Last week I already wrote that the invasion of Ukraine was going to change everything. In the world, in Europe, defense policies, economic policies, energy policies… And also Spanish domestic policy. The reviews of Ione Belarra saying that the PSOE is “the party of war” for the decision to send arms to Ukraine (as sudden as Germany’s) may be just the beginning.
Francis Fukuyama has said this weekend in a big article in the ‘Financial Times’ that “the Russian invasion of Ukraine on February 24 has been a turning point in world history”.
AND Josep Borrell -the only Catalan and Spanish to experience this rupture in the first row- has put his finger on the sore spot: “We Europeans have built the Union like a French-style garden, ordered, but the rest of the world is a jungle and we have to wake up (…) Putin wants to rebuild the Tsarist Empire and you are not dealing with that with trade and the preaching of human rights (…) Europe has gone around the world with the olive branch thinking that this would lead to systems similar to ours, but it hasn’t happened.”
The Western and European reaction to the invasion has been strong and swift. The Economic sanctions (weak in 2014 following Crimea) have now been very hard. Kicking Russian banks out of the world payment system, except those to whom we pay for oil and gas imports, seemed impossible. And even more, freeze the foreign exchange reserves that Russia has deposited in Western banks (half of the total) and with which Putin must face the fall in confidence in his banks and hold the price of the ruble.
It is something unprecedented and that is why Putin claims that the sanctions are a declaration of war. It is a forceful financial response to a military invasion and the threat of the nationalist expansionism of the Russian autocrat.
But the economic sanctions are going to rebound us. The increase in the price of gas, oil, wheat (Ukraine is the breadbasket of the world) the already very high inflation (7.5% in Spain, 5.1% in the EU) is going to trigger even more. And the ECB It will have to decide between accelerating the rate hike to contain prices or not doing so so as not to damage growth. And maybe I don’t have a choice, well the Federal Reserve is going to raise them and then the euro can depreciate once morest the dollar with the risk of pouring gasoline on the fire.
The progress of the economy is going to get complicated and the proof is that Sánchez is already proposing an income pact with the social agents.
And many decisions will not be of the states. Regarding the weapons to Ukraine, Spain cannot separate itself from France, Germany or America. And Macron, who recently said that NATO suffered from cerebral palsy, will have to rethink it. We will see what is discussed in June at the organization’s summit in Madrid.
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Until today Europe has had no other energy policy than the horizon of renewables. But in the meantime, Germany – unlike France – has opted for nuclear closure and purchases of Russian gas. And France (confidence in nuclear power) and Spain (green bet) have not promoted the MidCat gas pipeline that was supposed to carry gas from Algeria to central Europe. The three countries are going to have to rectify following having lost a lot of time.
Ukraine changes everything and forces us to bear in mind that Europe is a democratic and social welfare space, but that in the outside world the law of the strongest rules. And that NATO depends on the American president. Can you imagine that Trump still was?
