Exit of the biggest Italian energy company from Russia

 

This week the great news is that Italy's biggest manufacturer and distributor of energy and gas, Enel SpA, will sell in the next three months its 56.43% stake in Russia to local investors. Established in Russia in 2004, the Italian group will follow similar moves by the world's biggest energy companies, such as Shell and BP after Russian government's invasion of East Ukraine.

In addition, the deal is expected to have a positive effect on the group's consolidated net debt of about 550 million euros. The global reach of the Italian biggest utility extends from Europe to Latin America and India, that's why the company's ordinary financial results would not be affected by the deal to sell the stake in the Russian subsidiary.

Its easy to forecast that other Western multinational companies, which have been established in Russia since long time, are going to do the same.

Wheat shortage crisis

 

There is a great talk about global food crisis fueled by the war in East Europe, as Ukraine plays a major role in the global food system. So while the Ukraine-Russia war directly threatens global food security, wheat prices hit record high in recent days. According to Wionews.com, Russia and Ukraine are two of the top wheat exporters, with respectively 17% and 10% of global export. 

The big question is when will wheat prices come down? Russia and Ukraine have been exchanging accusations over obstructing the movement of wheat shipment through the Black Sea. In my opinion this is a false problem rather than a real barrier, which can't be solved thanks to Intermodal transfer. 

With regards to Ukraine, the wheat could be shipped from the two ports of Costanta (Romania) and Varna (Bulgaria), considering there is an efficient railway system from Odesa (Ukraine) to the two towns just mentioned. Intermodal transfer may involve rail and ship, due to the fact that the four biggest wheat importers (Egypt, Sudan, Turkey, and Yemen) are located close to the Mediterranean area.

China's military drills

Since Russia's invasion of Ukraine, two Western governments have been pushing for Taiwan to order missiles and smaller arms. In the meanwhile, China is conducting military drills near Taiwan, as it seems Chinese are practicing how to invade the island. 

According to WionNews, in the first week of May 2022 China carried out another round of drills near Taiwan. A large number of Chinese warplanes, warships and conventional missiles surrounded the island.

The U.S. has never officially supported Taiwan independence. And the sentence "Taiwan is part of China" had been written on U.S. State Department's website for decades. The fact that this sentence has been recently removed signals a shift. Consequently, the message is clear: America is ready to back an independent Taiwan. In other words, the U.S. would be ready to supply their weapons to Taiwan.

New arms race in Europe

I've noticed that world's policy-makers are not worried about the new arms race that has been triggered in East Europe. On the contrary, since Russia-Ukraine war began about three months ago the US has sent more the $ 3 billion in military equipments to Ukraine. Not to mention of other countries, such as China and the UK that are also involved in shipping weapons respectively to Russia and Ukraine. 

In addition, other European countries located close to Russian and Ukrainian border, such as Poland, Estonia, and Romania, have also been buying weapons and missiles. With its 37% of global arms export, the U.S. is world's largest weapons exporter. There are no doubts that military-industry complex and contractors are winning this war.

The picture above, which shows the Azovstal steelworks in the devastated Ukrainian city of Mariupol, was published on 6th May, 2020 by the BBC website: 

https://www.bbc.com/news/in-pictures-61348541 

I have got that powerful picture via email from Willie, our blogging friend from Blandford.

2021 military exercises close to the Russian border

If we were to get a wider perspective of the Russian's invasion of the East Ukraine's territories, we would need same information about the military drills held in 2021 on the Ukrainian territory by US and UK. 

In June 2021 US, UK, and Australia (which is not a NATO member), held naval exercises in the Black Sea and Southern Ukraine. One month later, The US, Poland, and Lithuania held another military exercise involving more than 1200 troops in West Ukraine. In addition, from 20th September to 1st October 2021 large scale war games with US, UK, and same NATO and Ukrainians troops took place close to the Belarus border. 

As it is known, Since early 1990s Ukraine has been a buffer state between Westerners and Russia. On the other hand, according to a core principle of international law, there is the right of people to decide their own destiny in the international order (principle of self-determination). That's why it's not easy to say who is right. Obviously, that has nothing to do with shellings of residential neighborhoods, railway stations and hospitals, as we have already seen in Syria, Yemen, Afghanistan, Libya, etc.   

Since Ukraine war began in late February, Russians have been knoking on Finland's door. In this viewpoint, the geopolitical neutral Scandinavian country was recently hit by two cyberattacks and an airspace violation by a Russian plane. If Finland's people or policy-makers of Finland try to join NATO, it would be a strategic mistake. Finland has been successfully developing economic ties with both Russia and EU. I think it would be a terrible mess for the Finnish people. 

Down the war path

I think we can not see the war in Ukraine as an isolated event.  Instead we should also look the conflict in East Europe as an integral part of a geopolitical strategy,  due to the fact that some countries are fanning its fire by applying political and economic tools. And while the Ukrainian President is still looking for partners who will give him weapons and more military assistance, the sanctions will severely damage the economy of many countries. 

In an interesting article published two days ago by an Indian news network, the author, Palki Sharma, explains three main mistakes made by the Ukraine President. According to the Indian journalist, Mr. Zelensky over-stimated Western support. In addition, he misread Ukraine importance to the Western countries. And last but not least, the Ukrainian President also misread Putin's intent to invade his country.

On the 1st of September 2021, Mr. Zelensky publicly said he thought the US President, Biden, would personally support Ukraine with regards to NATO membership. In April 2021 Zelensky seemed very confident in US & EU support due to the fact that his country would never be alone against Russian aggression.

But this doesn't mean that Western countries led Ukraine down the war path.

I do hope Russian invasion will go to an end soon!

Still room for negotiation

The Ukrainian President, Zelenskij, recently urged the EU to "prove that you are with us" in Ukraine war with Russia. As it is known, the German carmaker Volkswagen has two factories and around 4,000 employees in Russia. ENI, the Italian multinational oil and gas company, and the Russian company Gazprom  have 50% each in the Blue Stream gas pipeline to Turkey. The Norwegian company Equinor has minority stakes in three Russian oilfields. The French carmaker Renault makes 8% of its earnings in Russia (source: Citibank).

In this context, how can the Ukrainian President be so naive? Does he really think that the EU may help his country? I hope the diplomacy will be able to do a good job. There is still room for a good negotiation! It is not too late!