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Azerbaijan: Energy, reforms, COVID-19 and optimism

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When Azerbaijan became the elected member of the United Nations Security Council in 2012-2013 for the first time in its independent history the achievement may have seemed surreal for this small country in the South Caucasus region. However, it was a long road for Azerbaijan to having overcome many imponderables along its way to make it to the top. Today Azerbaijan has managed to establish itself as an energy state, but not only the mere exporter of the crude, but also as the exporter of energy security. Azerbaijan is active on many international fronts and its trust on multilateralism, balanced and pragmatist foreign policy has earned it many friends and strengthened its partnerships.This piece aims to explore some important aspects of Azerbaijan’s current development, focusing first and foremost on energy and navigating from there to touching upon the reforms, then covering the country’s battle with COVID-19, alongside offering optimism from the bleak picture created by the pandemics.

Energy

Since the inception of its independence Azerbaijan has built reliable partnerships not only within its neighbourhood, but also with the EU, the U.S. and other countries in the West as well as East. Azerbaijan’s multi-vectored and pragmatic foreign policy, which is also very well aligned with its national (including economic) interests enabled it to build equally strong, well-thought and balanced relations with all partners. The only exception from this list is the neighboring Armenia, with whom Azerbaijan has no relations due to the existence of unresolved conflict over Azerbaijan’s Nagorno-Karabakh region. Azerbaijan’ s successful model of collaboration with its western partners has begot its ever-evolving energy cooperation with Europe. Together with some large multinational corporations that are its international partners in the West, Azerbaijan has established a successful model of energy cooperation through the construction of the Baku-Tbilisi-Ceyhan and the Baku-Tbilisi-Erzurum oil and gas pipelines—both of which transport hydrocarbons extracted from the Caspian Sea to international markets. It is on the cusp of commencement of the multimillion megaproject – the Southern Gas Corridor that stands as a valuable contribution to Europe’s energy security by not only being a mere provider of crude energy, but also by ensuring diversification of sources and routes. Azerbaijan’s energy strategy thus, during the last 25 years aimed at contributing to stability, cooperation and mutually beneficial partnerships in its neighborhood and beyond.The revenues acquired from Azerbaijan’s hydrocarbon resources have been channeled to the socio-economic development of the country; as a result, every aspect of Azerbaijan’s statehood has flourished.

Azerbaijan’s trajectory of becoming an “energy state” could be considered to be rather natural and therefore linear. The country became the motherland of the first industrially drilled oil well in the world in 1846. In 1899Azerbaijanwas the world frontrunner in oil production and refining and provided the half of oil production volume. It provided 75% of all fuel for the tanks, aircrafts and all sorts of artillery of the Soviet Army during the World War II in the fight against fascism. Azerbaijan has managed to become self-sufficient and economically independent state by virtue of its oil and gas projects upon the signature of the “Contract of Century” in 1994, despite the fact that it also had to deal with the occupation of its territories and bear the socio-economic burden of large army of refugee and IDP population created in the consequence of Armenia-Azerbaijan conflict. Its reliance on oil should therefore come as natural escape to deal with variety of challenges to its statehood.

Beyond oil, the weight of natural gas, which is a low carbon energy source is lately increasing, including in Azerbaijan, in the overall global energy balance. The growing role of natural gas in the 21st century has increased the importance of issues related to diversification of sources and routes as well as energy security. Azerbaijan, which has made its name largely as an oil country, has been working intensively to build international partnerships towards exploration of the country’s gas resources.

The estimated gas reserves of the country are 2,6 trillion cubic meters. The existing Baku-Tbilisi-Erzurum gas pipeline did not suffice for the exploration of these fields and transportation of large production volumes. The necessity to explore these reserves and turn them into a strategic commodity for energy security of a broader region begot the strategic project such as the Southern Gas Corridor.

Thus, the Southern Gas Corridor project, initiated in 2013 and inaugurated in May, 2018, has become an important chain of energy security, economic development and global partnership. This Corridor of 3500 km length consists of four integral parts – “Shah Deniz-2” project, Southern Caucasus Pipeline Extension (SCPX), Trans Anatolian Pipeline (TANAP), Trans Adriatic Pipeline (TAP). The significance of this project is also enhanced due to fact that it is the first tangible megaproject existing in Europe that unites all components of energy security. It involves close cooperation of seven nations – Azerbaijan, Georgia, Turkey, Greece, Bulgaria, Albania and Italy, participation of numbers of international oil and gas companies as well as the support of major financial institutions, like the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and Asian Development Bank (ADB).Together with its partners and through the Southern Gas Corridor, Azerbaijan is working towards the creation of European gas market that envisages competitiveness and diversification of sources and routes. This project requires solid partnership, continuous political and donor support.

