Month: December 2021

Authored by Nick Corbishley via NakedCapitalism.com,

The ECB has already warned once about the potential impact a plummeting lira could have on Euro Area banks heavily exposed to Turkey’s economy.

Turkey is in the grip of another big wave of its multiyear currency crisis. The value of the lira against the dollar has plunged by almost 40% so far this year, making it the worst performing emerging market currency. The currency is currently trading at just over 13 units to the dollar, compared to 7.44 in January and 3.78 at the start of 2018. On just one day this month (Nov 23), the currency plunged almost 20% before recovering slightly. The main cause of the collapse was the Central Bank of the Republic of Turkey’s decision to reduce interest rates for the third time since September, despite a slumping lira and surging inflation.

Contagion Risks

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At the height of the last big wave of Turkey’s ongoing crisis, in August 2018, the European Central Bank issued a warning about the potential impact the plummeting lira could have on Euro Area banks heavily exposed to Turkey’s economy via large amounts in loans — much of them in euros — through banks they acquired in Turkey. The central bank was worried that Turkish borrowers might not be hedged against the lira’s weakness and would begin to default on foreign currency loans, which accounted for 40% of the Turkish banking sector’s assets.

In the end, the contagion risks were largely contained. Many Turkish banks ended up agreeing to restructure the debts of their corporate clients, particularly the large ones. At the same time, the Erdogan government used state-owned lenders to bail out millions of cash-strapped consumers by restructuring their consumer loans, many of them foreign denominated, and credit card debt.  

But concerns are once again on the rise about European banks’ exposure to Turkey. On Friday, as those concerns commingled with fears about the potential threat posed by the new omicron variant of Covid-19, Europe’s worst-affected stocks included the four banks most exposed to Turkey: Spain’s BBVA, whose shares fell 7.3% on the day, Italy’s Unicredit (-6.9%), France’s BNP Paribas (-5.9%) and the Dutch ING (-7.3%).

The collapsing lira is almost certain to fuel even higher inflation in Turkey. In October, consumer price inflation in the country was already at an eye-watering 20%. That’s still not as high as the 25% peak registered in 2018, but it is likely to go a lot higher as the lira weakens. As prices soar, further eroding the savings and incomes of many Turks, so too will the risk of social and political unrest. Another cause for concern is that a weaker lira will make it even harder for businesses already battered by the fallout of the virus crisis to repay their foreign-denominated debts.

The one silver lining for Turkey’s economy is that the crumbling lira has boosted exports while making imports prohibitively expensive for many people. Even before the currency’s latest rout, Turkey registered two straight months of current account surpluses in August and September — a rare feat for a country so heavily dependent on imports. Meanwhile, Erdogan, who maintains de facto control of Turkey’s central bank, continues to dig in his heels over interest rate policy, as the Guardian reports:

[…] Recep Tayyip Erdoğan’s declaration of an “economic war of independence” has pitched him against many in his own party and the country’s technocrats who fear an inflation rate running at 20% will create further bouts of social unrest.

“Some people who wanted to convey the opinion to the president that a different policy should be followed were not successful in this,” a senior official in the ruling AK party told Reuters, requesting anonymity.

Three central bank governors who stood against Erdoğan’s demand for lower interest rates have been sacked since mid-2019, leaving the way clear for the governor since March, Şahap Kavcıoğlu, to bring down the base rate in three separate cuts from 19% to 15%.

Reduced Exposure

Spanish banks have by far the highest loan exposure to Turkey, with just under $63 billion of loans outstanding, followed by France ($26 billion), Germany ($14 billion) and Italy ($6 billion), according to recent data from the Bank of International Settlements. The good news for the ECB is that some Eurozone banks with large-scale operations in Turkey have pared back their exposure to the country, or at least not added to it, since 2018.

