Energy, war and famine remain three big concerns
as Russia's invasion of Ukraine enters the harsh
winter months.
European energy preparations appear to be
paying off, but the long term is less than
certain.
We need to understand if and how the European
industry can quickly find a new equilibrium
where it can get alternative competitive
energy supplies rather than Russia.
And as the war drags on, a Ukrainian offensive has
managed to take back Kherson City, a major
regional capital, putting pressure on
Vladimir Putin.
Russia continues to hold the threat of nuclear
catastrophe against Ukraine and the West.
I think Putin sees nuclear weapons more as
militarily useful weapons, whereas a dirty
bomb or his operation might be more for
punishment or pretext.
Humanitarian concerns are also escalating as cold
weather, possible shortages of key supplies
and Russian attacks on power plants could put
civilians in dangerous positions as temperatures
drop.
Because of all these reasons. There are
massive, massive this rolling blackouts.
Since the start of the Ukrainian offensive,
fears of a Russian military escalation have
included the threat of Moscow unleashing a
nuclear catastrophe, either with the use of a
nuclear weapon through a stage meltdown at a
nuclear power plant or the use of a so-called
dirty bomb.
If Putin were losing the war in Ukraine.
If his forces were about to collapse, I think from
his point of view, using nuclear weapons would
actually be more attractive than losing
this war in a humiliating fashion.
Thus far, we haven't seen any evidence of Russia
moving its tactical nuclear weapons, smaller
nuclear weapons that can fit on something as small
as an artillery shell or a mortar round or what
have you. Not intercontinental
missiles. But it's something we need to be
mindful of.
Russians turned zaporizhzhia nuclear
power plant into a military base.
So they have mined two of six nuclear power
units and naturally itself by itself, a
nuclear power plant is an object which is
extremely difficult, if possible at all, to to
take back with military means.
The Biden administration has said that if Russia
uses nuclear weapons, there will be
catastrophic consequences. The United
States will respond decisively.
But Biden has said that the United States isn't
going to get involved in this conflict.
It's hard for me to imagine that he's just
going to come right out of the gates and start
using nuclear weapons.
So I think a third option right down the
middle and maybe would be the sweet spot would
be some kind of conventional military
response.
After the Ukrainian offensive pushed Russians
out of occupied areas in the east, Russia began
bombing Ukrainian energy infrastructure throughout
the country.
After Russians started massively bombarding
Ukraine's power infrastructure since
October ten.
There were problems with both, with coal because
Ukraine needed more coal to substitute these
nuclear capacities.
And there were problems where there was just a
lack of capacities inside the country.
The equipment being destroyed, such as power
transformers is not easily replaced.
In some cases is just almost impossible to have
the spare parts because in some cases these
transformations. That is the kind of unique
equipment and which can be produced only by a
request.
The rest of Europe has had nearly a full year to
prepare for a harsh winter without Russian
natural gas. Those plans seem to be paying off.
I think we're already starting to do some of
the right things and we can do more, including
looking to alternative sources of energy from
the Middle East, from US.
Liquefied natural gas continue to keep that aid
going from Washington to Kiev.
Ukraine, however, is dealing with the new
energy shortages caused by Russian bombings.
The Russians started these massive attacks
over energy infrastructure. It seems
like that Ukraine would pass the winter safely,
that it would be okay both in terms of
capacities and in terms of gas, coal stocks.
But actually these attacks have changed
everything.
And a looming price cap on Russian oil could also
complicate the energy calculations made by
Europe early next year.
So in a matter of a couple of months, I think
Europe will be almost entirely independent from
Russian energy already, because on the one hand,
the European embargo on Russian oil will enter
into force in the coming weeks now, and that will
imply a cut of 90% of the volumes of Russian
oil currently traditionally utilized in
Europe. On the other hand, Russia has already
cut itself the more than 80% of its traditional
gas supplies to the continent.
And therefore, we are already experiencing a
very strong decoupling between Europe and Russia
on energy.
I think that the Russians could destroy zaporizhia.
It would have devastating consequences
locally, would take the largest nuclear power
plant in Europe offline.
And so that that is something they could
consider a dirty bomb.
I think a dirty bomb wouldn't actually help
the Russians very much.
But my fear with the dirty bomb is that this
might be a false flag operation, that the
Russians would say Ukraine has launched a
dirty bomb, therefore were within our right to
retaliate with nuclear weapons.
Fertilizer shortages, grain trade issues caused
by the conflict, and the fact that farming in
Ukraine, a breadbasket of Europe, is now
riskier, have made agricultural outlooks
less.
Bright. We're on the verge of a food
availability crisis right now, and part of it
is because we just don't have enough fertilizer
available. So the world really needs those
European plants to operate again.
But now we're seeing this is becoming a real
security issue with the Russians using food as a
weapon of war, turning off and turning on grain
supplies as a way to try to coerce and manipulate
the West.
Europe continues to grapple with the new
reality facing Russian energy imports.
Since the start of the war in Ukraine, the
European imports of solar panels from China,
which is the main supplier, have been
skyrocketing. That means that more and more
families and businesses across Europe are
installing solar panels because they prefer to go
for this way of generating electricity
rather than paying a very expensive
electricity bill because the system costs are very
high.
The war is likely far from over for Ukrainians,
and how this winter goes could dictate the
outcome.