In the spirit of this cooperation and respect for its commitments, Azerbaijan’s priority is to deliver first gas to Europe in 2020. Strategic importance of the Southern Gas Corridor is not only confined to Azerbaijan and the countries involved. This megaproject has the potential to expand to Balkans, Central and Western Europe as well, to attract new supplier, transit and consumer countries. BRUA project (Bulgaria-Romania-Hungary-Austria gas pipeline), IGB (Interconnector Greece Bulgaria) and IAP pipeline (Ionian Adriatic Pipeline) are the potential interconnecting pipelines that could deliver Shah Deniz gas to other destinations through the Southern Gas Corridor. The completion of the TAP as expected in 2020, will enable the import of about 8,8 billion cubic meters of Azerbaijani gas to Italy, with potential growth capacity of more than 10 billion cubic meters per year.

The works on all four segments of the Southern Gas Corridor project are successfully implemented. The inauguration of TANAP became the bedrock of the Southern Gas Corridor. Turkey is already receiving volumes of gas since the formal inauguration of the Southern Gas Corridor and as the completion of the project as this fall as expected, Europe will also start receiving 10 billion cubic meters of Azerbaijani gas per year. As of June 2020 Turkey is set to receive 6 billion cubic meters of gas. With the onset of the final implementation stage of the Southern Gas Corridor, successful completion of works on TAP become ever more important, since it is an essential element to deliver gas to Europe. With the completion of TAP, Azerbaijan will contribute to the energy security of Italy as well as of the countries in South Eastern Europe and will ensure the diversification of routes and sources and contribute to the de-carbonization efforts of the continent.

The Corridor was built with the real vision so that the future opportunities can also be explored. This is an expandable diversification network with the capacity to expand up to 31 billion cubic meters in SCPX and TANAP and doubling up to 20 billion cubic meters for TAP. It is stated that market demand tests for the Corridor’s possible extension are already being carried out and if conditions are suitable additional gas volumes could reach the EU and South-East Europe already within this decade. Such plans could though be challenged by virtue of the fact that the EU’s energy policies maybe changing in a long-term future with the adoption of the “Green Deal” which sets the stage for Europe’s becoming carbon-neutral by 2050. With EBRD becoming a “climate bank” and mostly focusing on public and private “green” investments, it will therefore not invest in any future fossil fuel projects, including gas, starting from 2022. However, it is stated that the situation with already functional projects like the Southern Gas Corridor could be assessed differently. As was voiced by the EU officials themselves, becoming carbon-neutral in fact does not mean that the EU will no longer need natural gas. Natural gas is also said to be a significant back up commodity for the renewables for some time.

The Southern Gas Corridor project also brings social benefits, such as new employment opportunities in the countries through which the Corridor passes, which doubtlessly, has positive impact on the economy of these countries.

The latest, 6th meeting of the Advisory Council on the Southern Gas Corridor that took place on 28 February, 2020 in Baku, offered another valuable opportunity to review the achievements in this field. It was reported that works were progressing at a steady pace and TAP is almost complete (93,5%as of March 2020). Growing number of countries joining the Advisory Council each year also testifies to the increasing interest to the project. Azerbaijan is about to complete this megaproject, which is a great stride towards strengthening Azerbaijan’s regional and global stance as an energy exporter. However, Azerbaijan acts not only as a mere exporter of crude energy, but also as an exporter of energy security by providing alternatives and diversification of routes and sources of energy.As President Ilham Aliyev said during the opening ceremony of the Southern Gas Corridor on May 29, 2018: “We are implementing such giant projects together with our partners and redrawing the energy map of the world”.

Looking beyond oil and Reforms unleashed

Beyond energy, Azerbaijan’s economy has also been witnessing major transformations since 2014. They say global trends are called “global” because of their global ramifications. Azerbaijan had to suffer two currency devaluations in 2015, nevertheless, it was not something that happened only to Azerbaijan. It was the period of economic perturbations in many countries brought by fluctuating oil prices in global oil markets since 2014. However, the country adapted fast by undertaking necessary measures to adjust to the associated challenges. Putting more premium on the development of non-oil sector of the economy and embarking on the development of its renewable energy sector in order to increase the share of renewable energy in overall energy balance of the country are some, however very direct examples of how Azerbaijan manages the challenges associated with fluctuating oil prices.