Italian megabank Unicredit has sold down its stake in the commercial bank Yapi Kredi from 40% in 2018 to around 20% today. Under a strategy aimed at offloading non-core assets, the bank’s current business plan envisages achieving zero contribution from Yapi by the end of 2023. Nonetheless Yapi Kredi will still contribute around 5% of group earnings in 2021, according to estimates by Citi analysts.

French giant BNP Paribas operates various businesses in Turkey, from retail banking to leasing and insurance through a string of subsidiaries. But the country accounts for a low single-digit contribution to BNP profits, according to Jeffries. What’s more, BNP claims that most of its Turkish business is self-financed.

Another European bank with operations in Turkey is the Dutch group ING but its exposure is also limited. In 2020 it generated a total income of 420 million euros in the country, making it the Dutch bank’s third biggest market outside Europe after the United States and Australia. Assets in Turkey stood at around 7.3 billion euros in 2020, or less than 1% out of a total of 937 billion euros.

Bucking the Trend

There is one big exception to this trend: Spain’s second largest lender, BBVA. In 2020, Turkey was BBVA’s third largest market after Mexico and Spain, providing €563 million of net attributable profit, up 41% from 2019. That represents 14.3% of BBVA profits, excluding the corporate centre.

Until two weeks ago, BBVA owned just under 50% of Turkey’s second largest private bank, Garanti, for which it had paid €6.9 billion in incremental purchases beginning in 2010. Since then the Lira has done nothing but fall. Garanti’s market cap as of two weeks ago, converted into euros, was €3.7 billion (it is now €3.3 billion). BBVA’s 49.85% stake in it was worth €1.85 billion. In other words, BBVA had lost 73% of its investment.

But instead of cutting back its exposure to Turkey, BBVA has doubled it. Flush with cash after selling its U.S. subsidiary to PNC last year, BBVA announced two weeks ago — just days before Turkey’s central bank cut interest rates for the third time, triggering the lira’s worst daily collapse in 20 years — plans to buy the rest of Garanti for the price of TL12.20 per share. The move amounts to a massive gamble Turkey’s Erodgan-dominated economy and has found little favour among investors. Since the day of the purchase BBVA’s shares have fallen almost 20% while Garanti’s are now below the takeover price.

“It was our best investment option,” said BBVA’s CEO, Onur Genç, on in an investor call on Monday aimed at allaying shareholders’ concerns. The Spanish lender sees its purchase of Garanti as a long-term proposition that cements its position in a high-growth market it already knows well — and what’s more at a bargain price! Genç, himself of Turkish descent, said even the recent decline of the lira, which has decimated Garanti’s market value, was beneficial to BBVA since it meant that its offer price for Garanti, converted into euros, has fallen from €2.25 billion on the day BBVA announced its offer, to €1.8 billion today. At the same time, the amount of capital committed has fallen from €1.4 billion to €1.2 billion.

But while the collapsing lira may mean that BBVA is getting a cheaper and cheaper deal as each day goes by, it could still end up paying dearly. As a Reuters Breaking Views article cross-posted in El País points out, the crisis could hurt Garanti in two ways:

First, a weaker lira makes it harder for borrowers to service dollar-denominated debt, increasing the risk of defaults. Garanti has reduced its foreign currency exposure much faster than other banks, but at $11.6 billion (€ 10.3 billion), it is still almost a third of total loans. Second, the unorthodox monetary easing raises the prospect of a sharp rise in rates at some point in the future. That would reduce loan margins, as deposits instantly become more expensive while loans take longer to appreciate.

But BBVA’s CEO is for the moment nonplussed, or at least appears to be. “Since the beginning,” he said, “we have been aware of the risks and have controlled for them in multiple ways.” One prime example is the way BBVA has set up its global business to limit the spread of financial wildfires from Turkey or other emerging markets to the wider group, as a Bloomberg article recently pointed out (comment in parenthesis my own):

As a legacy from the Argentine debt crisis of the late 1990s, the bank uses a model of self-sufficient subsidiaries, which insulates other units if one of its businesses runs into trouble. That means that if Garanti were to start failing, it could be liquidated or restructured without affecting the rest of the group. In a worst case, BBVA would risk the value of its equity stake in Garanti — currently just under $4 billion.

