Al Mayadeen English

  • Ar
  • Es
  • x
Al Mayadeen English

Slogan

  • News
    • Politics
    • Economy
    • Sports
    • Arts&Culture
    • Health
    • Miscellaneous
    • Technology
    • Environment
  • Articles
    • Opinion
    • Analysis
    • Blog
    • Features
  • Videos
    • NewsFeed
    • Video Features
    • Explainers
    • TV
    • Digital Series
  • Infographs
  • In Pictures
  • • LIVE
News
  • Politics
  • Economy
  • Sports
  • Arts&Culture
  • Health
  • Miscellaneous
  • Technology
  • Environment
Articles
  • Opinion
  • Analysis
  • Blog
  • Features
Videos
  • NewsFeed
  • Video Features
  • Explainers
  • TV
  • Digital Series
Infographs
In Pictures
  • Africa
  • Asia
  • Asia-Pacific
  • Europe
  • Latin America
  • MENA
  • Palestine
  • US & Canada
BREAKING
Israeli media: Ben Gurion Airport airspace sut down following missile launch from Yemen
Israeli media: Air raid sirens sound in the central region and Hashfala following the detection of a missile launch from Yemen
SDF announces the killing of three of its members as a result of ISIS cells detonating a landmine targeting a vehicle of a security patrol on the Hasaka-Raqqa road
The Popular Resistance Committees: We call on all international institutions to take urgent action and uphold their responsibilities by restoring and immediately enforcing effective mechanisms for the distribution of humanitarian aid.
The Popular Resistance Committees: The latest Zio-American crime against Gaza’s starving civilians constitutes a war crime, for which the US administration bears full and direct responsibility.
Gaza Media Office: Bloody spectacle shows that these zones have become collective death traps rather than aid distribution zones.
Gaza Media Office: Dozens of citizens are still surrounded under constant fire in the vicinity of the "aid station."
Gaza Media Office: As soon as citizens arrived, occupation and Americans opened direct fire on them.
Gaza Media Office: Occupation, in complicity with the US company, called on citizens to move toward Wadi Gaza Bridge, claiming that aid would be distributed.
Gaza Government Media Office: Occupation set a bloody trap at bridge of Wadi Gaza, luring thousands of starved civilians, and opened fire on them.

Gleichschaltung: 'We don’t care what you think: Everything will be regulated or capped to death'

  • Alastair Crooke Alastair Crooke
  • Source: Al Mayadeen English
  • 11 Sep 2022 23:27
  • 11 Shares
6 Min Read

The key flaw to the entire EU plan is that Europe, the big consumers, having lost control of commodity prices to the energy and raw material producers – now wants, with US help, to seize it back.

  • x
  • Gleichschaltung: 'We don’t care what you think: Everything will be regulated or capped to death'
    Or, in a word, now every other commodity market is about to be ‘regulated’ or capped to death

Well, in case there is someone, somewhere, who had not noticed it, Europe is in crisis. Six months ago, European leaders were agog that their plans to stop buying Russian gas and oil, and sanctioning absolutely everything Russian, would ‘pop’ Russia's economy -- and into the bargain, ‘take out’ Putin, too.

Fast forward to today, and it is ‘6 out of 10 businesses in [the] UK [that] face closure because of rising energy costs’; ‘a cold winter for Europe lies ahead’; ‘ten terrible winters to come’; ‘record Euro zone inflation’, and Germany’s energy options dwindling.  But cheer up -- Europe's leaders don’t care what you think. Suck it up! "We will support Ukraine to the end", they warn.

It is simply extraordinary: the EU keeps on shooting itself in the foot; and then doing it anew. It first imagined Russia’s financial collapse; it then imagined Russia’s military incompetence and stumbling performance would allow Zelensky to humiliate Russia on the battlefield. And now, instead of stopping digging its hole deeper, the EU comes up with its ‘plan B’: After sanctioning everything (with predictable consequences), it now plans to ‘price cap’ everything -- with as predictable adverse consequences, also.

Last Friday, the G7 finance ministers agreed to proceed with their plan to cap the price of Russian oil exports. This initiative will not replace G7 countries' separate embargoes on Russian oil, but will be implemented in parallel -- 5 December for crude, and 5 February 2023 for refined products.

This cap will be actuated through the “comprehensive prohibition of services” that enable the transportation of Russian seaborne crude and petroleum products. Those services - which include shipping insurance - will only be permitted if the products are purchased at, or below, a price that will be set by a “broad coalition of countries”. 

A scheme that is essentially the brain child of US Treasury secretary, Janet Yellen.

In her vision, the price would be set above the price level that Russia requires to balance its national budget (and thus incentivise Russia to continue to pump oil), yet below the price required to keep western economies thriving – and low enough to deeply cut into Russia’s oil revenues, thereby (it is hoped) weakening its economy, and its war effort. 

The notional cap is undetermined, but guessed at around $50-$60. The Russian budget is based on oil at $44 equivalent -- during 2022. EU implementation will require member states to unanimously agree to amend the sixth sanctions package that detailed the bloc’s embargo on Russian crude, including by adjusting its ban on insurance services.

