Risking retaliation, Germany grabs control of Russian-owned refinery

Commentary

Peter Zeihan

Geopolitical Strategist
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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.

Hey everyone, Peter Zion here. Hello again from Lake Louise. 

The news as of this morning is that the Germans have nationalized a couple of physical assets, refineries specifically that belonged to Russian state owned oil company Rosneft, multibillion dollar assets. 

We’ve always known this was coming. As soon as you have the Germans and the Russians having a dispute over economics and strategy, they are going to start drawing lines. And this is one of the big ones. 

Now, the German strategy for dealing with the Russians going back two centuries has been pretty straightforward. They want to avoid a war because wars between the Germans and the Russians are awful. 

They fight in Poland, they fight in Ukraine, lots of people die, the weather is horrible. The terrain is wide open, they both commit atrocities. It’s just wretched. So they try to avoid it. And they do that by trying to entangle their economies. So they have a vested interest in not fighting. But ultimately, it doesn’t work out and then fighting and it’s horrible. Suddenly, to head to a tangle again. 

What we’re seeing now is the disentanglement and the preparing for a direct confrontation. The Germans, of course, hope it won’t come to that. History suggests that hope is largely in vain. That’s the bigger strategic picture. 

The economic picture is almost just as bold, because we have now had direct entanglement between the Europeans and the Germans for going on 30 years. And now that all becomes unwound. 

So the Germans have fired the starting gun with some multibillion dollar assets they’re  taken away from the Russians. 

Expect every single joint venture that the two sides have and lots of property on both sides to basically be unwound and returned to the national authorities. 

And that is the end of this phase of Russian European integration. 

Don’t count on it coming back anytime soon, because the demographic pictures on both sides are just atrocious. So this is where it gets real. And this is where we have a sharp severing. 

We’ll talk about what’s going on with the Chinese next.


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