And Europe is de facto replacing “bad” Russian pipeline gas with “good” U.S. LNG.
At a price of 4-5 times the previous cost of pipelined gas. That makes the European manufacturers non-competitive in today's markets. That will lead to a loss of manufacturing capacity for Europe as companies either go bankrupt or are forced to transfer their manufacturing to countries like China, or South-East Asia.
Or we will find that many 'prestige' brands like Mercedes-Benz or Dior or BASF, for instance, will have to either disappear or reduce their ranges markedly.
The Europe we know today is gone. Possibly forever.
Punctual article by Cliff Kupchan. The (abridged) analysis:
> The Russo-Ukrainian War[, that will last for many years,] will spur deglobalization, especially in the energy and food sectors[; it] has the potential to lead to armed conflicts between Russia and the West[, with] impact on global stability
> The war will propel ongoing deglobalization and decoupling[: through reduction of risk in supply chains, for both Countries and firms, also after the possibility that suppliers may be hit by sanctions of similar magnitude; also, through increased diffidence against non-condemning China]
> Deglobalization will have a particularly lasting impact on energy markets [in a search for reliable friendly partners] and food security [in an increase of protectionism]
> Energy groupings will divide U.S.-Canada-Latin America-EU (where Europe is getting closer to the already established circuit in the Americas), Russia-China (where the original diversification from China is overridden by the discounted Russian prices), and Middle East-Asia (where the position of the Saudis discourages Western interest). [...] Several countries and regions will occupy a more ambiguous status. India will remain a floater state, drawing supplies from Russia while crude is cheap; imports of Russian crude have risen from 30,000 BPD prior to the war to over 800,000 BPD at present
> While the relationship is not always direct, runaway food inflation and hunger are often accelerants of social unrest. The two most salient historical examples are the Arab Spring protests in 2011-2012 and the food riots of 2007-2008, both of which occurred against the backdrop of high food inflation [...T]he frequency of food and agriculture-related protests has risen considerably. The number of these demonstrations between January and June of this year topped the total number of similar protests during the last five years combined [... M]arket interventions [hence] look increasingly attractive[: t]rade policy measures, regulatory changes, stockpiling, price caps, and subsidies
> [I]n the former Soviet space, expect more wars as neighbors try (with Western support) to move away from Russia
> [In the international system, ]overwhelming U.S. power deterred challengers and suppressed most wars. Under bipolarity, though, leaders must judge the power of not one but two nations - a task made even more difficult because the bipolar system is new
> Russia’s leader... badly underestimated the strength and resilience of the U.S.-led grouping within bipolarity[: t]his is an example of why wars are more likely under bipolarity than unipolarity - a misperception of relative power leading to war
> Deglobalization in the energy sphere means that the market alone will no longer dictate flows [...] In the food arena, the war will be a long-term driver of upward pressure on food prices - both because of the uncertainty it creates about production and the support it lends to market interventions
At a price of 4-5 times the previous cost of pipelined gas. That makes the European manufacturers non-competitive in today's markets. That will lead to a loss of manufacturing capacity for Europe as companies either go bankrupt or are forced to transfer their manufacturing to countries like China, or South-East Asia.
Or we will find that many 'prestige' brands like Mercedes-Benz or Dior or BASF, for instance, will have to either disappear or reduce their ranges markedly.
The Europe we know today is gone. Possibly forever.