Before the onset of COVID-19 pandemics and the worldwide lockdowns that negatively affected everyday and economic life, including in Azerbaijan, forecasts on Azerbaijan’s economy was very optimistic and positive. For instance, in October 2019 the then Minister of Economy Shahin Mustafayev declared that “In 2020, real growth in Azerbaijan’s GDP will be three percent, including 1.6. percent for the oil sector and 3.8 percent for the non-oil sector. The growth of the non-oil industry is projected at 8.8. percent, and agriculture – at 4.8 percent”. His successor, a young and western educated former Minister of Taxes Michael Jabbarov later also reiterated this objective with a new and steady commitment to achieve more. Azerbaijan’s unemployment rate has dwindled from 5,02 percent in 2018 to 4,99 percent in 2019 and was projected to further decrease in the years to come. On another front, Azerbaijan aims to increase the share of renewable energy resources in the overall energy consumption balance of the country by 30% till 2030, while currently this number is 18-19%, including hydropower stations. It aims to hold auctions in 2020 in order to attract the best business partners for the development of renewable energy projects (mostly solar and wind) at specifically allocated sites of the country. In January 2020 it has signed implementation agreements of pilot projects on renewable energy with two leading companies of Saudi Arabia and United Arab Amirates – “ACWA Power” and “Masdar”, respectively, and more such undertakings could come in future.

Azerbaijan’s relations with the European Union – one of the biggest economic actors – is also developing dynamically. EU-Azerbaijan Strategic Partnership Agreement, unlike the Association Agreements and Deep and Comprehensive Free Trade Agreements envisaged by the Eastern Partnership (EaP) is based on more equal conditions for partnerships that capitalizes on mutually beneficial partnership for both sides, having thus, eliminated the need for Azerbaijan to one-sidedly comply with EU standards and expectations. The successful conduct of the second round of EU-Azerbaijan Security Dialogue in Baku on 19 December 2019 once again underscored common positions on political, economic, security and energy related issues, while also stressing the importance of continuing to work towards the finalization of EU-Azerbaijan Strategic Partnership Agreement. The open chapters within the Agreement are currently being negotiated and there is a genuine interest on both sides to find a common denominator soon.

Moreover, the country is undergoing a comprehensive reform process in all areas of its statehood and the very nature of the current reforms in all political, economic, administrative strata of Azerbaijan implies the peaceful transition of state management to younger generation that carry more zest and energy alongside also being competent for such a leadership. This does not, however, obviate the fact that older generation are also given their due respect and recognition for their service and their experience are valued and kept at hand’s reach if needed. This evolutionary example of “rejuvenation” of state management while maintaining the synergy of “institutional memory and experience” with “youthfulness and energy” is thought to deliver the needed results in the overall scheme of things.

The reforms have brought number of palpable changes in the state administration, the results of which are already showing in terms of concrete achievements and progress attained in various areas. The leadership of the country has chosen the path of “evolution” in its efforts to adapt the country to ever changing nature of international relations and boost the country’s resilience in the face of evolving global political, socio-economic and other challenges. The snap parliamentary elections held on 9 February was therefore also an important achievement that reshaped the composition of the Parliament and attracted many young parliamentarians. 1314 candidates (independents and representatives of 19 parties) were registered in the race for 125 seats in the Azerbaijani Milli Maclis and 50 per cent of the candidates were under 40 years old. For the first time in the history of independent Azerbaijan a female speaker of the Parliament, Sahiba Gafarova was elected.

COVID-19 and Azerbaijan’s response

Despite the positive picture above, when the scales of global pandemics acquired bigger proportions, Azerbaijan did not also remain immune to the contagion. The news about the first infection case broke on 28 February and the government was swift to close down country’s borders, restrict international and domestic transportation, schools in early March, and all the shopping malls restaurants, etc. gradually. The entire country was put into the lockdown and quarantine was enhanced incrementally as the situation so demanded. From 5 April onwards, people are only allowed to leave their houses for basic needs, like grocery shopping, pharmacy needs, attending the funeral of the closest family member via the SMS permission system. As of this writing there were 1197 coronavirus patients in the country with 351 cured, 13 dead and 833 active patients.

