which are still 80% higher than a year ago), and the government will subsidise energy producers. That is to say, we are once again look at the traditional neoliberal model of pumping public money to save private businesses.
The culmination of this neoliberal approach are the words of the President of France. Emanuel Macron said “this is the end of the era of abundance.” So, he basically told his citizens: oh well, difficult times are coming, but we can’t do anything about it, that’s your concern!
But are Europeans ready for such a challenge? After all, they were used to the “era of abundance.” In recent weeks, the media has been flooded with information about protests against pauperisation, rising costs of living and inflation. And sometimes, the protesters even demanded the lifting of sanctions against Russia. First, farmers protested, as they were unable to sell their food to Russia (which was a large recipient of European food) due to the sanctions. In Italy, protesters burned their electricity bills, in Germany, Belgium and the Netherlands, people also took to the streets. In the Czech Republic, as many as 70,000 people came to the protest organised by the communists and the far-right (for the small Czech Republic of 10 million, it was a really large demonstration).
Left-wing voices on social media were delighted with this. They have seen it as an “awakening” of Europe and the return of the left to the mainstream. However, it is enough to return to the Czech Republic and remember what ought to be a sobering fact for the socialist left. Two weeks later, the Czech communists organized a protest themselves (without cooperation with the far-right) – it was so small that the media hardly mentioned it.
I am not completely pessimistic, but observing the anti-Russian propaganda fed to European societies, as mentioned earlier, there are some important strategic consequences. As such, it seems that it would be inconceivable to “abandon” Ukraine. Since 2014, the United States has spent millions to promote an anti-Russian narrative in Ukraine and Europe. European propaganda sees the events in Ukraine as a fight for good (the West represented by Ukraine and its victims) and a “monstrous aggressor” Russia. In the Polish public space (i.e. social media, not ‘official’ mass media, of course), there are even Tolkien-like comparisons dehumanising Russians, describing them as “orcs.”
Of course, whether European societies will massively oppose further support for Ukraine and the lifting of sanctions against Russia currently depends mainly on the coming winter. If it turns out to be a hard winter and the cost of living becomes unbearable, then the situation may change, but so far Europeans are still idealistic that they are a force of good against the “forces of darkness”/Sauron etc.
Additionally, this conviction is favoured by the current situation at the battle front. In the face of Russia’s numerous defeats at the front, many Europeans believe that the war is about to end with a stunning victory for Ukraine (and thus for the West). Even Greenpeace activists are protesting demanding an immediate ban on Russian gas imports to Europe (which is not possible, because Europe does not have enough infrastructure in renewable sources to meet its energy needs, and thus the demands of this “green” organisation, if fulfilled, can only trigger a restart in Europe, coal-fired power plants!).
Much also depends on Europe’s politicians and business elites. This crisis is also a clear test of independence. Will they be ready to oppose Washington’s will (which demands continued pressure and sanctions against Russia) or will they want to save themselves from the anger of the citizens? Time will tell.
However, so far both the political and business elites seem stunned by the situation and only realise their weakness towards Big Brother from other side of Atlantic.
Today, Europe is like a confused orphan that the United States throws under a speeding train in defence of its own interests and the desire to maintain an old hegemony.