Germany has been hard hit by the economic standoff with the Kremlin because of its reliance on Russian gas and oil. In an effort to prevent blackouts this winter, last Friday Germany took control of a major Russian-owned oil refinery which supplies around 90% of Berlin’s fuel. Straight Arrow News contributor Peter Zeihan talks about the entangled history of the two superpowers and how the war in Ukraine is leading to a potentially dangerous conflict:
Excerpted from Peter’s Sept. 16 “Zeihan on Geopolitics” newsletter:
Americans woke up to news today that Germany has nationalized assets–primarily refineries–owned by Russian oil giant Rosneft. Assets worth billions of dollars.
Though this is not surprising or unexpected, it’s something we should take seriously. Germany and Russia have a famously difficult relationship going back centuries, and when the going gets rough, their disputes get ugly (ask just about anyone in Poland or Ukraine). The more armed conflicts between Russia and Germany, the greater the incentive for them to avoid conflicts all together.
The default approach since the end of the Cold War was to entwine their two economies to such an extent that it would not make sense for either of them to destabilize or threaten the other. We’re seeing now how much Russian leadership values economic stability over its perception of national security. Unlike previous bouts of Russo-European conflict, however, the current demographic situation on both sides of the conflict is atrocious. Whatever the final result of the Russian invasion of Ukraine, what we should not expect is an easy or quick return to economic stability, let alone growth, for either side.