The special Coronavirus Support Fund was established with 19 March 2020 Presidential Decree and the government, and other type of organizations, entrepreneurs were very swift to extend financial support to the Fund. Moreover, the government prepared 9 programs worth 2,5 billion manats – 3 % of the GDP to support the economy and the entrepreneurship as well as social benefits containing compensations for unemployed population as well as educational fee rescue package for socially vulnerable parts of the population in the aftermath of the total lockdown of the economy. The idea is to put the economy back on track as soon as possible and weather the COVID-19 storm with minimum losses.

Obviously, pandemics has affected not only global health but also global economy. Some even compare its magnitude and potential effects to those of the Second World War, while others predict severe economic crisis unseen since 1929-1930. Azerbaijan obviously is not immune to the consequences of the pandemic. Granted, the acute slump in oil prices as a consequence of worldwide lockdowns and therefore suppressed demand for crude, and the failed OPEC+ endeavor to find a common denominator on 6 March, put further strain on the economy, which otherwise was on an upswing before the COVID-19. Azerbaijan’s 2020 budget has envisaged 55 USD per barrel of oil. However, with oil prices in the first two months of the year being above 60 USD and budget proceeds surpassing the expenditures for about 400 million manats in January alone, plus the proceeds from tax and customs services testifies to the increasing income to the state budget. Azerbaijan’s strategic currency reserves are estimated to be over 50 billion USD, which provides extra fiscal security. The overview of the extra financial reserves acquired since beginning of the year in fact enables to compensate for the losses incurred due to the coronavirus induced decline in oil prices.

This is more so, in the light of the recent OPEC+ deal, which pledged to reduce oil production by 9,7 million barrels per day (bpd) in May and June of 2020 (plus 300 thousand barrels the US will cut instead of Mexico’s proposed share), plus voluntary reductions up of 2,7 million bpd by Saudi Arabia, Kuwait and United Arab Amirates planned for April. The US, Canada, Indonesia, Norway and Brazil are thought to also cut their output by 4-5 million bpd, while oil production in Iran, Venezuela and Libya is expected to drop by 2,8 million bpd. as well. In total, 20 million bpd. oil is expected to be withdrawn from the markets, which should help to stabilize the market and maintain balance between supply and demand. Further cuts will be 7,7, million bpd. from July till end 2020 and 5,8 million bpd from January 2021 till April 2022.It is yet to be seen how the deal will operate under the current conditions and in future, but early market reactions have been rather positive.

The ramifications of COVID-19 and its impact on world economy and everyday lives of citizens are yet to be seen as the debate is still ongoing. However, one thing is clear that there will be no winners and losers of this global calamity as everyone is affected. So is Azerbaijan. However, Azerbaijan’s strong standing before the outbreak as an energy and reformer state and swift measures to contain the virus as well as operationalization of state support mechanisms can offer the cause for optimism that the country could quickly return back to normal and continue the works interrupted with greater rigor. There definitely is a political will and hopefully the way will be unhindered soon too.

Dr. Esmira Jafarova is the Board Member of the Center of Analysis of International Relations (AIR Center), Baku, Azerbaijan.

Eastern Europe

Ukraine’s issue may endanger peace in the whole of Europe

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Big challenges ahead, the world may face uncertainty, and unrest, as NATO allies have put forces on standby and sent ships and fighter jets to bolster Europe’s eastern defenses as tensions soar over Russia’s military buildup near Ukraine.

The military alliance’s move, announced on Monday, came as the United Kingdom began withdrawing staff from its embassy in Kyiv as fears persist of an imminent Russian invasion. Britain’s move came after the United States took similar action.

The UK’s foreign office said in a statement that it was pulling out “some embassy staff and dependents” in response to “the growing threat from Russia”.

Tensions in Ukraine are high following Russia’s massing of some 100,000 troops near its neighbor. The West says Moscow, which is angered by the growing relationship between Kyiv and NATO, is preparing to attack Ukraine.

The Kremlin has repeatedly denied planning to make an incursion, but the Russian military already took a chunk of Ukrainian territory when it seized Crimea and backed separatist forces who took control of large parts of eastern Ukraine eight years ago.

