I recently noted that the argument that the imperialist sanctions and boycotts of Russian energy was a primary cause of inflation, was false. I have also, however, noted, consistently, that those same sanctions and boycotts, did result in higher costs of production for EU capital, were passed on to EU workers, and did act to slow the EU economy, particularly relative to that of the US. In other words, EU workers, were made to pay financially for the costs of NATO's war against Russia, in Ukraine, in the same way that Ukrainian workers are paying with their lives and limbs. NATO imperialism, and its media arm, of course, always present those costs as being caused by Russia, and not by the deliberate actions of NATO and the EU, to limit Russian exports.
In that previous post, I noted that, the price of EU gas had already risen from €5 per megawatt/hour in June 2020, to €35 per megawatt/hour in July 2021. In other words, a 7 fold rise. The price had risen steadily during late 2020, and through 2021, as had many other primary product prices, many of which have nothing to do with Russia, following the ending of lockdowns, and the surge of liquidity that was released into the global economy, from all of the money tokens printed by central banks, and expansion of credit.
In a recent Newsnight, it was claimed that this rise in prices in 2021, i.e. prior to the war, for EU gas, was a consequence of Russia, already, in 2021, starting to limit supplies to the EU, so as to raise the price ahead of its invasion of Ukraine. But, besides the fact that that implies both that a) Russia, at that time, planned to invade Ukraine, and b) that there would be some advantage to Russia from reducing the supply of gas, and raising its price to the EU.
The first seems unlikely, because Putin's preferred option seemed to be to try to use the EU as a lever for a new Minsk Agreement, which would give Russia some continued leverage inside Ukraine. Irrespective of that, the second makes no sense. Russia's leverage on the EU, and Germany, comes from the energy supplies, and if you cut those supplies and raise the price you have removed that leverage, only encouraging the EU to look for alternatives. Besides, the record shows that when those gas prices rose the most, going from that €35 in July 2021, to €339 in August 2022, it was the result of the EU itself boycotting the supply, and of NATO/G7, imposing sanctions on Russia to make it hard to export.
Moreover, the data does not seem to support the claim of those earlier higher prices being the result of reduced supplies to the EU from Russia. In the period, when EU gas prices rose seven fold, between June 2020, and July 2021, Russian gas accounted for pretty much the same proportion of gas imports into the EU. In July 2020, Russia accounted for 42.3% of EU gas imports. In January 2021, Russian gas imports to the EU actually jumped, much higher, accounting for 53.8% of EU gas imports. In June 2021, they accounted for 47.8%, and, in July 2021, 41.6%, almost identical to a year earlier. In 2020, the EU imported 152.6 billion cubic metres of Russian natural gas. In 2021, EU countries imported 155 billion cubic metres of gas from Russia. So, the data simply does not support the narrative that higher EU gas prices between June 2020 and July 2021, when they rose 7 fold, was a result of Russia reducing its supply of gas to the EU. On the contrary, during that period, Russian supplies rose by 2.4 billion cubic metres.
Moreover, look at the movement of another primary product that has nothing to do with Russian exports – copper. Its price went from $2.15 in May 2020, to $4.78 in May 2021. That was a more than doubling of its price. Or take Soybeans. Their price also doubled from $838 in June 2020, to $1600 in May 2021. Lumber prices went from $216 in March 2020 to $1700 in May 2021. That was an almost 8 fold rise. Iron ore had a three-fold rise, during the same period, and steel doubled. Coal prices trebled. Silver prices doubled. Wheat prices nearly doubled.
None of this rise in primary product prices, during that time, can be explained by a Russian invasion of Ukraine, which was still eight months into the future, nor to a NATO imperialist boycott and sanctions on Russian exports, which was to follow it. What it does coincide with, as I had predicted beforehand, and detailed as it happened, was the surge of all the liquidity, created by central banks, during lockdowns, that was unleashed, once those lockdowns were relaxed, and ultimately ended.
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