In other words, BBVA would simply walk away from the smouldering wreckage as well as Turkey as a whole — at least in theory. The one thing the Bloomberg article doesn’t mention is that BBVA’s silo-based damage control system has never been properly road tested before.

Europe’s energy crisis is about to get a whole lot worse as the Northern Hemisphere winter is just weeks away. New risks are emerging across the continent that households and companies might have to scale back on power use or even plan for rolling blackouts. 

There is no immediate fix to the energy crisis that comes from the supply side, with Russia’s Gazprom, the largest supplier of natural gas to Europe, only pumping what it has. At the same time, EU stockpiles remain well below trend.

On Tuesday, Prime Minister Mario Draghi said Italy’s government is ready to combat soaring energy prices for households, according to Bloomberg. 

“We set aside 1.2 billion euros ($1.4 billion) in June and over 3 billion euros in September,” Draghi said. “We are now taking steps in the budget and are prepared to continue doing so, with particular attention to the most vulnerable.”

“Given the current energy supply system, a blackout cannot be ruled out” across Europe, Minister Giancarlo Giorgetti said, adding that “it’s important to neutralize the impact of increased energy bills on households and companies in the fairest way possible.”

Even before the winter season arrives, cold weather is driving energy prices across Europe to record highs. The massive rally in European gas prices is not diminishing anytime soon. Gas prices at the Dutch TTF hub, the benchmark gas price for Europe, jumped to €100 per MWh, adding more pressure on households who are already dealing with rapid food and shelter inflation. 

Just yesterday, power prices in France jumped to the highest levels since 2012. 

The long-awaited activation of Gazprom’s Nord Stream 2 pipeline from Russia to Germany would ease the natural gas crunch. Still, the project continues to hit regulatory snags from German regulators who recently suspended the certification process of the pipeline. What this could mean is flows might not start until spring. 

Gazprom’s finance unit head, Alexander Ivannikov, pointed out in an investor call on Monday that forward natural gas contracts “do not imply a noticeable decline in prices in the coming months.” He said low levels of gas injections in European gas storages and colder weather would keep a bid under prices. 

What’s great for Gazprom is disastrous for Europe as higher gas prices appear to be sticking around as the Northern Hemisphere winter is just three weeks away. Ahead of winter, Bloomberg’s weather forecasts show average temperatures to trend below a 30-year average for the next two weeks. 

Nicolas Goldberg, a senior manager in charge of energy at Colombus Consulting in Paris, laid out one scenario where a cold snap plus no wind power generation could strain the European power grid. 

“If there’s a deep cold snap and there’s no wind, things could become tight given the lesser availability of nuclear plants and the recent closure of dispatchable generation assets using coal, Goldberg said. “If it’s getting really cold and there’s no wind, it may become a problem.”

Other energy analysts have warned of power grid woes. Jeremy Weir, chief executive officer of Trafigura Group, a Swiss commodity trading house, said rolling blackouts are possible across the EU. 

 “If the weather gets cold in Europe there’s not going to be an easy supply solution, it’s going to need a demand solution,” said Adam Lewis, partner at trading house Hartree Partners LP.

EU officials don’t want to admit it publicly, but they need Russian gas to prevent rolling blackouts and control energy inflation. Failure to do will result in a ‘winter of discontent.’ 

Authored by Bruce Wilds via Advancing Time blog,

They just won’t let it go. It seems many of the so-called “warmongers” are hellbent on turning Ukraine into a major war whether the countries involved want it or not. History shows what has become known as “proxy wars” create profits for companies manufacturing weapons. The cost, of course, is then pawned off on taxpayers and a public preoccupied with personal concerns. Such talk of war is probably viewed as a blessing by President Biden and a White House that has been battered with bad press.