UK’s Johnson warns against ‘disastrous’ invasion

Johnson has said that a Russian invasion of Ukraine would be a “disastrous step” by Moscow.

“We need to make it very clear to the Kremlin, to Russia, that that would be a disastrous step,” he told broadcasters, adding an incursion would be a “painful, violent and bloody business”.

Asked whether he thought an invasion was now imminent, Johnson said intelligence was “pretty gloomy on this point”.

“I don’t think it’s by any means inevitable now, I think that sense can still prevail,” he said.

Moscow accuses the West of ‘hysteria’

Moscow has accused the US and its allies of escalating East-West tensions by announcing plans to boost NATO forces in Eastern Europe and evacuate the families of diplomats from the US embassy in Ukraine.

Kremlin spokesman Dmitry Peskov accused the West of spreading information filled with “hysteria” and “laced with lies” and said the probability of military conflict in eastern Ukraine being initiated by the Ukrainian side was higher than ever.

He claimed Kyiv has deployed a large number of troops near the borders of breakaway regions controlled by pro-Russian separatists, indicating it is preparing to attack them. Ukraine has repeatedly denied having any plans to do so.

Although Europe was part of the cold war and many other wars in other parts of the world but was away from any big war on its own soil for several decades. The prosperity and economic development were due to peace and stability in Europe for such a long time. People were feeling safe and secure, and focusing only on economic developments. If any misadventure happened in Europe, the unrest and instability may cost a heavy price.

It is appealed to politicians and decision-makers to avoid any misadventure and avoid any instability in Europe as well as other parts of the world. Wars never benefit humankind, even, winning the war does not mean success absolutely. The cost is on the human lives, either side of the warring countries. The world has been emerged as a global village and may impact whole humanity if any part of the world is disturbed.

Pakistan was the victim of the four-decade-long Afghan war for four decades and suffered heavy losses in the form of precious human lives as well as economic losses. The bitter lesson learned was to stay away from wars. Pakistan has learned this bitter lesson after huge suffering. Hope, the rest of the world may learn from our experience and may avoid any big loss.

It is believed that there is nothing that cannot be resolved through peaceful diplomatic dialogue, as long as there is a strong will for peace. The UN may intervene and play its due role to protect human lives. Hope all concerns may initiate meaningful dialogue and save humanity from big loss. Humankind is the most precious thing in this universe and must be protected at all costs.

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Eastern Europe

Ukraine Lies About 2022 Russian Attack to Hide Dying Economy

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Image source: Wikimedia Commons

Yesterday, Ukraine’s president Zelensky speaking to the Ukrainian Foreign Intelligence Service said “We have learned to contain external threats. It is time to launch an offensive to secure our national interests. We are united in wanting our territory returned immediately”.

Beginning the day after Joe Biden’s inauguration, Ukraine has been complaining of Russia’s troop buildup of over 90,000 men on its border. According to Ukraine’s Zelensky, Russia was prepared to attack at any moment.

In response to this, Ukraine mobilized over ½ its army or over 170,000 troops to the frontline with all the heavy weapons at its disposal accompanying them.

This force was a supposed counter to the Russian invasion army, which again, was just over the border.

In reality, the Russian army staged planned war games near the city of Yelnya, 160 miles (257 kilometers) from the Ukrainian border. You read that right, the Russian army was160 miles away from the Ukrainian border even though every major western publication made it sound like they were already in Kiev.

For the average modern army, that means over a day’s travel just to get to the Ukrainian border. Then another 4-5 hours travel on top of that to where the Ukrainian army is. So much for a surprise attack.

So what is it that Ukraine’s President Zelensky finds so threatening about Russia?

Ukraine’s President Zelensky told visiting US Senators in early June that the country’s military defense against Russia and the completion of the Nord Stream 2 pipeline are inextricably intertwined.

Once the project is completed, Ukraine will be deprived of the funds required to fund defense spending and defend Europe’s eastern border.

“Nord Stream 2 will cut Ukraine off from gas supplies, which will cost us at least USD 3 billion per year.”

Zelensky, always the joker, wants Russia to pay $3 billion per year so he personally can defend Europe from Russia who is paying him.

What a great story. He’s confusing screenwriting fantasy with diplomacy again.

“We won’t be able to pay for the Ukrainian army,” Zelensky observed.

In reality, Ukraine has about one month’s worth of diesel if Kiev ignores Ukraine’s responsibility to its own people to provide a safety net or at least access to necessities like bread or shelter in below-zero weather that’s on its way next month by heavily subsidizing gas and electric costs.

