Ukraine: the chicken coming home to roost for the West?

The EU and NATO have slammed historic sanctions – numbering some 5,532 – on Russia, targeted at crippling its international trade on account of its invasion of Ukraine. But rather than bringing Russia to its knees and ending the war, Russia has responded, escalating the matter, by demanding payment for gas in
ruble by ‘unfriendly nations’. One clear thing is that the engagement and its outcomes won’t end soon.
Ukraine may be far from Nigeria physically, but in terms of impact, the war going on there splashes on us well. As I pointed out last week, Russia and Ukraine account for some 25% of global trade in wheat, and that affects Africa, a net importer, very much. For Nigeria particularly, Russia is the world’s second largest exporter of crude oil ($110 billion in 2021) and the world’s largest exporter of natural gas ($8.8billion) – Nigeria’s prime exports. Russia is also a very significant exporter of refined petroleum ($69.9 billion) – a prime import of Nigeria. Whatever affects Russian trade as a result of its invasion of Ukraine would touch on Nigeria. The spike in oil price which followed the invasion was both good and bad news for Nigeria. It was good in terms of earnings from crude export, but it was bad for Nigeria as well as she is a major importer of refined petroleum which prices rose with that of crude. It means either more ‘subsidy’ on petrol prices or increases in pump prices. If you still don’t get it, here’s how it will hit your pocket directly. Inflation is rising in both the US and the UK from which our folks send the remittances that sustain most of us at home – some $25 billion at last count. The UK inflation figure is expected to end the fiscal year at 9% – a shade off double digits like Nigeria. Household income is predicted to drop by 2.2% per person.
Therefore, our folks out there will spend more to maintain themselves and have less to send home. Indeed, living standards in the UK are expected to fall at the fastest rate since the mid-1950s in this 2022/23 fiscal year! The war in Ukraine and its fallouts account for a significant portion of this expected
outcome. The picture in the US isn’t much better, with the populace stewing under a 5% inflation which has raised average family monthly spending by about $300 (N177,000). Take that off what they can send home and see what’s left. We therefore need a balanced view of what’s happening in Ukraine and
Russia.

My friend, David Danisa, a strategic studies expert has an interesting take on this unfolding matter. Here goes:
“Putin demands ‘unfriendly countries’ pay for Russian gas in Rubbles” It doesn’t sound so big, does it? It doesn’t if you are not a thinking man. If you are, it does. Europe relies on Russia for 40% of its energy needs which in terms of value and volume CANNOT be replaced immediately. Russia does not need
Europe to sell. If Europe sources its energy needs from elsewhere, it immediately creates a hole in the energy markets that Russia can fill. Besides, if you replace Russian gas with shipped LNG from UAE or USA, you must be willing to pay more for your gas, meaning that your industrial products will cost more, while the Russians will replace the shortfall in UAE and USA gas supplies to erstwhile Asian customers…and sell gas to these markets at discount. Russia, don’t forget, is a Eurasian power. It can look to the West or pivot to the East with ease. Geopolitically, Russia occupies a central position in the markets, which enables it to play at will. And where is the competition for the west, in terms of industrial production?
The East! So, if Russian hydrocarbon arrives on favorable terms here, who loses markets? The West. President Putin knows this. You can’t threaten him with sanctions and go scot-free. You impose sanctions on all Russian credit institutions, you prevent the country from trade with the West, they can’t buy
or sell anything other than fossil fuel in Western markets. You sanction Russia’s central bank.
You steal half of its reserves because you think you are clever. You shut their trade companies, and you put pressure on western private companies operating in Russia. And you sit back, feeling entertained, thinking he’s been chained. Not realizing that he’s done his homework, all done years before he made his move in Ukraine. To add insult to injury, you permit Russia to sell and receive dollars and euros only for fossil fuel you need. And you call yourself smart? You think this will sink the rubble and inspire regime change. They even said that this would sink Russia economically… Guess what guys, the entire economic bureaucracy of western governments aren’t even half as smart as just President Putin, it seems to me. They are at least 10 years behind his pace.
 … President Putin now wants rubble for his gas to Europe. Only the Russian Central Bank, which you have sanctioned, issues that bill. It means you will find a way of dealing with your vomit if you are in the west and you must buy Russian gas. How you go about that, President Putin does not care or want to know. He’s prepared to honor his country’s gas supply contract and has been doing that. “Now, what do you do? Well, this is the million-dollar question. I have friends that are economists and business specialists. Perhaps, they will educate me on what the issue really must be now, and how if you are a buying company of Russian hydrocarbon fuel in the West (“Unfriendly countries”), you will deal with this situation.
Do you see how easily and effortlessly President Putin can turn the tables? Some hours ago, it was Washington that was sending delegates everywhere to threaten people in India, Pakistan, China, Saudi Arabia, etc with sanctions – if they revert to buying Russian fossil fuel exports in any currency other than the dollar or euro. Because they’d blocked that window, without which they planned to crash the Russian economy.
President Putin has turned the tables. ‘Why take the fight to 3rd party countries when we can box with one another directly? Leave India, leave Pakistan, leave China and face me’. I WANT MY PAYMENT IN RUBLE! What are you gonna do about that, “say what, say what, say what!!!  These are surely interesting times. Let’s watch. The game is on. And the economic war is getting even more interesting than physical combat going on in Ukraine…