The proof that Ukraine is unlikely to go quietly into the night is reinforced by a slew of news stories over the last few days. It includes items such as the U.S. Embassy in Ukraine is warning of “unusual Russian military activity” near the nation’s borders and in the annexed peninsula of Crimea or that Canada is now considering larger deployments to Ukraine.

Nothing ramps up the hype like the headline, “Ukraine fears that Russia may be preparing to invade.” Brig. Gen. Kyrylo Budanov, head of Ukraine’s defense intelligence agency, said last weekend. He went on to say that Russia had more than 92,000 troops amassed at the border and could attack as early as the end of January. In reaction, not only is Canada looking at deploying hundreds of additional troops to support the Canadian soldiers already in Ukraine on a training mission, it is considering redeploying some of the CF-18 fighter jets currently based in Romania.

NATO Has Slowly Expanded Towards Russia

I stand with those arguing this has little to do with Russia taking over the world or Ukraine’s national sovereignty. It is about money, energy, and power. Several years ago I wrote a piece that urged America to stay out of a war in Ukraine. It also warned of the major advantage Putin held by having a huge well-armed army just across the Ukrainian border and that any army cobbled together to face him would most likely be unenthusiastic and politically troubled. Another reason provoking Russia is a horrible idea is that it creates the potential the current “minor skirmish” could explode into World War III with nuclear bombs entering the mix.

When President Obama was in office he pulled out all the stops to paint Putin with a brush dipped in all the bad colors. Every Sunday in interview after interview Washington experts were paraded across the screens of the talk shows denouncing Putin as a “thug and a bully.” This description of the former KGB officer is so ingrained in their repertoire that they seldom describe him in any other terms unless it is to add the words “dangerous or menace” to highlight the fact we should all be afraid. Clearly, the U.S. establishment loathes Putin and constantly paints him as an aggressor, a tyrant, and a killer that invaded and occupied Crimea. The fact is, it is NATO that has slowly been expanding towards Russia since Putin took power in late 1999. 

In 1999, Russia was defenseless, bankrupt, and being carved up by a group stealing its resources in collusion with America. Putin changed that and resurrected the crumbling empire once again into a nation-state with coherence and purpose. Putin is credited with halting the theft of his country’s wealth by the plutocracy and restoring Russia’s military strength. Putin’s biggest sin may be that with blunt rhetoric he refused to accept for Russia a subservient role in an American-run world under a system drawn up by foreign politicians and business leaders. The fact is many Russians credit him with saving Russia. Today, after two decades in power, Putin’s approval rating exceeds that of many Western leaders.

Ukrainian Soldiers Killed In An Unwinnable War

Reports from the front in Ukraine are often buried or hidden from public view but they appear to confirm that Ukrainian troops are being sent into a meat grinder.  Putting more weapons into the hands of those unmotivated to fight for their corrupt state is merely adding fuel to this fire and doing more harm than good. Again, remember Ukraine is a financially failed state and while we can point to its potential, its massive oil and gas reserves by all rights should belong to the Ukrainian people. The IMF, however, points out that Kiev needs billions in loans and grants just to stabilize its economy after more than twenty years of massive levels of corruption. This debt and the deep, deep hole Ukraine dug itself into after a series of bad governments ran the country after it became independent of the Soviet Union.

The euro-zone currently faces a lot of problems without jumping into a proxy war against rebels in Ukraine. I use the term proxy because without the money and backing of outsiders things would most likely go quiet. The failed and bankrupt country of Ukraine would most likely break into two parts with the eastern half and its people who share strong ties with Russia aligning itself with that country and Kiev, and the western-oriented portion of the country drifting towards stronger ties to the euro-zone. What is the big problem with such a solution? A great deal if you ask those in Washington that are pushing for more intervention in Ukraine. As to what motivates their desire to turn the area into a giant killing field several possibilities exist but it is mostly money and profit.

War In Ukraine Is About Money, Energy, And Power!

