Economic Consequences of the Hundred Days War in Ukraine

The eurozone’s response to the war has tested the seams that bind twenty-seven. The invasion has opened a new abyss in Europe. On the one hand, the EU is dependent on Russian energy; For another, which underpinned its energy policy on the diversification of supply sources. In the last 100 days, several member states have retaliated. Those who were demanded the most sacrifice during the 2008 crisis are those who have sought to completely break the contracts with which Putin finances his attack in Ukraine.

However, the balance of forces within the union is tilted to the north. Countries like Germany or Austria have blown up plans for a radical response against the Russian leader. Both have built their energy existence on the foundations raised by Moscow. former chancellor, Angela Merkel Inauguration – with the former President, Dmitry Medvedev– on the Nord Stream gas pipeline in November 2011. The pipeline that chains Berlin to Russian interests. And the German capital stretches the rest of the European Union.

Tension in the gas market is nothing new. The gas price crisis began to take shape in October 2021. At the start of the month, several factors influenced the price on the Dutch market (TTF), a benchmark in Europe. Decline in reserves, forecast of cold weather and constant tension all around Vladimir Putin, prices boosted. Russia played with the market at the end of the year. He opened and closed production, arousing the nerves of investors. The panic came in December, when gas broke the 128 euro barrier.

fuel, at historic highs

The oil crisis proceeds in the rhythm of the gas crisis. This Friday, the European Union announced a new package of sanctions against the Kremlin. Sixth, in just three months. Brussels still does not face a Kremlin gas embargo but is moving towards a total veto of its oil. It does so after weeks of debate, in which community leaders haven’t stopped to discuss and analyze the situation in each of their countries. Finally, the EU approves a partial ban, which leaves Czech Republic, Slovakia and Hungaryhim too Bulgaria and Croatia, The document will restrict the flow of Russian crude oil to other countries from 2023.

Most experts agree that Europe is late for the veto. Brussels is launching itself into a market run by the United States and the United Kingdom, which on March 8 announced its total veto of Russian gas and crude. Both countries have an advantage in looking for alternative suppliers.

During the past months, the price of Brent – the reference point in Europe – has suffered its own particular rally. a spiral that causes fill gas tank in spain touch 100 euro, despite Spain’s low reliance on Russian crude. Due to the pressure on the pocket of the consumer, the government had to pay a bonus of 20 cents per liter of fuel on 1 April. A help that has been carried forward in just two months by the rise in oil prices in the markets.

a long-term wheat crisis

Wheat has been one of the heroes of the war. Ukraine is the fourth largest exporter of grain, and the passage of the conflict through the country has caused its exports to decline and its price to skyrocket. Half the world is already threatened by a drop in supply. Spain too. ASAJA has analyzed the advance data of the campaign and estimated that this year’s winter grain crop will suffer 21% reduction, That is, 4.1 million tonnes less than last year’s official figures.

“The main problem producers faced during this campaign has been high production costs as a result of high prices for energy, seeds, fertilizers and phytosanitary products,” he says of the Young Farmers Agriculture Association.

Additionally there are high temperatures and droughts that affect Spain. as well as decision India will cut its exports, New Delhi will prioritize its self-reliance over the returns it receives in a growing market. Even Afghanistan has suspended shipments. The Taliban government on May 20 announced the suspension of wheat exports ahead of this year’s harvest.

“The fall in supply and rise in prices will act in a chain on all wheat derivatives,” say sector sources, who warn that – unlike other raw materials – the price of cereals will peak in the medium and long term.