POLITICAL CHESS

Situation

At the moment we have the occupation in the Donbass region, which is made up of the separatist republics Donetsk and Luhansk.?Which were integrated into Russia through an agreement on February 21, 2022. On the part of the Kremlin, peaceful integrations of the two Pro-Russian regions were called.

"The conflict is economic, not warlike."

Start of Disputes

According to Russia, he perceived that Ukraine was being used by the coalition, as a platform for a threatening military alliance.

Given the imminent possibility of Ukraine becoming a member of NATO.

Russia went ahead with its troops to stop missiles and troops from that alliance being housed there.

Consult Professor George Friedman, who recalls that the territory of the Ukraine has served as a protection zone for Moscow since the time of the Napoleonic invasion of 1812.

Let's get in Context

Ukraine is the western border of Russia.?When they were attacked from the west during the First and Second World Wars it was the territory of the Ukraine that saved them. They had to travel more than 1,000 miles (1,600 kilometers) to reach Moscow.

But if Ukraine is in the hands of NATO. Moscow is 400 miles (640 kilometers) away.?So the Ukraine has been part of what has saved them from Napoleon onwards.?

"It is a security zone that they must have according to them."

On July 12, 2021, in a lengthy article on relations with Ukraine, Vladimir Putin denounced that the neighboring nation was falling into a dangerous game aimed at turning it into a barrier between Europe and Russia, into a springboard against Moscow.

Chronology

The problem began before the Pandemic, when Angela Merkel's attempts to ensure her energy supply ended up condemning the European Union's energy dependence on Russia.

When Christine Lagarde arrived together with úrsula Von Der Leyen, they hardened the European position against the growing Russian monopoly in energy matters.

That is why the Constitution was appealed to execute said law and reduce Russian power on US lands.

But it was the opportunity of the punished Angela Merkel that she had to turn off the tap in her last performances as her president. She was forced to execute the transparency that was required of her government, the same one that today quietly expresses recession and deficit.

In fact, it was already suspended "for issues related to the regulation of European monopolies", since February 2021.

"Her certification of her had been paralyzed since February for not complying with European regulatory procedures."

The Situation of Germany Today

It has only one active nuclear plant left that it has promised to dismantle this year, but it has underground storage, the second largest capacity after Ukraine.

It does not have regasification facilities, so if this measure lasts, it will have to resort to coal and wait for the "Alpenf?hn" wind (German name for the wind from the Alps) to blow. From spring it will have solar with a capacity of 22 gigawatt hours, equivalent to 20 nuclear power plants.

Sanctions and Threats

That privilege or disgrace is the Nordstream 2 gas pipeline that generates 1,923 tcf/year or 55,000 MM m3, and this cannot be replaced today.

A 1,200 kilometer gas pipeline under the Baltic Sea that connects the coast of Saint Petersburg with the city of Lubmin, in Germany. A huge pipeline capable of transporting enough gas to supply 26 million homes.

The Nord Stream 2 is a way to send gas without going through Ukraine or Poland.?Precisely Ukraine is at the center of the debate on Nord Stream 2 despite being miles away. The fact that the gas does not pass through there implies that hundreds of millions of euros are not paid in rights of way.

Russia fills the Nord Stream 2, which is "ready to go" 29.12.2021. Russian President Vladimir Putin announced that the gas pipeline connecting Russia with Germany through the Baltic Sea is ready to start pumping up to an additional "55 billion cubic meters a year" of Russian gas.

Instability and Shortage

That is why it is expected that they will continue with large increases in energy prices, but since the world does not end in Germany, Austria and Poland, for example, will suffer.

Although Austria could increase its purchases of Russian gas via the Transbalkan, which enters Europe via Bulgaria and which receives gas from the Turkstream, which was built to bypass Ukraine.

Now Hungary, Serbia, Macedonia, Kosovo, etc.?they also feed from the same source so there will be a shortage in the Baltic.

Purchases of American LNG and Norwegian gas cannot be increased, both are at their maximum levels of generation and delivery, and the logistics of LNG ships do not exist to supply said requirement.

Analysis

"All this superficial analysis is based on the fact that Russia abides by multiple sanctions."

But it seems that it will not do it and instead it could, for example, lower the supply of crude oil to Europe through the Druzhba pipeline (oddly enough it means "friend"), and this is not so easily replaceable for logistical reasons.

The Kremlin could also reduce sales of coal or aluminum or oil.

*That is, Russia has options to respond.*

*It is such an unstable situation for Europe and for Russia (to a lesser extent) that some solution must already exist.*

What will Germany do if it declared Russia a "dangerous" supplier?

A world of possibilities and changes opens up, we will see!

Points of View

As the suspension of NordStream 2 is a sanction, it does not have to be rational. At least in the short term.

The remarkable thing is that until now Germany has not said anything about cutting off purchases via NordStream 1 (it would be suicide).

Will Germany be ready to make this decision that is binding for the US?

Sweden's prime minister, Magdalena Andersson, was adamant about the European Union's relationship with Russia and left considering the new sanctions for those who maintain commercial relations.

Minsk Agreement

Through Resolution 2202/02 of the Minsk agreement in 2015 it says that;

The permanent monitoring of the Russian-Ukrainian border and its verification by the OSCE is ensured, through the creation of security zones in the border regions between Ukraine and the Russian Federation.?Immediate release of all those kidnapped and of all those illegally detained.