Foreign policy has often been used as a tool to advance national interest which is often dictated by economics. When it comes to the economy, energy is often considered the blood from which all strength flows and in the case of Europe the Nord Stream 2 (NS2) pipeline designed to carry natural gas from Russia to Germany remains a bone of contention. Several European countries see the pipeline as being designed to increase their energy reliance on Moscow.

Those opposed to the pipeline continue to argue that “Gazprom” is not only a gas company but a platform for Russian coercion and another tool for Russia to pressure European countries. Under a provision in the Countering America’s Adversaries Through Sanctions Act (CAATSA), the U.S. State Department has even threatened European corporations with ties to the pipeline on the grounds that “the project undermines energy security in Europe”.

To confuse the issue and muddy the waters great efforts have been made at high levels by those advocating military action to paint Russia as an aggressor. These forces aided by the media continue to link Russia’s move into the majority ethnic-Russian Crimea region as a violation of Ukraine’s sovereign border. The whole argument of sovereign borders is a little gem promoted by those in power, these borders are a creation of man and not visible to the birds flying above. This is an argument of convenience that masks deeper issues and the difference between “terrorist” and “freedom fighters” often depends on a person’s point of view. In this case, it is clearly the new American-backed government in Kiev that is pushing to bring the eastern part of Ukraine back into the fold.

Adding Ukraine to NATO and the EU is a long-held dream of neocons like Victoria Nuland and neoliberals like Biden. This is also important to those supporting the World Economic Forum’s desire to expand the EU and encircle Russia.  Putin has long been a thorn in the side of the NWO gang. After entering office, Ukrainian President Volodymyr Zelensky signed Decree No. 117/2021 activating the Ukraine Army to recapture and re-unify with Ukraine, the autonomous region of Crimea, and the city of Sevastopol. This was in total conflict with his promise to end the now nearly seven-year-long war in eastern Ukraine that played a central role in his election in 2019. This indicates Zelensky has continued to subordinate his government’s policies to the US and NATO.  

What this boils down to is that American companies want to sell and supply Europe with Liquid Natural Gas (LNG) and they seem willing to start a war to make it happen. Whether it is for profit or to minimize the threat of natural gas shipments to Europe being cut off and used as a key weapon in Russia’s political arsenal we cannot ignore the idea more is at play here than just doing the “right thing”. 

Many people in the “Tin Foil Hat” community have gone so far as to indicate they feel that America and elements of the CIA were involved or had a part in the overthrow of the former corrupt Ukraine government and its replacement with another corrupt but more pro Europe regime. At the time even America’s Vice President, Joe Biden, saw his son join the board of a private Ukrainian oil and natural gas company. We should assume not only those involved in selling energy to Europe will profit from stopping the flow of energy from Russia but also the military-industrial complex stands to gain.

Without a war, the odds of U.S. LNG significantly displacing Russian natural gas shipped by pipeline are slim. Piped gas sells at a large discount to LNG, which must be cooled to liquid form, shipped overseas, and turned back into its gaseous form. Poland recently received its first shipment of U.S. LNG last month from what is currently the only export facility in the lower 48 states. While LNG trade between the United States and Europe would help reduce the U.S. trade deficit it also stands to improve energy security among the European countries by giving them an alternative to Russian gas. 

Still, it is not a cure-all, Russia can easily cut prices and adjust terms to maintain its dominant position in the European gas market and European countries are likely to continue buying most of their gas from the lowest-cost supplier. Bottom-line, Russia has traditionally been the major supplier of European gas. But it charges high prices, often in the form of long-term contracts linked to the price of oil. The overwhelming dependence on Russian gas leaves European countries from a national security standpoint vulnerable to a cutoff of crucial natural gas supplies. 

