Putin wages two wars in the heart of Europe, geopolitical and economic. The first one is losing it, but the second one will probably win it. The advances of the Ukrainian Army in the Kharkov area have provoked an internal movement against it by part of the Kremlin. Even the Chinese president, Xi Jinping, acknowledges his concern about the progress of the conflict.
A Russian foreign ministry spokesman warned the United States that “by sending heavy weapons to Ukraine, all it does is enter the conflict.” The red line marked by Moscow to avoid an escalation.
But Putin maintains his chances of victory. He has ruled out a general mobilization of the population unlike Zelensky, because he does not need it. He has only used a fifth of his Armed Forces in the special operation on Ukraine.
In case he finds himself cornered and in serious difficulties, he can call on the rest of his Army, made up of a million soldiers. Ultimately, he will resort to tactical nuclear weapons, which would cause an escalation of the war. NATO would then have to decide between responding with the same type of weapons or deploying ground forces in Ukraine. Both options would increase tensions.
There are also some elements for optimism: Putin’s setbacks on the Ukrainian map, which currently controls less than 20% of its territory, have made the expansionist threat to neighboring countries, which existed at the beginning of the war, disappear.
If he cannot conquer the Ukraine, he will hardly dare set foot in Poland, Moldova or Romania. Sweden and Finland have just signed their entry into NATO , despite the threats.
German gas reserves are at 85% , which will allow them to last until spring. It is true that there are signs that the war will be long, but with a weakened Russia, the prospect of some kind of agreement before the winter of next year, when Europe will arrive with depleted storage, opens up.
Likewise, the slowdown in China is growing at half its potential, and its negative influence on all of Asia contributes to keeping oil prices below 90 euros and takes pressure off gas.
On the side of the economy things are worse than on the front. The European Union announced measures aimed at containing the price of gas . Nobody in the sector expects a substantial reduction, but on the contrary. The president of the Commission, Ursula von der Leyen, influenced by her countryman Chancellor Scholz and the leaders of the Baltic countries, did not dare to put a stop to Russian gas for fear that Putin would turn off the tap completely. European disunity is evident in this matter.
To make matters worse, Von der Leyen adopted the German chancellor’s social-democratic discourse, by imposing a tax on fossil fuel companies, precisely those that were the most affected by the pandemic. Brussels amended, incidentally, the plan for Teresa Ribera, which intended to tax the income of energy companies, instead of profits.
It is uncertain that Europe will collect 140,000 million with these measures . The only thing guaranteed is the 25,000 million to the oil companies. The rest of the money will be saved by consumers, but will not enter the community coffers.
The European rate will most likely have a boomerang effect . Energy companies will put the brakes on their investments or divert them to other destinations. The president of Iberdrola, Ignacio Sánchez Galán, estimates that while we look into the recession , more than one and a half billion in renewables will move from Europe to the United States, where they receive incentives to settle.
Meanwhile, the vice president of the ECB, Luis de Guindos, already foresees a fall in property prices due to the rise in interest rates. Real estate, along with tourism, are the two sectors that have driven the economy so far. Both will suffer significantly in the coming months.
Not one euro of the 30,000 million announced by Sánchez goes in aid to companies
Funding is the third big concern. While Garamendi meets with the top leadership of the CEOE this week to launch his re-election campaign, the small and medium-sized businessmen are plunged into desolation and feel helpless in the face of the constant attacks from the government and the lack of concrete support.
Not one euro of the 30,000 million injected by Sánchez into the economy since Putin invaded Ukraine in February, went to directly support companies.
The president demonizes companies at the same time that he uses them as a throwing weapon against his main adversary, Alberto Núñez Feijóo, for trying to profit from inflation, when for the majority it is just the opposite, they suffer a narrowing of margins,
The controversy opened by the second vice president Yolanda Díaz on the price of basic foods has two groups among its great losers: small businesses and ranchers and farmers. The caps that Díaz is asking for from large surfaces will strangle thousands of small businesses and freelancers. The problem, as elEconomista.es explains today , lies in excessive taxation and bureaucracy, together with inadequate supervision of the food chain.
In addition, there is a growing fear that the end of the moratorium on insolvency proceedings since last July will cause a domino effect. Bankruptcies grew 15% in August and an explosion is expected in September and October. Companies with suppliers on the verge of bankruptcy will have to account for their debts as losses when it occurs.
To make matters worse, the Official Credit Institute (ICO) has turned off the tap on the lines open during the pandemic. The latest extension has not even been launched, probably due to fears of defaults, which have increased significantly.
The banks are tightening the conditions of the loans in parallel, not only because of the interest to be collected, which will more than double at the end of the year, now they are looking closely at insolvencies, with the Bank of Spain on their hump, asking through the means that strengthen surveillance in the face of a foreseeable increase in delinquency.
Finally, the political context discourages financial institutions from giving loans, with a government determined to make banks participate in the energy costs borne by consumers.
With gas skyrocketing and no sign of being corrected, rampant inflation, rising loan prices, and supply disruptions of chips and other raw materials still unresolved, companies are facing the perfect storm this fall-winter, the pair that are the target of Sánchez’s diatribes.
It is no wonder that hundreds of thousands of small and medium-sized entrepreneurs or the self-employed whom the Government had promised to help, even with tax cuts, are unhappy and feel cheated in the midst of the storm.
PS .- After prices, the torture rack for companies will be financing costs. The rise of the influential German councillor, Isabel Schnabel, a supporter of a ruthless orthodoxy against inflation, is a sign of how the hawks are gradually taking control of the institution. The last rise in the price of money by 75 basis points was taken unanimously, when the initial proposal was only 25 hundredths.
The orthodox wing of the monetary institution places interest rates at 4% at the beginning of 2024, to place them close to the level they are expected to reach in the United States next year. That means that, in a year and a half, the price of money will more than double.