(Finance) – A few days ago, not without difficulty, it arrived the agreement on the embargo (only by seaaccording to many a bit on the downside) to Russian oil. Therefore, the pressin
g EU on Moscow but the question is always the same: Do sanctions really risk hurting us more or do the numbers say something else? Telebag he asked Matteo Villa, to head of DataLab ofISPI, the Institute for International Political Studies.
“Speaking of sanctions in general – explains Villa – to the Russia are doing much more harm, at least at the moment. In the short run, the recession in Russia is about 5 times stronger compared to the economic slowdown in growth we are witnessing in the rest of the world and I am talking about the worst economic slowdown that is that of Italy and Germany which are much more closely linked to Moscow than other countries and which are greatly affected by the effect of the sanctions. The IMF has revised down the growth forecast for our country, with a cut of about half past one, immediately after the Germany with a 1.7% cut and things will probably get a little worse in the coming months. But in Russia certainly not better, on the contrary: the Russian Ministry of Finance itself estimates a -8% of GDP this year. It must also be considered that the sanctions will have an effect, if they continue, even in the medium and long term, especially by calculating that Moscow is forced to review an important part of the own industry to try to make up for everything that the West does not sell and this forced reconversion it will have a strong effect in the medium term in Russia. This, in fact, in general on the penalties that they are not energetic, on energetic instead there are so many risks we have to talk about because we have to avoid hitting the Russia does not end up hitting ourselves “.
“Europe is already sanctioning itself by not importing petroleum products and are, in particular, three variables to be taken into consideration and that is how many volumes of oil Russia will export all over the world, therefore to us but also to others, how much it will succeed in replacing the Europeans; the second is what is the price of Brent therefore the price of international crude oil, finally the third, that is, what is the price at which Russia sells its oil, for us the benchmark is Urals, the price of Russian oil. In the meantime, I did some calculations and for example in April with the self-sanctions we had, so with the non-desire for Europe of cbuy Russian oil, the cost – i.e. lost earnings for Russia were about 600 dollars per citizen in one year, a great coup “.
“Basically, come on self-sanctions every citizen in Russia lost something like 5% of one’s income in one fell swoop in one year; doing the same thing towards the European Union, therefore for the citizens of the European Union, it resulted in a loss (obviously we also have a loss because petrol costs more and everything costs more) of 150 dollars, more or less 150 euros since we are close to parity per year, so we were actually in better shape. Furthermore, 600 euros for a Russian che already has a much lower GDP per capita than the European one is much stronger as a loss compared to 150 euros for us “.
But – explains Villa – “there is a problem: if we take May the gap begins to close and this is because the price of brent has risen a lot we are above 120 dollars a barrel, therefore our self-sanctions and some international dynamics of the oil price, supply and demand of crude oil, have meant that in May the price of oil was very high , which means we begin to lose ourselves more (the cost of petrol goes up, etc., despite government interventions) e Russia begins to lose less and less.
How will it go between now and the end of the year?
“We don’t know, so we have to be careful every month and monitor, what we can understand from Russia’s export data for now is that even in terms of volumes, Moscow is largely succeeding in replacing Western customers with customers elsewhere. Not however, it is said that it will always be like this or that it will always be fast, for now it is selling to India, we see other things arriving towards China and at the moment the loss is quite marginal, about 10% of its production. This is to say that they are penalties that I compared to the general ones (I am referring to those that avoid, for example, exports to Russia of high-tech western products and a whole series of products that are not even high-tech but finished products, do not have buttons, paper, which make machines go back to production Soviet) have a more difficult to estimate and more controversial effect, paradoxically they can also harm us “.
Meanwhile, Brussels opens to the ceiling on the price of gas: proposed to Europe by Draghi, it was adopted by the governments of Spain and Portugal, with huge benefits for consumers. Is this the right solution or could there be “side effects”?
Let’s start by saying that they have already done so Spain and Portugal, I also clarify that it is not a gas price ceiling but a gas price ceiling when you produce electricity so for power plants that run on gas and obviously it is an idea to lower the electricity bill. Spain has done so and it is still a mechanism that has contraindications. The market works like this: the hourly and also the minute price of energy it is set by the last source it produces, so if it is gas, electricity will cost based on how much it costs a gas-fired power plant to produce electricity. It follows that all the other sources that always enter the system producing electricity that perhaps produce at a lower cost have an advantage. The idea of reducing this price works for Spain and Portugal in the short term because it reduces the price of electricity for everyone but reduces it especially if the gas used to make electricity in a country is low. We take Spain where only 15% of the electricity produced is produced with gas, the rest are renewable, some coal and so on. So, by using gas only for 15% of the electricity produced, you basically lower the price to the producers of gas who therefore produce at a loss, obviously you lower it enough not to lose all the other sources, therefore coal, etc. the other sources continue to produce profit but you reduce their profit. This it has two consequences : you have to reward gas producers otherwise they go out of business, so there are compensatory mechanisms. Basically, the government says I’ll give you some money, but where do I get it from? From taxes. Obviously yes they only compensate the gas producers not the others who still continue to make a profit. This is crucial to understanding what the point is: I lower the price of gas and only reward gas producers who are producing at a loss, if there are few gas producers in my electrical system, that’s fine because I only rewarded them a lot and lowered the price for everyone, instead if, as in Italy, electricity means for the 40% using gas means rewarding all thati, all gas-fired power plants that enter the system for a certain amount of time and in theory for 40% of the total energy produced.
“This mechanism already makes us understand one thing: that asymmetries are introduced between countries depending on how much gas is used to make electricity and Italy is at a disadvantagea because our system runs on gas a lot and until we reduce the gas quota we will always be at a disadvantage compared to the others. The first distortion therefore is this: unbalance competitiveness between countries in the short term because some benefit much more than others from the price of gas and they are the ones they already use now less gas “.
“Then there is a second aspect that concerns the transition: if we want to accelerate, gas prices that are bad for consumers and bills in the short run are important in the long run to signal to the market that there is a shortage of something e there is an opportunity to invest in renewables
War on the one hand, inflation on the other: is global food security really at risk?
“THE food prices – explains Villa again – they had been increasing for about a year and a half, orssia from the post pandemic and they were already high enough, this means that we cannot blame all the blame on the war but clearly eliminating tens of tons of wheat from the market leads to the current situation and we are certainly moving in a very dangerous perimeter. After all, just look at the food price index of the FAO or the World Bank which have exceeded the highs of 2011, the year that for the Mediterranean was the beginning of the Arab Spring, the bread riots in Tunisia, in May it is stabilizing but remains at very high levels. We are therefore witnessing something extremely dangerous for everyone, especially for not Europeans. In the short term, Europe is quite calm from the point of view of food security, the problem is the others, but we know well that we are all a little connected. Sri Lanka a country that has gone bankrupt, that has had to declare bankruptcy because it could not afford to pay for its grain imports and we will unfortunately see it in many other places. It will be a complicated year for everyonei with so much pressure because Putin he has chosen a dangerous game that also questions his credibility, that is, from a monetary point of view, I do not release the wheat issue until you lift the sanctions “