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The McFaul-Yermak Group
Located in the deep rear, Ukraine’s top politicians and members of parliament from the ruling Servant of the People party continue to shake up the country and the situation on the line of contact as best they can. They’ve dreamed up lots of kooky tax reform plans, disrupted key markets and proposed all manner of idiotic measures involving language and literature. And so on. Weird pronouncements and decisions are made and announced almost daily, suddenly, without any public discussion.
I’m tempted to write about some of them, except I am too busy running long distances and attempting to prevent becoming the accidental victim of an unemployed actor — the same one being compared with Byron and Shelley1.
London-based practicing philosopher Vladimir Pastukhov does not sound impressed by the work of the McFaul-Yermak Group2.
Here’s a quick translation of what he opined yesterday.
Head of the Office of the President of Ukraine Andriy Yermak on his Telegram channel regularly reports on efforts to tighten sanctions against the Russian Federation and, in particular, at least once a week, on the gas embargo. And today he wrote that the McFaul-Yermak Group is proposing to allies to impose a gas embargo in order to hit the Russian economy, and also to knock out the “energy needle” from their hands.
It looks like the proposals of the McFaul-Yermak group are listened to on the other side with "understanding." Russia’s president has been expanding the “embargo” on Russian gas for European countries for several months now. By decision of the Russian Federation, Bulgaria and Poland were cut off from Russian gas at the end of April, Denmark, Finland and the Netherlands at the end of May. On June 15, gas pumping through Nord Stream 1 (and these are supplies to Germany, France, Austria and Italy) fell by 40%, and on June 16, by another 20%. Plus, almost a third of gas supplies to Europe through the Ukrainian GTS have been lost due to the loss of Ukraine's control over the compressor station in the Luhansk region. Accordingly, there was a shortage and the cost of gas soared to $1,300. US per 1,000 cu. m. And this is not the limit. Last fall, the price exceeded $2,000.
Of course, Putin did not become an ally of "Anglo-Saxons and neo-Nazis." It's just that at the moment the gas embargo hits Europe much harder than Russia. Let's pay attention to Russia’s budget (recently revised in April-May) for simplification in average monthly figures. Revenues per month - $36.3 billion (of which from gas exports - $6.7 billion), expenses per month - $38.7 billion ($11 billion for the war). If gas revenues are completely eliminated immediately, then the budget should cover a deficit of about $9.05 billion per month. Even without much shrinking, and using only the National Wealth Fund ($155 billion) for this, it is possible to cover this deficit for almost a year and a half. And there are also considerable gold and foreign exchange reserves of the Central Bank of the Russian Federation. Of course, this is a very crude approach. Budget expenditures will certainly grow to compensate for the sanctions against the real sector and intensify the financing of the war. At the same time, budget revenues will decrease from a decrease in industrial exports in other items. But after all, revenues from oil and gas exports will not fall to zero - there are always alternatives. So it's a long story.
The current financial "cushion" of Russia allows it to exist quite normally in conditions of severe isolation for many years and continue military operations. But Putin does not plan to wait for many years. If hit immediately, Western Europeans will feel the impact of the energy embargo almost immediately, with a growing effect by the heating season. And these are: energy shortages, widespread price increases, a decrease in economic activity, an increase in unemployment, a global crisis and voter discontent - which will destabilize the political situation and raise a simple question: why should we, Europeans, suffer hardships because of the war on the outskirts of Europe. A good basis for quickly reaching a truce on a compromise basis. And the time to strike is right - until European gas storages are filled to 80%.
Putin's tactics look rational and effective, but how the West can counteract it as soon as possible with the introduction of a gas embargo (which works in the same direction) from the West is not yet clear. Radical opposition to this plan would be to bet on a military turning point on the battlefield. However, for the time being, Ukraine’s allies are not focused on achieving an early victory at the front, but are adopting the concept of a long war of attrition. For Ukraine, this is definitely not the best solution.
Byron, Shelley, and Now Zelensky. The Atlantic (June 18, 2022)
Michael McFaul is a Russia expert and former U.S. Ambassador to Russia under Barrack Obama. Andriy Yermak is head of the President’s Office of Ukraine.