German Think Tanks have built a long tradition of credibility and in-depth wisdom in the last few decades. When one of these institutes releases a report with insights regarding our world, everyone pays attention (Listen further here). That’s the kind of attention we are all paying now with the release of the report on trade from the Kiel Institute for the World Economy.
The institute measured the effect of trade sanctions on Russia on the long term growth for allied economies. The simulation shows that the closer the country is to Russia, the more likely it is to be affected in the long run. Obviously, Russia is estimated to be hurt the most in the long run from these sanctions with close to 10% reduction in the long term annual economic output. It’s followed by the Baltic states with an annual impact ranging between 2% and 2.5%. Poland will also suffer substantially with a 0.8% annual reduction, while Germany and France would see a 0.4% and 0.2% negative impact respectively. The US and China on the other hand will barely feel the impact.
And you can see it in the readiness to apply to most stringent sanctions against Russia. The US already announces that it will stop buying gas and oil from Russia (8% of US imports). In the E.U, the attitude is to avoid doing more harm to ourselves than we do to Putin. Europe will act more gradually while the US can afford to act swiftly and decisively.
These also have an effect on French elections. Macron is benefitting largely from his leadership style and his diplomatic initiatives in the current conflict. Polls show him at 33% in the first round.
Marine Lepen, from the Front National, is accused of having developed connections with Vladimir Putin. Pictures of Marine Lepen’s meetings with the Russian head of state in the past are hurting her credibility. However, this does not seem to affect her position in the polls. She remains at 15% in the first round.
Eric Zemmour, on the other hand, is losing ground because of his leniency for Vladimir Putin and his lack of outright condemnation. He is now at 11%.
The left wing candidate with roughly 13% intentions, Jean Luc Melenchon is advising that France should be a non aligned and more neutral country in order to remain relevant in the new emerging partnership taking shape between China and Russia.
The debate now is about the following points:
- Are sanctions going to throw Russia into China’s arms?
- The non alignment or neutrality of France and Europe especially, in order to be able to remain a credible partner in the new partnership taking place between China and Russia. We should have first elements of answers this week with a European summit in Versailles about its defense policy.
- Iran’s position is likely to be reinforced.
- Increased dialogue with other potential suppliers such as Algeria, Qatar, Venezuela. Norway also. But volumes from all these sources are limited.
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