Europe versus Russia, Mutual Assured Economic Destruction

This article portrays the Putin as retreating from the Europeans resolve over the war. But it seems both sides are playing a game of chicken.

Putin is waiting for winter to come to hit the Europeans hard with the expected shortages. Once people start dying from the cold, that will push people one way or another. However, the Nord Stream shutdown is not due to sanctions. The Russians have no idea how to run their pipelines without western expertise. Exxon, BP, and Shell were the companies that made Russian oil productive. With the sanctions and the war those companies exited meaning all the oil drilled out of the crazy Russian permafrost is beyond the capability of the Russians. Their military equipment completely broke down against western equipment, why should we expect their oil drills to fare any better without western equipment. In all likelihood once winter hits Russia will not be able to produce oil at all. Likely, the end of the Russia economy.

The Europeans seem to be just printing money to subsidize energy. Since demographically speaking the Central Europeans are basically at a retirement age and they don’t have a replacement population this printing of money will never get paid. The shutdowns of their manufacturing and agricultural businesses will have a detrimental effect on their economy leading to companies finding alternatives. This war came at the worst time for Europeans. As most of them start retiring and the state prints money, socialism breaks down. The state will not be able to provide resources that it previously has in the future without borrowing/printing more money. Europe is no longer a meaningful place for investments, it will however, be a place to get access to cheap human capital.

If Ukrainians keep pressing for advantage they can likely fully take over the lands they lost to the Russians in 2014. However, once winter approaches this will slow down. Putin likely thought that he could waltz into Ukraine, and win it in a few days. The war would be over with Ukraine falling. The west to prevent bloodshed would appease him. And the Russia would still have access to western oil expertise. All of those things have fallen apart. The Ukrainians may very well win, but in doing so they will have taken down Europe and Russia.

The United States is pretty vested in the Ukrainians winning because if Russia isn’t completely demolished they will attack NATO countries triggering Article 5 of the alliance meaning America has to send troops. America really, really doesn’t want to do this (especially after Afghanistan and a significant decrease in people joining the military). So it is okay with Europe failing as long as it means it doesn’t have to go fight a war over there.

Long story short we are seeing the destruction of the Russian AND European economies not just Russian.

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