Related News

Six years of dashed hopes for peace and reconciliation in Ukraine

Sovereign ideology in the context of multipolarity: DPRK as an example

Even this key component of insurance serving as the cap ‘operating mechanism’ is moot: Lloyds’ of London are one of the leading maritime insurers. How, in practice, are insurance companies to determine which cargoes are carried at what initial price? Are they to recruit an army of inspectors? Why do these G7 ministers assume that only G7 insurance services will be engaged? India already is providing insurance on Russian cargoes – as are Russia and China. More likely it will mean a shift of maritime insurance services from London to Asia -- another legacy western economic advantage lost.

Well, the first and most obvious lacuna in this scheme is that it hinges on the readiness of big importers of Russian oil - including India and China - to go along with the scheme.  And both have said ‘no’. Russia has warned it would simply halt exports to any state participating in the scheme.

Then, days after the EU threatened commodity traders that it would stage an ‘emergency intervention’ to crush energy prices, Gazprom (pure happenstance?) announced it would ‘completely halt’ all Nord Stream 1 transit due to an ‘oil leak’. 

The news sent global stock markets plunging, and threatened to push European gas and power prices back up to all-time highs -- as well as forcing Sweden to follow Austria and Germany in bailing out their energy companies to the tune of billions of euros.

The EU (having ‘worked non-stop through the weekend’), late on Sunday, proposed ‘historic interventions’ in the energy market, including a levy on excess profits of electricity and energy companies: And from gas-price caps to a suspension of power derivatives trading -- ‘as the bloc scrambles to respond to latest developments in the deepening crisis’. 

Or, in a word, now every other commodity market is about to be ‘regulated’ or capped to death.

The key flaw to this entire construct is that Europe, the big consumers, having lost control of commodity prices to the energy and raw material producers – now wants, with US help, to seize it back. And no one, outside of the West, wants that. OPEC+ certainly does not want that. Indeed, OPEC+ is in fact cutting output, which will push up prices. Producers naturally want high prices. They are not interested in ‘punishing’ Russia at the expense of their revenues.

And India and China are quite content to purchase discounted Russian oil, and (liquefied gas in the case of China) and after ‘transforming it’, somehow selling it to the Europeans at a tidy profit. Neither state has any interest to antagonise Moscow needlessly -- they are not fans of western "rules-based" interventionism.

The EU’s “planned intervention should be designed in a way to avoid an increase in gas consumption or to jeopardize the efforts to cut gas demand. It should be simple to implement and coordinate across the bloc and be consistent with the bloc’s climate goals”, the EU Presidency said in the draft document.

‘Simple to implement’?  This is where laughter breaks out: Why? Because, as even Goldman Sachs wrote on Friday, nothing Europe does will lead to lower prices, and if anything will send prices much higher -- suggesting that Europe's ‘historic’ plans work in theory, and collapse in practice.

The views expressed in this article are solely those of the author and do not necessarily reflect Al Mayadeen’s editorial stance.
  • Russia
  • US
  • gas
  • Gazprom
  • European Union
Alastair Crooke

Alastair Crooke

Director of Conflicts Forum; Former Senior British Diplomat; Author.

Most Read

All
Although the background information does not indicate direct US involvement, considering the broader geopolitical context, it is plausible that the US would have an indirect impact. (Al Mayadeen English; Illustrated by Zeinab El-Hajj)

Did 'Israel', US fight a proxy war with China in South Asia during the India-Pakistan escalation?

  • Feature
  • 19 May 2025
The two countries need to sit down and resolve the crisis with maturity, to consider carefully that they could be being manipulated to be easily dominated. (Al Mayadeen English; Illustrated by Batoul Chamas)

Algeria and Mali, divided and almost conquered

  • Opinion
  • 25 May 2025
It may well be due to the longstanding relationship between MI6 and HTS, via Inter Mediate, that Britain was the first Western country to recognise their assumption of government in Syria. (Al Mayadeen English; Illustrated by Zeinab El-Hajj)

How MI6 helped HTS seize Syria

  • Opinion
  • 31 May 2025
Trump and Biden both pretended to be fighting Netanyahu

Trump and Biden both pretended to be fighting Netanyahu

  • Analysis
  • 28 May 2025

Coverage

All
The Ummah's Martyrs

More from this writer

All
The Nakedness of EU ‘Geo-political’ Ambitions Will Be Revealed - As the Ukraine War Melts Away

The Nakedness of EU ‘Geo-political’ Ambitions Will Be Revealed - As the Ukraine War Melts Away

The Slow-Motion Advance to the Edge of the Abyss

The Slow-Motion Advance to the Edge of the Abyss

Already, "Israel" has the White House committed to support an Israeli military operation against Hezbollah. (Al Mayadeen English; Illustrated by Zeinab El-Hajj)

Does 'Israel' want war?

The European Mutiny: The Consequences are Just Beginning

The European Mutiny: The Consequences are Just Beginning

Al Mayadeen English

Al Mayadeen is an Arab Independent Media Satellite Channel.

All Rights Reserved

  • x
  • Privacy Policy
  • About Us
  • Contact Us
  • Authors
Android
iOS