Military Measures

*Sweden feels threatened by Russia and that is why it re-enacted compulsory military service in 2017 (which it had withdrawn in 2010).?Which was launched immediately from January 1, 2018.

Of immediate interest to Sweden is good Russian relations with Finland, her country and around the countries that recently became independent from Russia.*

Putin Wants To Rebuild The Russian Empire

Which today were mentioned by Russian President Vladimir Putin in his speech, mainly countries that were within the Russian empire in the past, how;

Estonia, Latvia, Lithuania, Belarus, Moldova, Ukraine, Georgia, Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan.

Note1: Estonia, Latvia, Lithuania.

Between 1987 and 1991 they were the ones who participated in "The Singing Revolution" and who led the Baltic states to become independent from the USSR and encouraged the separatist movement of the other republics.?These are the countries furthest from the Russian orbit today, being the only ones that have entered the European Union and NATO?

Note2: Belarus, Moldova, Ukraine, Georgia, Armenia, Azerbaijan.

"The Istans of Central Asia" did not have great manipulations of independence after the dissolution of the USSR, which meant that power continued in the same elites as during the Soviet years. That is why the influence of the Russian government is still very strong throughout this region.

Note3: Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan.

These six countries still maintain close political relations with Russia and are the so-called "Eastern Association", a political and economic concept created by the European Union to get closer to the bloc of these former Soviet republics.

New Strategies

For Russia, having a militarized arm like Belarus is important in its strategies.?Since its neighboring country is the extreme and multiple sanctioned arm that Russia has to start conflicts, starting by testing its tact with its neighbors for minor situations.

The Immigration Excuse?

For ex. Belarus and Poland, took up the recent dispute over undocumented immigrants encouraged according to (Warsaw and Brussels) by Russia and Belarus.

In recent days, the migration crisis on the border between Poland and Belarus has worsened.

The European Union and Poland believe that the irregular migratory pressure on the border is orchestrated by Belarus with the tacit support of Moscow, the regime's main international supporter.

Thousands of people, most of them from the Middle East, crowd the icy border region between Poland and Belarus, in the Kuznika Pass, where several incidents have already occurred.

Brussels will also contain the same scheduled migrations in Cyprus, for registering the same mechanisms as in Poland.

Russian companies have grown in Cyprus, so much so that the new yacht owned by Vladimir Putin was triangulated for purchase by companies from this country to reach Kaliningrad.

But this also happens in southern Italy (Sicily).

Europe does not stop having attacks by minors unaccompanied by adults, which is taken as induced attempts and where Russia and China are pointed out as the main members of this migratory manipulation.

NATO sanctioned and advanced more sanctions for the regime, but Belarus counterattacks those words and threatens to cut off gas transit to the EU in the event of new sanctions.

There is Division in EU

Today the coalition is divided in opinion, on the one hand the weakened countries dependent on Russia such as Germany, France that do not find an outlet for their feedback with Russia in bilateral business. On the other, countries like Sweden that took the bull by the horns and do not want to allow more abuses by Russia.

Germany and France

Both are with terrible crosses within their country for the position they must take in the face of this situation. This added to the difficulties to govern, reflect an ambiguous and disconcerting panorama for its EU partners.?

But also for their interlocutor Russia, whom they are trying to persuade not to lose their trade agreements and cover their most immediate needs with them (energy).

The Time to Attack

It is known that the strategy is a vital part of geopolitics and especially that taken by Russia.

That is why in the Kremlin they believe that ground must be gained now with the greatest possible diplomacy.

Because there are thaws in March, which means that if Russia does not attack now, it will have to wait for the climatic gap that the harsh winter gives them or wait almost 6 months for the beginning of summer.

"As if it were a novel, there really is a propitious moment to attack."

Newton's Third Law;?Cause and Effect

It seems that Putin is dealing with this theory.

He generates the Cause and awaits the Effect, which is apparently absent in the weak West today. Which reflects a single result so far.

?*Neo Communism 1- world 0.*

What happens if they give you sanctions and they are not enough?

A mild package of sanctions like those on the Crimean peninsula does not cause Russia any setbacks.

But if the measures intensify, not only will the objective be to take Ukraine, but the sanctioned Belarus (Russia's hard arm) can invade Poland or Moldova. With whom he has been measuring his strength and the thermometer of how far he can transgress barriers.

But a moderate Biden said;?"We will sanction investments, trade and financing of American persons to or from the breakaway regions of Donetsk and Luhansk."

The Communist Strategy

(called by NATO)

It is causing the authorities of each country to lose focus and I have removed the vision of focuses that involve decisions towards Russia.

This is why the distraction effect seems to be the "New Game of Cat and Mouse for the Kremlin".

Strategy Russian

The Russian Central Bank has been selling its positions in US bonds and increasing its position in Gold.

That is why it has lowered its position in treasury bonds from almost 200 billion to 4 billion.

This means that Russia has been preparing this whole movement for years, getting rid of its holding of bonds (so that they cannot be touched at a time like the present), and buying gold, which is where the market is heading every time "the drums sound" as they say.

“What would happen if the sanctions against Russia do not generate anything and are returned by Putin through the shortage of primary and energy resources”.?

Author: Diego Balverde

Senior Economist

International Monetary Fund

Fernando Graciano Rossi Research Analyst External