EUROPE FACING A RUSSIAN WINTER

By the time Napoleon’s Grande Armée had reached the outskirts of Moscow in October 1812, their original strength of 610,000 men had dwindled to just over 100,000. The Russian winter had defeated them, forcing Napoleon to retreat. Hitler’s Wehrmacht faced the same fate. Now it seems like the Russian winter will envelop the whole of Europe. As Vladimir Putin’s savage onslaught continues to destroy lives and infrastructure in Ukraine, an EU deal to reduce dependency on Russian gas has foundered, with many countries demanding exemptions and others hoarding supplies to last through the winter. The chaotic response has vividly revealed Europe’s addiction to Putin’s gas that can be traced back to Angela Merkel’s decision to shut down most of Germany’s nuclear plants and rely instead on regular supplies from Gazprom via the Nordstream 1 pipeline. Now Putin knows that he can hold the EU to ransom, switching Nordstream 1 on and off at will, in retaliation for European aid to Ukraine. The pipeline is already at only 20% capacity. If Putin turns off the taps this winter, the EU will face catastrophe.

Britain will share the pain. Although our reliance on Russian gas is marginal compared to the Eurozone, the close links between the UK and European gas markets have already pushed up prices and will continue to do so this winter. The head of the German federal network regulator has warned that even with the imposition of strict gas rationing, households could see a threefold surge in their gas bills. Against the current background of soaring energy costs, such further increases would be intolerable. Even pledges by Rishi Sunak and Liz Truss to slash VAT on energy bills would have little impact. Average households in Britain could see their monthly gas and electricity tariffs exceeding £500, pushing half of Britons into fuel poverty, facing the choice between heating or eating.

With food prices skyrocketing, that is not an enviable choice. The war in Ukraine has severed links to Europe’s main breadbasket. Many of Ukraine’s wheat and barley fields now lie barren and untended, littered with landmines. Around 30% of global wheat production comes from Ukraine and Russia, but even the wheat crop harvested last year has been stranded in Ukrainian ports, where the war has stopped commercial operations. In mid-July, a UN brokered deal with Russia to allow massive stores of wheat trapped in silos in Odesa to be safely shipped out across the Black Sea, was shattered after only one day, when 2 cruise missiles hit the maritime port’s infrastructure facilities. So far only a single shipload of wheat has left the port. Putin has weaponised food supplies as a way of threatening the West. As a result, international wheat prices have rocketed by over 50%, with resulting knock-on impacts on food, particularly bread, and animal feed. The trebling of energy, seed and fertiliser prices, has added to the cost-of-living crisis just as the world tries to rebuild economically in the wake of the coronavirus pandemic. It is a perfect storm.

The looming Russian winter will see inflation in the UK reach 11%, its highest for 40 years, as prices continue to surge. This, in turn, has spawned a flood of strikes, particularly in the public sector, with trade unions demanding concurrent wage increases in line with inflation. While understandable, such massive increases would simply fuel further inflation, leading ultimately to hyper-inflation and economic meltdown. But the unions are in militant mood. There has even been talk of a General Strike. There hasn’t been one of those since 1926. With Andrew Bailey, the Governor of the Bank of England, warning that inflation in the UK is set to be higher and last longer, against a background of weaker economic growth, the UK has hit the buffers. Our poor performance, compared to the other G7 nations, is largely due to the war in Ukraine, compounded by Brexit. 

Of course, in Scotland, such economic calamities are grist to the SNP’s mill. Obsessed with the single issue of independence, Nicola Sturgeon continues to insist that all these problems could be solved, almost at a stroke, by the magical and apparently transformative experience of leaving the Union. Her conclusion that the problems caused by tearing the UK out of the EU single market after only four decades of membership, would be solved by tearing Scotland out of the UK single market, after more than 300 years of successful membership, is risible. Her plans to create a hard border with England, our biggest trading partner, where we do in excess of 60% of our trade, more than we do with the EU and the rest of the world combined, would be calamitous. Severing ties with our main source of fiscal transfers worth billions, that have sustained Scotland in times of need, such as the pandemic, would be foolish in the extreme.

A glance at the SNP/Green government’s economic competence should be sufficient to warn sensible people off a plunge towards separatism. The ferry fiasco, Prestwick Airport, the failing nationalised rail service and now the revelation that Scottish ministers signed off a deal with the metals tycoon Sanjeev Gupta, effectively committing taxpayers to a bill of up to half a billion pounds for smelting and hydro plants in the Highlands, to which Gupta contributed only £5, should sound alarm bells. The SNP/Green government’s record on industrial intervention has been disastrous. But, instead of focusing on the cost-of-living crisis, spiralling energy costs, NHS waiting times, the worst record of drug deaths in Europe, child poverty and failing education, our First Minister insists that in the absence of Westminster’s agreement to Indyref2, she will turn the next general election into a single-issue campaign…yes, you guessed it…on independence!  For an abject lesson in out-of-touch, muddle-headed thinking, our First Minister cannot be surpassed. 

If we are to survive the ominous Russian winter, Scotland, England, Wales and Northern Ireland will need to work closely together to stimulate growth, control inflation, drive down energy costs and safeguard food security. These must be the priorities, not the whimsical illusion of fairytale independence.