The only thing the government in Kiev is concerned about is losing the $3 billion in transit fees from the country they accuse of attacking them.

Zelensky’s government went as far as demanding fees from Germany and Russia when Nordstream II took over the transit game.

Zelensky’s Ukraine is shuffling Europe, NATO, and the US closer and closer to the line where one mistake in diplomacy, one stupid move by any of Ukraine’s infamous Neanderthal nationalist volunteers, and bang!

The next headline reads- Oops! Thousands dead in Ukraine as the war spreads to Europe.

Joe “Brandon” and club RINO are sleepwalking America right into this level of catastrophe by coddling his pet kleptocracy who’s already stolen billions of US dollars meant as aid.

And why? Why oh-why indeed.

Ukraine is using the supposed Russian attack to renegotiate its unsolvable gas situation.

It’s either this or tells Ukrainians; Oops! We screwed the pooch guys! You’re gonna freeze because we can’t afford gas.

Russia won’t invade because then Russia will be responsible for providing a total civil safety net including gas and electricity for Ukrainian people who otherwise can’t afford it.

Ukraine’s economy is dying. Russia doesn’t plan to foot the bill.

According to Oleg Popenko, the head of the Union of Consumers of Utilities (UCU), high gas costs will prevent most small and medium-sized firms from operating and will force them to close.

According to him, small business owners will be unable to “pull” the payment of 7,000 hryvnias (22,000 rubles) for heating.

As a result, we can anticipate a reduction in the activities of hairdressing salons, bakers, dry cleaners, dental offices, and so on.

They will either have to include the higher-priced communal unit in the pricing of their services, or they will have to close.

All types of businesses, from small dry cleaners to big agricultural holdings, use gas to some extent.

The only ones who benefit from the price increase are Ukrainian gas-producing businesses, which are now raising the price for their users’ dozens of times, resulting in massive profits.

In a recent interview, former President’s Office head Andriy Bogdan forecast a total economic collapse by February of next year.

“Here we still have December – this is the pre-New Year’s, joyous month, when everyone spends money, and somehow with hope:” We’ll pluck something out of the egg-box and live.”

However, this will not be the case in January and February.

“We will dismiss people, our industry will grow, our budget revenues will fall, and our economy will boom based on the price of gas and electricity,” Bogdan added.

“With a further rise in gas prices, the chemical industry and the production of fertilizers are at risk of dying altogether, predicts energy expert Valentin Zemlyansky.

“Industry will die. I am not kidding. The impact of energy prices on the business situation is an inertial process. The business will not close immediately, it will happen in stages. The beginning will be in March 2022, we will see the peak by May-June,”the expert says. Zemlyansky also emphasizes that this happens with a favorable market environment – mineral fertilizers are in demand, they are actively purchased by India, Pakistan, and China, but Ukrainian enterprises cannot afford their production. This was confirmed by the recent suspension of the specialized work of the Odessa Port Plant.

Thus, Ukrainian exporters are squeezed out of world markets. Many of Ukraine’s neighbors that produce similar products (for example, nitrogen fertilizers) receive gas at fixed low prices. In Turkey, for example, the government regulates gas prices for such businesses. It will also be difficult to sell the products that have risen in price on the domestic market due to the falling purchasing power.

Economic analyst Igor Deysan also warns that an increase in fertilizer prices will lead to the abandonment of sowing of many crops and an increase in the price of agricultural products, especially wheat in the 2022-2023 season.

“The cost of gas is largely carried over to the cost of wheat and other crops. If gas prices remain high for a long time, the rise in gas prices can make a significant contribution to the price of wheat,” the expert predicts.

Farmers still need to dry the harvested wheat crop, which also implies significant gas consumption. The next in the cycle of its processing are millers and bakers, who are also going bankrupt due to high gas prices.”

The breadbasket of Europe is empty. Ukraine hasn’t seen this scarcity since the 1932-33 famine they are constantly enshrining. The difference between then and now is this time the government is responsible for all of it.

Bakeries will close down because Ukraine oversold wheat to Turkey and its stocks are empty. Now, the breadbasket nation needs to purchase flour from Turkey.

Even if the grain was there, the gas needed to furnish the bakeries, cities, businesses, homes, hospitals, and government buildings with heat and electricity is not.

