Dismal Returns in Europe's Economic Sacrifice for Ukraine
"Send photos of your credit card from both sides to make sure you hate Russians."
The European economy is struggling to stay afloat amidst the flood of global shocks and shifting economic dynamics. A survey conducted earlier this summer reported 58% of Europeans describing the economic situation in their own country as “bad.” One-third of participants stated they believe EU lacks sufficient power and tools to defend the economic interests of Europe in the global economy.
Over the past two years, the sharp deterioration of terms of trade due to surging imported energy prices has resulted in a substantial loss of EU purchasing power. Households and public finances have borne the brunt of this imported inflation, as job growth struggles to counterbalance the fall in real wages. This summer the European Commission requested a staggering increase of €66 billion to the EU's long-term budget following a series of crises that have drained the bloc's financial reserves. The EU’s desperate attempts to address pressing issues reveal deeper inconsistencies between its hard-lined ideology and economic realties.
Last week the Commission paid out another €1.5 billion* to Ukraine as part of a support package approved last November. In just this one package Ukraine has received €12 billion* so far this year. According to the Commission, since the start of the war, financial support to Ukraine amounts to €76 billion.* If that wasn't excessive enough, future proposals for supporting Ukraine appear equally unrestrained. In June the Commission proposed another €50 billion* for the period of 2024-2027. These projections offer a pessimistic view of the conflict's resolution and the return to a peaceful state—something Eastern Ukraine hasn’t seen since 2014.
It’s astonishing that the EU intends to continue offering this support when so far the most significant effects have been damage to its own economy, the death of tens of thousands of people, and the fortification of economies in the global south - including Russia. Portraying the Russian economy as being in turmoil is far from genuine. The International Monetary Fund (IMF) released the World Economic Outlook in April earlier this year highlighted “uncertainty over the effects of Western sanctions on Russian crude oil exports,” stating that, as of March, Russian crude oil exports have “held steady” since the implementation of the G7 price cap and the ban on imports. The report explains that “Russia rerouted its oil, reportedly sold at a major discount to Brent oil prices, to nonsanctioning countries.” Even with the sanctions in place, it isn’t just China and India aiding the Russian energy sector. EU imports of Russian liquified gas have skyrocketed by 40% since the conflict in Ukraine erupted in February last year.
The dedication to poor economic policies driven largely by ideology cannot reasonably be expected to yield better results than it has thus far. If Europe’s economy continues to deteriorate, will citizens be able to pressure changes in policy? Or will the EU continue to railroad its own citizens out of hatred for the Russian Federation?
-The Shultz Report by M. Shultz