EU threatens Russia with more sanctions as war in Ukraine intensifies, Greece pivots to Russia
Latest commentary on Mark O’Byrne’s www.goldcore.com website focuses particularly on worrying politico-economic developments in Europe which, if unchecked, could well lead to a banking and economic crisis which could spread globally.
EU foreign ministers are meeting in Brussels today to discuss imposing further sanctions on Russia following an upsurge in fighting in east Ukraine.
The EU and the US have already imposed sanctions on Russia and slapped asset freezes and travel bans on Russian individuals and businesses.
NATO says hundreds of Russian tanks and armoured vehicles are in east Ukraine. Moscow denies direct involvement but says some Russian volunteers are fighting alongside the rebels.
Greek’s new Prime Minister Alexis Tsipras and a leader of the country’s radical left-wing anti-austerity party, has indicated dissatisfaction with the sanctions posed on Russia. Russia and Greece have a history of good relations and shared culture. The opposition of EU sanctions by Tsipras may lead to the strengthening of the relationship between the two countries and spells trouble for further sanctions that are to be decided in the weeks ahead.
Tensions between Russia and the West are intensifying. President Obama’s suggestion that Russia would be cut out of the SWIFT banking transfer system was met with a degree of hostility and threatening words that has not been customary of the Russian government.
Prime Minister Medvedev warned that the “Russian response – economically and otherwise – will know no limits.”
The EU‘s push for further sanctions on Russia may be imprudent and only help ‘bait the bear’. Measures under discussion include asset freezes, travel restrictions on certain Russian individuals, and restricted access to capital markets.
The consequences of such a move could be dire. China have made it clear that it can provide liquidity to Russia if necessary, an offer the Russians have not felt the need to avail of as yet. Russia still sits on vast dollar reserves which it could dump on the market and buy Chinese yuan and other allied nations fiat currencies and indeed precious metals such as gold and palladium.
Or Russia could choose to cut off natural gas to Europe causing a crisis for homes and industry across Europe and paralysing industry and agriculture in already struggling periphery economies.
The war in Ukraine, in which 5000 people have already died, is growing in scope and intensity.
At some point Russia may directly enter the conflict – which it would justify given that the ethnically Russian people of Donetsk voted to secede from Ukraine following the overthrow of democratically elected, albeit corrupt, President Yanukovych.
Moscow’s intervention in Ukraine and its continued support for rebels in the east of the country is “not a wise course for Russia”, former UK foreign secretary and leading government politician William Hague has told CNBC.
“If Russia continues on this course of the last few days there will be a further grave deterioration in relations between the European Union and Russia,” Hague who is close to NATO told CNBC’s Worldwide Exchange.
The risks now fomenting in Greece as well the escalating tensions with Russia, along with the tacit admission that the EU is already in serious crisis by initiating emergency QE measures, mean that that the risk of banking contagion and collapse, economic collapse and currency collapse are real threats.