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The European Commission has a draft proposal that envisions a world without Russian energy exports and determined that it will cost about €195 billion investment to detach itself from the Russian spigot, a report said.
The Financial Times, which viewed the draft proposal, said the effort will last into 2027. The EU wants to slash its consumption of Russian gas by 66 percent by the end of 2022, but CNN pointed out that it has yet to present a detailed plan on how to achieve that.
The report pointed out that officials believe the EU can reduce Russian gas imports this year by two-thirds. The draft proposal also calls for a 13 percent cut in energy consumption in countries by 2030 to meet its goal of net-zero carbon emissions by 2050.
Russia accounted for about 45 percent of the continent’s gas imports last year. Russia has the largest natural gas reserves in the world.
The EU is looking for African countries to fill in for Russia’s lost output but there are concerns that those countries cannot produce the required amount.
“The good news is there will be greater interest in countries that already have the resources to replace Russian gas and Africa is in a very good position. We’re going to see more investment,” she says, Carole Nakhle, an energy economist, told the BBC. These countries include Algeria, Egypt, and Nigeria.
Mario Draghi, the Italian prime minister, signed a new gas supply deal with Algeria last month that will increase gas imports by about 40 percent. The BBC pointed out that it was Rome’s first deal to find alternative supplies since the invasion.
The Wall Street Journal reported Monday that the EU admitted that its economy would likely contract if supplies from Russia were halted “with the deepest recessions felt by countries that rely on that source for much of their energy generation.” (We point out in this issue that Hungary has been opposed to banning Russian oil due to these concerns.)
The commission previously forecast the EU economy to grow by 2.7 percent this year and 2.3 percent in the following year, the paper said. The bloc will face a recession if there is a halt to the Russian supply, economists said.
TRENDPOST: The Trends Journal has warned that the sanctions that have been put in place against Russia over its 24 February invasion of Ukraine will end up hurting Western countries far greater than Russia, which, considering its human and natural resources, will become more self-sufficient than any European nation. (See “TOP TREND 2022: SELF-SUFFICIENT ECONOMIES. UKRAINE WAR SET THE PACE.”)
And while EU companies will raise wages, inflation will rise higher than salaries, like the U.S.—with real household disposable incomes down 2.8 percent.
The commission said in a statement that “war-induced logistics and supply chain disruptions, as well as rising input costs for a broad array of raw materials,” will continue to weigh on production.
The EU said that energy price-driven inflation will exceed 6 percent in 2022 and hit 6.9% percent in the second quarter, DW.com reported.
TREND FORECAST: As we had forecast for well over a year, runaway inflation was already spiking long before the Ukraine War began. Central banks, wanting to artificially inflate deflating equity markets and economies, which were hit hard by the COVID War draconian lockdowns and mandates, kept interest rates low to artificially pump up sagging equity markets and economies.
And, as we have extensively reported, central Banksters either lied or were too stupid to see how severely inflation was rising and did not raise interest rates fast enough to tackle the additional surge of price increases the war has set off.
In fact, the European Union, which is hit with a 7.5 percent rise in consumer prices, has still kept interest rates in negative territory.
Rising prices will exceed the budgets of large numbers of consumers.
In the United States, with inflation at 40 year highs, it was reported today that a Pew Research survey found some 70 percent of Americans saying inflation is “a very big problem,” for the country.
And, the higher central banks raise interest rates to combat inflation, the deeper equity markets and economies will decline. Therefore, we maintain our forecast for Dragflation, a Top 2022 Trend, in which prices will continue to rise while economies are dragging down.