Deputy from the “Opposition Platform – For Life” Yuriy Boyko said on the air the other day that high gas prices are ruining bakeries. “I came to a bakery in the Kiev region. A modern enterprise. The bakery today pays for gas seven times more than a year ago. And for electricity twice. And energy carriers play a very significant role in the cost of bread, about 20%. That is, in reality, already today they are forced to either increase the cost of bread, or there will be no bread, ”the deputy said.

The short-term gas forecast for Ukraine looks bleak even though Ukraine has the second-largest proven gas reserves in Europe right behind Russia.

 Former Ukrainian Prime Minister Yulia Tymoshenko, now the leader of the Batkivshchyna party, stated on the Nash TV station on December 22 that Ukraine could furnish itself with gas in three years, but only under particular conditions.

Earlier, the politician said that Ukraine should not wait to purchase Russian gas supplies until the end of the heating season, because there is nowhere else to get it.

According to Tymoshenko, “To enhance gas production in Ukraine, the president’s will is required first and foremost because this should become a strategic and critical program for the development of the state’s energy sector.”

Today, there is no such political will. “Licenses are dispersed on the right and left,” she explained.

Secondly, according to Tymoshenko, non-budget banking investment resources must be directed to Ukrgazvydobuvannya, which also needs to be licensed for all explored deposits. In this case, the ex-prime minister is sure that Ukraine will provide its own gas in 3 years.            

Gas firms promise to reinvest revenues in increased production and modernization, but in the meantime, all other industries and small businesses can relocate across the world.

The Association of Gas Production Companies (AGKU) vehemently rejected proposals to impose state regulation of Ukrainian gas pricing in October, citing the fact that it would “inflict a blow on Ukraine’s image in the world arena and severely harm the European Union.” integration processes”.

Only those Ukrainian oligarchs’ enterprises like those of Rinat Akhmetov, Igor Kolomoisky, and Viktor Pinchuk, who control gas production companies and can send natural gas to their enterprises are affected in this situation.

If Ukraine could produce enough gas tomorrow, its citizens can’t afford high-priced Ukrainian gas and hydrocarbon products. The reserves are 5000 ft. below the surface and the costs of drilling and extraction are quite high.

The only way Biden’s Ukraine can become energy independent is if fuel prices perpetually soar from now on. Ukraine will be able to pay financial obligations like World Bank loans and investors like Hunter Biden.

According to Yuriy Vitrenko, the newly appointed CEO of Ukraine’s energy behemoth Naftogaz, Nord Stream 2 will give Gazprom a dominant position in Europe, giving it significant leverage over Germany and other EU countries.

The only option to avert this scenario is for Ukraine to gain access to gas from other gas-producing countries like Turkmenistan, Kazakhstan, or Azerbaijan, which would gladly use Ukraine’s transit system to sell gas to Europe.

“Germany should ensure that Gazprom cannot obstruct us,” Vitrenko argues.

“They must do so before Nord Stream 2 is completed, while Germany retains the essential leverage.”

The Germans must impose a moratorium until this type of competitive solution is implemented.”

If Russia refuses to cooperate, it will show that Nord Stream 2 is simply a geopolitical weapon aimed at harming Ukraine and monopolizing Europe’s energy markets, according to Vitrenko.”We have a transit system in Ukraine.” Let us compete to bring other gas providers into Europe,” we argue.

Vitrenko believes that once Nord Stream 2 is completed and the present five-year contract expires in 2025, Russian gas will no longer flow via Ukraine.

Arsen Avakov, Ukraine’s Interior Minister, has claimed that Russia may not even complete the current contract.

He warned that Moscow may disrupt Ukraine’s pipeline network to hinder gas transit across the nation and boost the argument for Nord Stream 2.

What’s interesting about this is it brings us right back to a graft-investor scenario reminiscent of Biden-Burisma. The companies feed profits to investors instead of reinvestment into equipment and permitting.

Secondly, Vitrenko wants the most expensive gas in Europe to materialize in his Ukrainian pipe. Caspian Sea gas, like Ukrainian fracked gas, is extremely costly to produce. The average Ukrainian won’t be able to afford it even if it was a possibility.

It’s only now that we get to the part that will make Americans and Europeans equally appalled.

Biden is using gas and oil cost spikes due to his mandated production cuts and the attempt to shutter Nordstream II to support Ukraine.

