EU ‘shot itself in the lungs!’

EU ‘shot itself in the lungs’ with sanctions against Russia, says Hungarian Orban

The Russian ruble has rebounded from crippling economic sanctions imposed on Moscow following the invasion of Ukraine and since President Vladimir Putin exercise his master stroke by demanding that oil and gas from unfriendly countries be paid in ruble, it has rised and is now at its strongest in more than seven years — earning it the distinction of being the best-performing currency in the world so far this year.

Russia is the second largest exporter of oil in the world and is also the world’s largest exporter of natural gas. The export of fossil fuels has allowed the Russian government to reap a $20 billion a month windfall since the start of the war in Ukraine. An analysis by Bloomberg Economics earlier this year found that the Kremlin could amass a surplus of $321 billion this year strictly from energy exports. Consequently, Putin has touted the ruble’s robust recovery as proof that his economy has successfully withstood the onslaught of Western sanctions as the ruble has soared 40% against the dollar since the start of the year.

By Euronews with Reuters • 15/07/2022

The European Union has “shot itself in the lungs” with ill-considered economic sanctions on Russia, which, unless rolled back, risk destroying the European economy, Hungarian Prime Minister Viktor Orban said on Friday.

The European Union has “shot itself in the lungs!”

The surge in gas and electricity prices forced nationalist Orban to curtail a years-long cap on utility prices for higher-usage households on Wednesday, rolling back one of the 59-year-old prime minister’s signature economic policies.

“Initially, I thought we had only shot ourselves in the foot, but now it is clear that the European economy has shot itself in the lungs, and it is gasping for air,” Orban, a long-time sanctions critic, told public radio in an interview.

Orban said Ukraine needed help, but European leaders should reconsider their strategy, as sanctions have caused widespread damage to the European economy without weakening Russia or bringing the months-long war closer to any resolution.

All EU sanctions packages require agreement among the 27 member states. While Hungary has voted to endorse the sanctions, they objected to the inclusion of Patriarch Kirill, the head of Russia’s Orthodox Church and got him excluded from the sixth sanctions package.

Gas supplies to Europe have tightened and fuel costs have soared since Russia’s invasion of Ukraine in late February, leaving countries scrambling to refill storage and diversify supply channels.

“The sanctions do not help Ukraine, however, they are bad for the European economy and if it goes on like this, they will kill off the European economy,” Orban said. “What we see right now is unbearable.”

“The moment of truth must come in Brussels when leaders admit they have made a miscalculation, that the sanctions policy was based on wrong assumptions and it must be changed.”

The Ruble rising against the US Dollar and remains strong

Orban said that the entire utility price cap regime will now have to be scrapped.

Re-elected in April, Orban is facing his toughest challenge yet since taking power in a 2010 landslide, with inflation at its highest in two decades, the forint plumbing record lows and European Union funds in limbo amid a dispute over democratic standards. 

Before the April ballot, economists estimated the cost of the utility price caps at up to 1.5 trillion forints (€3.7 billion), which along with a raft of measures that helped Orban’s election bid, have caused a surge in the budget deficit.

Orban’s other decision to fast-track legislation to raise the tax rate for hundreds of thousands of small firms this week as part of a broader drive to rein in the ballooning budget deficit has led to several protests in Budapest.

~ by Joel Huan on July 21, 2022.

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