This would be devastating to their economies at any time but even more so in the depths of winter. For these reasons, it makes sense for Europe to consider alternative supplies and open its doors to U.S. LNG. Regardless of the politics at play, danger lurks from flooding Ukraine with weapons, and using the people of Ukraine as pawns in this high-stakes game violates all standards of human decency. Americans should also be aware that our current policy drives Russia towards the East and into the open arms of China. This creates even more problems long-term than it solves short-term and borders on the edge of insanity.

Upping tensions in the area is the fact the Kerch Strait Bridge, also known as the Crimean Bridge, is now a target that Russia will make every effort to protect. Comprised of a pair of Russian-constructed parallel bridges it spans the Strait of Kerch between the Taman Peninsula and the Kerch Peninsula of Crimea. The bridge complex provides for both road and rail traffic and has a length of 19 km. This makes it the longest bridge Russia has ever built.

The war in Ukraine has not developed organically but appears to be the product of meddling. It could be argued that Biden is pushing for more military action to cover up the corruption and sins of his family that occurred in Ukraine. Mercenaries and money from America appear to be backing and propping up Kiev with America acting as the “champion” for this failed bankrupt country.  The best way for the West and Kiev to prove they are on the right path is by letting the eastern part of the country secede and then making Kiev a center of economic and democratic success. 

Since the latest ceasefire agreement in the war in Donbas was implemented in July 2020, it appears the situation has not grown worse. This indicates rocking the boat is a bad idea. We can only hope those monitoring the recent events in Ukraine saying this will someday be looked back upon as the beginning of World War III are wrong. Some war game players have indicated that China could use a larger war in Ukraine to rapidly move on Taiwan. After our experiences in Iraq, Syria, and Afghanistan, I’m forced to wonder what these fools are getting us into?

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Footnote; The following link takes you to a YouTube video of what is labeled “Insane Ukraine Fighting.” It is roughly an hour of idiots firing in the air and wasting ammo, and that is the current war.

Belarusian leader Alexander Lukashenko has again announced his country stands ready to host nuclear weapons provided by Russia on its territory. “We are ready for this on the territory of Belarus,” Lukashenko told Russia’s RIA news agency in an interview published Tuesday.

Lukashenko held it out as the necessary response in the scenario where NATO would deploy nuclear systems to neighboring Poland. The Belarusian president said he will soon propose this plan to Putin.

In the interview he had been asked to respond to recent comments of NATO Secretary General Jens Stoltenberg, who provoked anger out of Moscow by suggesting the Western military alliance could eventually see its nukes deployed to Eastern European partners. 

According to state-run BelTA, the exchange went as follows: 

The Belarusian head of state was asked about a recent statement by NATO Secretary General Jens Stoltenberg regarding the possible deployment of nuclear weapons in Eastern Europe.

Aleksandr Lukashenko responded by saying: “Yes. Then I will suggest that Putin should return nuclear weapons to Belarus.”

“What nuclear weapons?” Dmitry Kiselyov asked Aleksandr Lukashenko to clarify.

The head of state said: “We will agree on what kind. The nuclear weapons that will be most effective in such an engagement. I said for a reason that we in Belarus’ territory are ready for it. As a thoughtful landlord I haven’t destroyed anything [of the USSR infrastructure for nuclear weapons], all the depots remain in place.“

The ending reference to “all the [USSR] depots” remaining in place and ready to go is certainly interesting related to what many pundits have dubbed the ‘new Cold War’, given also the renewed soaring tensions linked to everything from the emerging Ukraine crisis 2.0, to the Poland-Belarus migrant border standoff, to the US and Russia now tit-for-tat booting each other’s diplomats. 

If the United States moves its nuclear weapons to Poland, Lukashenko will ask Putin to return nuclear weapons to Belarus.

Moreover, the entire infrastructure for nuclear weapons in Belarus has been preserved.

“As a diligent owner, I have not destroyed anything,” Lukashenko said https://t.co/EiP93uQbij

— Jeanne de Montmorency aka DinamiteGirl (@dinamite_girl) November 30, 2021

It was in the midst of the migrant border standoff with Poland earlier this month, for which the EU slapped more sanctions on the Belarusian government, that Lukashenko first raised the nuclear hosting issue. 