The more hydrocarbon product costs spike, the less dependent the EU and Ukraine are on Russian gas. This means fewer Russian gas transits to the EU.

As a consequence, Ukraine can profitably frack hydrocarbons and pay oligarchs, political grafts, and international loans. The gas is too expensive for Ukrainian people but investors like Hunter Biden or Amos Hochstein make out like bandits.

The more profitable the expensive EU oil and gas production rigs become, the more diverse gas purchases are and short-term energy diversification and security is achieved through extremely high price energy products.

If energy costs are through the roof, Joe “Brandon” has a clear runway to dismantle the US economy and Democrats will do what Democrats are doing.

Why should this infuriate you? What’s the difference between $1.80 per gallon and $4.00 per gallon gasoline in the US when it’s coming out of your pocket? The difference is Ukraine’s ability to pay its bills. The difference is Ukrainian politicians dealing with their own problems like grownups. The difference is Ukraine starts acting like a partner and less like a petulant child throwing temper tantrums.

How do higher fuel costs transfer to high retail off-the-shelf product costs?

Do high energy costs contribute to runaway inflation?

Now you know.

It is a hard enough choice to bear the cost in lives when a war is worth fighting and can’t be avoided. Ukraine’s Zelensky doesn’t want Donbass back in the fold. Just a few weeks ago, Zelensky described the citizens he claims to want back as “subhuman.”

The Ukrainians, as of January 2022, are not good partners or friends to America. They are unworthy of American support.  Do we want to give them the opportunity to send American kids to war so their oligarchs and our politicians can steal more?

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Eastern Europe

The Stewards of Hate

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A big bear is rattling the open door of his cage.  He cannot abide a NATO spear in his belly.  Hence Valdimir Putin’s demand for Ukraine to remain out of it, and for the military alliance to stop its advance into eastern Europe.

For 72 years until 1991, Ukraine was a republic of the Soviet Union, and before that for centuries an oblast of the Imperial Russian empire.  In 1939, parts belonging to Poland were annexed.

It was during the breakup of Russia following an independence referendum that Ukraine opted to separate.  But NATO is another story.  After the dissolution of the Warsaw Pact (NATO’s eastern counterpart), Russia had expected the West to do the same.  Instead, NATO became a US fig leaf for its wars in Iraq and Afghanistan.  Apparently, everyone in the world saw through this — except the US — as it embroiled itself in both countries, and the bill for the misadventures rocketed from $80 billion to an estimated $5 trillion.

The EU, a path to riches for East Europeans, is a Ukrainian dream, and Russian troops the reality when they wake up.  Such are the facts, no matter how much the Ukrainians are trying to ignore them. 

If the powerful Russian bear is the Ukrainian bete noire, its polar opposite is the case in India.  A powerful Hindutva movement abhors the Muslim minority.  It blames them for India’s problems, very much akin to the situation for Jews in pre-WW2 Germany.  Not unsurprisingly given the roots of the RSS, which modeled itself after the Nazis, instituting uniforms and drills.  A former member assassinated Gandhi for being too soft on Muslims.  Post independence, the RSS was banned by India’s first government which was led by Jawaharlal Nehru, a secular socialist.

The current prime minister, Narendra Modi, is a former RSS pracharak —  that is an active member who devotes himself full time to promoting RSS doctrine and, like a missionary, in seeking new members.  As an ambitious politician, he shed RSS ties when he entered politics and as leader expresses the wish for unity — sentiments not shared by his BHP colleagues.

There is the yogi elected chief minister of India’s largest state, and his undisguised derogatory opinions of Muslims.  Worse, at a political event at the end of December, leaders called openly for the killing of Muslims, and India’s leaders kept silent.  After general social media outrage at the speeches, the police  finally registered a case against some of the speakers for ‘promoting hatred between religious groups.’

Videos show many of the speakers are prominent religious leaders often present with senior ministers in the BJP government.  Imagine, calling for genocide in 2021.  The world reacted to the effort to eliminate Tutsis in Rwanda where it also began with reviling and dehumanization.  Genocide and even incitement to genocide is a crime.  Hence the prosecutions.  Incitement to genocide is recognized as a separate crime under international law and an inchoate crime which does not require genocide to have taken place to be prosecutable.

The founders of post-independence India, Gandhi and Nehru who took pride in being secular, must be in agony over international outlaws wanting to become the stewards of their child.

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