On the night of last Wednesday to Thursday, Vladimir Putin launched an invasion in Ukraine. Since the war in Ukraine broke out, the European Union has imposed sanctions which will mainly affect Russia from an economic point of view. But they will also affect Europe because Russia has what it takes to retaliate.
This morning, on the set of DH Radio, we received Bruno Colmant, professor of economics for ULB and UCL, and Damien Ernst, professor of energy at the University of Liège to discuss this issue.
First of all, Europe took very strong sanctions against Russia. Several large Russian banks can no longer use Swift interbank messaging and 600 billion assets of the Russian population have been paralyzed. For Bruno Colmant, the war is also waged on the financial side. “I was very surprised that the Russians were excluded from the Swift banking system, which was supposed to work even in the event of a conflict. This will create a disruption in financial payments, which will embarrass Russia, but so do we. Our imports to Russia will be blocked. And then, blocking the assets of a central bank is extremely rare. (…) Today, Russia is becoming a financial pariah. It can’t last for weeks. It’s like putting a blood clot in a body. It will become an embolism or it will create problems”comments the economist, who says he is surprised at the scale of the measures taken by Europe.
“Gigantic” economic repercussions
For Damien Ernst, Vladimir Putin could retaliate and, in turn, hurt Europe economically. “Mr. Putin is detestable. He is a brutal dictator, a criminal. But he is smart. For 10-20 years, he has played extremely effective energy geopolitics and he has put Europe in a weak position terrible compared to Russia. We are now Russia’s energy puppet. It is he who controls our security of supply.”
Damien Ernst also mentioned the future price increase. According to him, the conflict over gas already started in July, when there was already a price increase. “We noticed that households with an average consumption of gas and electricity saw an increase in their bill of 2,500 euros over the year per megawatt hour. I think that this amount can be doubled. We can arrive at more than 5000″.
Bruno Colmant, professor of economics, confirms that this conflict will have serious economic repercussions: “It’s going to be gigantic. It’s going to create a problem of competitiveness for companies. Because they all have an energy content, no matter how small. But for households, it’s going to have a dramatic effect. Today we’re talking about inflation of 8% but in reality for average households inflation may be 15-20% And unfortunately wages will only be indexed by 4% which will be a net loss of purchasing power over the year of 8% if we consider an overall inflation of 12%.
“An error of judgment on the part of Jean-Marc Nollet”
Finally, the two men returned to the exit of Jean-Marc Nollet in the Echo, this Tuesday morning. Ecolo’s co-president felt that the current situation further justified a total phase-out of nuclear power. “
The increase in the price of electricity, it is not a problem of the rich, it is a problem of the poor
“, reacted Bruno Colmant. “
It’s not the super rich who will be affected, it’s the middle class. Playing on the virtue of the energy transition when we have been facing a dramatic phenomenon for six days seems to me to be an error of judgment.
“