Reuters reported in mid-November that he “wants Russian nuclear-capable Iskander missile systems to deploy in the south and west of the country, he said in an interview with a Russian defense magazine…”

While Russia and Belarus remain part of a closely cooperative “union state” – such an action as Russia transferring such weaponry to Belarus would without doubt trigger a crisis on par with the 2014 Crimean crisis (or beyond), and potentially leading to war with NATO. And given Putin recently had to distance himself from Lukashenko’s threats to shut off Russian energy supplies running through Belarus, it’s highly unlikely the Kremlin would ever sign off on stationing nukes there. Of course that could all change depending on how close NATO in the future places its own nuclear arsenal.

Authored by Paul Joseph Watson via Summit News,

Fears that bureaucrats are once again scheming to cancel Christmas arose again after a top health boss told Brits to avoid socialising with their friends and family over the festive period.

“Dr Jenny Harries, the current head of NHS Test and Trace, has told BBC Radio 4’s Today programme that people can do their bit to reduce the spread of the new omicron variant by reducing the number of social contacts they have,” reports the Telegraph.

Harries said that if “the (Omicron) variant is more highly transmissible…(it) could still be a significant impact on our hospitals,” despite top doctors in South Africa saying the symptoms are “mild” and haven’t placed added strain on hospitals.

“And of course, our behaviours in winter and particularly around Christmas we tend to socialise more so I think all of those will need to be taken into account,” she added.

“So I think being careful, not socialising when we don’t particularly need to and particularly going and getting those booster jobs which, of course, people will now be able to have at a three-month interval from their primary course.”

Of course, if Christmas doesn’t involve socialising with friends and family, it might as well not exist.

Despite case numbers flatlining and deaths going down in England, such measures are being pushed again in addition to more mandatory face masks rules based on little more than hot air and media hysteria.

Suffice to say, if the government once again tries to lock up Brits and prevent them from seeing loved ones over Christmas, expect mass non-compliance like you’ve never seen before.

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Finland has succumbed to the energy crisis as households and businesses early this week paid a mind-numbing €422 per MWh (including taxes), or about five times higher than a year ago, according to data from the Nord Pool electricity exchange.

The Northern European nation bordering Sweden, Norway, and Russia is energy-dependent, meaning it must import high volumes of fossil fuels, such as petroleum and natural gas. Domestic sources of power production include thermal, nuclear, and hydropower plants.

Energy experts told RT News that soaring natural gas prices in Central Europe attributed to skyrocketing power prices. Experts warned of very little relief for Finnish households and businesses who may experience heightened electricity costs until next summer. 

The massive rally in European gas prices is not diminishing anytime soon. On Tuesday, gas price at the Dutch TTF hub, the benchmark gas price for Europe, spiked to €100 per MWh. 

“According to our forecast, the price of electricity will remain high in winter but will start to decline in spring. It is likely that it will not be as high as it is today, but the overall level remains elevated,” Finnish electricity company Fingrid spokesman Mikko Heikkila said. 

“Finland is very dependent on imports. In winter, we need energy from neighboring countries but if the electricity market and domestic electricity production work normally, then next winter there will be enough electricity,” Heikkila said. 

Soaring power prices come as the country’s average temperature will remain well below a 30-year trend line through Dec. 15. 

The country’s heating degree days show power demand will continue to increase as temperatures remain well below average. 

Russia’s Gazprom PJSC, the main supplier of natural gas to Europe, warned Monday that prices would remain elevated in the coming months, offering very little relief for households who heat their homes with gas and power plants that produce energy with it. With the Northern Hemisphere winter just weeks away, it seems as Europe’s energy crisis will worsen. 

Soaring energy inflation and rising food prices are the makings of a ‘winter of discontent’ across Europe. EU politicians beware.