The guidelines of a Nobel Prize in Economics for Europe to adapt to living without buying oil and gas from Putin

The speed and intensity of the economic and financial sanctions decided against Russia will make them effective, but Europe must stop buying Russian oil and gas, said Nobel laureate in economics Joseph Stiglitz.

“The capacity [de Rusia] to wage war (…) will be altered” by the repercussions on its economy of the sanctionsconsidered the economist on the sidelines of a conference on the future of Europe, in an interview with the AFP in Paris. “They lost significant amounts of military equipment (…) and will have to replace it. But do they have the industrial and financial capacity? is debatable”.

One of the main elements of the potential success of the sanctions is “the speed with which they were imposed”.

“If applied gradually, [los rusos] they can adapt,” says Stiglitz, who welcomes the speed with which the Europeans have acted since the invasion of Ukraine.

However, considers it “difficult” to know if the impact of the sanctions on the Russian population and the oligarchs could push Vladimir Putin to relax his position regarding Ukraine and the conflict he started. “There is so much disinformation propaganda that Russian citizens accuse the West and not Putin” of the sanctions they suffer, such as restrictions on imports, the departure of some foreign companies or the devaluation of the ruble.

But consider that Europeans “should stop buying Russian oil and gas,” which make it easier for the regime to finance its war in Ukraine.

According to him, the impact “could be offset by sharing the burden” among European states more or less dependent on Russian gas.

The European Union rules out for now stopping buying Russian gas and oil, a measure that the Biden administration has already taken in the United States. Some countries, like Germany or the Baltic states, which import more than half of their gas from Russia, have no alternative in the short term.

Europe and the United States could put “enormous pressure on Saudi Arabia, Abu Dhabi or the United Arab Emirates and ease sanctions against Iran and Venezuela to obtain additional oil supplies”, says the economist.

Also, he considered that Europe and the United States must “do what they can to protect the countries and individuals, who are the most affected” by the sanctions in their own territory.

“In some democracies, there are groups that suffer [por las sanciones] and they could demonstrate, as well as political parties that could take advantage” of these protests, he warns, for which he advocates common action in the budgets at the European Union level.

The former economic adviser to former US President Bill Clinton said earlier in the conference that China’s position will also be crucial to ensure the effectiveness of sanctions.

China’s support for Russia worries the United States. The White House claimed that it “made a clear signal to China that we will not sit idly by” if a country provides assistance to Russia. For its part, China stated that it does not want to “be affected by the sanctions”, which it “opposes”.

“Disproportionate” concern about inflation

In the context of the sanctions and the acceleration of inflation, in particular of the prices of energy and raw materials, due to the war in Ukraine, the 2001 Nobel laureate in economics considers the concern “disproportionate”, since he considers that this price rise phenomenon will be temporary.

“From a political standpoint, it’s a problem,” he said. But “there is no economic reason to worry about an inflation level of 5 or 6%, and even 7 or 8%,” he says.

Stiglitz pointed out that the conditions are not right for a vicious circle of rising prices and wages to form, and that the markets anticipate, on the contrary, a drop in inflation in the medium term.

(With information from AFP / By Marie Heuclin)

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