(LifeSiteNews) — In a startling admission, European Union (EU) technocrat Josep Borrell has stated that the EU has so far spent over 760 billion euros on the war in Ukraine.
Speaking at this week’s International Institute for Strategic Studies (IISS Security conference in Singapore, the EU foreign affairs representative addressed an audience of NATO defense ministers and Asian diplomats.
Borrell framed the EU’s involvement in the war against Russia as a departure from convention.
Maybe not many people know in this region that in the last 15 months in Europe we have been breaking political taboos.
What Borrell meant by “breaking taboos” was the financing of the war in Ukraine.
For the first time ever, we have been funding military support to a country under attack. Providing about €40 billion of military support to Ukraine, coming from the [EU] Institutions, coming from the resources I manage in Brussels, and coming from the Member States.
Yes, much less than the US support. But if you add up all the support – military, civilian, economic, financial and humanitarian – the level of support to Ukraine is about €60 billion for Europe.
He seemed keen to impress his audience with the total cost to the EU of the war against Russia.
But let me show another figure which is really impressive: if you include the support that the European governments have had to pay in order to help their families and firms to face the high prices of electricity, of food, the subsidies to our people in order to face the consequences of the war is €700 billion – ten times more than the support for Ukraine.
Borrell’s speech fell short of naming these “consequences” precisely, but it is clear he is referring to the cost of sanctions.
Which shows that the consequences of this war are not reduced to what’s happening in Ukraine but to the shockwaves that the war has been sending all around the world.
Borrell is explaining how much the EU has to pay for its own deliberate mistakes. He does not say when the money printing is going to stop.
Economic ‘shock and awe’
Borrell refused to break the one obvious taboo indicated by his own speech – that the sanctions have backfired.
Described as “Economic Shock and Awe” as far back as March 20, 2022, the sanctions on Russia were expected to secure the same goal as the military doctrine of that name. Inspired by a 1996 guide to military strategy, “Shock and Awe” is the use of overwhelming and spectacular force to “achieve rapid dominance.”
Fifteen months have passed since the phrase was used to describe the attempt to use economic sanctions to isolate, destabilize and overextend the Russian economy.
Yet Russia has recovered from the initial impact of the sanctions, diversifying its trade partnerships and seeing its economy rebound to overtake those of Germany and the United Kingdom in terms of growth. Its performance has exceeded the optimistic picture projected for Russia in the International Monetary Fund’s February forecast.
While Germany slides into recession, suffering accelerating deindustrialization due to an insoluble energy crisis, the U.K. and U.S. look set to be next. The energy crisis is driving inflation, and the response of printing money contributes to this vicious circle.
The price of everything in Europe is rising, with the EU resorting to subsidizing its own industries to allow businesses and domestic consumers to meet the rising cost of energy.
A circular argument
That the sanctions have backfired is obvious. What is not is why they were undertaken in the first place, given that there was no realistic alternative to the cheap and reliable supply of Russian oil and gas.
Eleven rounds of sanctions have been placed on Russia, with the result being that the sanctioning nations have borne the brunt of the economic fallout. Secondly, this gambit has revealed the limitations of economic warfare in a shrinking circle of influence.
The attempt to undermine Russian oil revenues with a price cap has failed. With major consumers and transit nations such as India and China outside the sanctions bloc, the economic reach of the sanctions is limited to its own membership. This excludes 70 percent of the world population.
It is a sign that the economic warfare model is no longer effective – except as a means of self-destruction. The reach of sanctions is shrinking, as most nations simply ignore them.
Predictable results
Leading oil price expert Jorge Montepeque was one of many who claimed in the spring of 2022 that the Russian oil price cap would fail to hurt Russia.
Just over one year later, business insiders report this is exactly the case, with Russian oil routinely being sold openly over the price cap, often through a new shipping and insurance arrangement which completely excludes Western firms.
This introduces an entirely new revenue stream for Russia. It is unclear how much money Russia is making from these ancillary services, but it is not an insignificant amount.
Estimates of Russian oil revenues exclude this new market, constructed as an alternative to that which was removed under Western sanctions. The result of the sanctions here has been to promote trade outside the Western system, and beyond its reach. Despite the involvement of India and China in the transit of Russian oil, “Right now, the G7 believe the price cap policy is working.”
The management seems out of touch as a matter of principle.
Warning signs
Borrell himself admitted last October that “our prosperity relies on China and Russia”. Why then would he enthusiastically embrace policies certain to destroy it?
This is one aspect of the multipolar reality outlined in the European Central Bank’s April assessment, in which ECB head Christine Lagarde spoke of the end of a “period of relative stability… now giving way to one of lasting instability resulting in lower growth, higher costs and more uncertain trade partnerships.”
“That has been most visible in the European energy crisis…” she added.
Her remarks echoed those of U.S. Federal Reserve Chair Janet Yellen, who warned in an April 16 interview with CNN that economic warfare could end the dominance of the dollar.
There is a risk, when we use financial sanctions that are linked to the role of the dollar, that, over time, it could undermine the hegemony of the dollar.
Of course, it does create a desire on the part of China, of Russia, of Iran to find an alternative.
Economic heads and EU diplomats are compelled to acknowledge – without mentioning the “s” word – that their policies have steered Europe into a mire of stagnation and inflation.
Borrell and the jungle
Borrell is no stranger to taboo. His remarks made about the world beyond Europe last October led to international condemnation. He infamously described Europe as a garden – and “most of the rest of the world” as a jungle to be civilized by European engagement.
It is hard to picture how the EU will be capable of tending its own garden in future, given the severe economic consequences of its so-called civilizing mission.
Tending the jungle seems an ambitious project for an administration which has been beggared by predictably disastrous policies, and can supply no answer to the question of what to do to help itself out of the mess it has made.