Life in Spain
I enjoyed an ‘early’ dinner in a Spanish household last night. It started at 8 and dessert was served at 11.15. Imagine what would have happened if it had started at 10. Possibly much the same . . .
Over the years, I’ve occasionally moaned about what I call the Atlantic Blanket and the effect it has on the view which adorns the top of my posts, witness:-
Sometimes, I can’t even see the hedge . . .
Cosas de España/Galiza
Rather than write under this heading this morning, I’m wholeheartedly referring your to this link to the final version of the write-up of my recent visitor, Andy, to Galicia, via (O)Porto. It’s complete with fotos and links and, as it’s very amusing, I’ve forgiven him the defamation of me and the (illegal in Spain) insertion of unauthorised fotos of me. I’m not sure why he wants to go back to Oporto.
Says Richard North on the fight to be the next leader of the Conservative party and – for 2 years at least/most – UK Prime Minister: So, it’s to be Miss Trussed versus Sushi: the terminally thick versus the bright but compromised.
Or, perhaps, a 2nd generation immigrant against a woman. A ‘triumph for diversity’, says at least one other commentator. Polls suggest that, though the man won the election among MPs, the woman will win the real election among party members in September. So, pick the meat out of that. Bottom line . . . It’s hard to see either of them leading a tired, divided party to victory in the next general election in 2024.
Here’s RN’s son, Pete, on the prospects of Liz Truss. RM Junior writes, like his dad, of a broken and sclerotic political system, in which tough decisions are regularly ducked. Hard to disagree with that.
RN cites the Guardian’s wonderful political commentator, John Crace, on the outgoing(?) PM, Boris Johnson here. To say the least, he’s not kind to Miss Truss.
En passant . . . If he really does go, Boris Johnson is predicted to make millions on the ‘after-dinner comedy-speaker circuit’. Which should, at least, solve his perennial financial problems and allow him to finance the several sprogs he’s fathered to various wives and non-wives along the way. It’s an ill wind . . .
On a lighter note, here’s a cartoon set in the UK on the hot last few days:-
The ‘nice’ news is of the finding of the wreck of a ship that went down near the coast 750 years ago, possibly because it was carrying some very ornate but heavy gravestones.
Our resident Cassandra, AEP, fears Russia will cut off oil as well as gas. See the worry-raising article below.
For a reason he explains in the article cited above, John Crace says that parliamentary sketch-writers will at least be able to laugh as they die. Oddly enough, I heard in a podcast last week that General Custer is said to have done this at Little Bighorn, just prior to being scalped. But I doubt it’s true.
The Way of the World
You’ll all know that Quidditch is a game invented by that appalling TERF, J K Rowling. There are various Quidditch organisations around the world but they’ve all now decided to change the name of their sport to Quadball. Why? Well, to “distance” themselves from JK Rowling over her views on transgender issues. Need I add that this began last year when two American organisations decided to drop ‘Quidditch’, citing Rowling’s position on the rights of transgender people. Possibly because they seriously conflict with the pre-existing rights of other folk. The term for whom is controversial, with the universally acceptable one possibly coming along next week. Or in 2050.
Not enough people know that England was once effectively a Danish colony:-
One marvellous result of this was that Old English was massively simplified by ditching Old German grammar and syntax in favour of the Scandinavian version of a Teutonic language. This is an excellent video on this subject. Thank-you, Dane folk.
Finally . . .
A gardening note: My wisteria has just presented me with a single bloom, 2 months after the first ones. And also with several large seed pods. I read that it’s advisable to remove these as, if I don’t, they will explode and I will then have a ‘wisteria forest’, in which the ‘trees’ will take up to 15 years to bloom. . . .
For new readers: If you’ve landed here looking for info on Galicia or Pontevedra, try here. If you’re passing through Pontevedra on the Camino, you’ll find a guide to the city there.
Talking of readers . . . I now know how to improve my stats – Don’t publish my posts until late in the day . . .
Welcome to new subscriber: Lacie in Canada, who has her own blog and who might well read this post,
Putin may cut off oil as well as gas to cripple Europe. Read this exclusive extract from our Economic Intelligence newsletter and sign up at the bottom of the article to get it every Tuesday: Ambrose Evans-Pritchard, The Telegraph
Vladimir Putin has prepared the ground for a drastic cut in supplies of both oil and gas at any moment, giving him the means to strike a psychological hammer blow against the Western democracies before a global recession erodes his energy leverage.
The coming weeks may be his best chance to try to force the West to the table on Russian strategic terms, locking in territorial gains on Ukraine’s Black Sea coast and in the Donbass before the delivery of heavy weapons from NATO raises the military cost for Russia to excruciating levels.
Mr Putin spelled out his operating premise at the St. Petersburg International Economic Forum in late June, calling the EU’s sanctions policy a double-edged sword that would cause Europe to lose its footing in the global economy and lead to a “system-wide decline” for years to come. He left no doubt that generating inflation in the West is a primary goal.
“This will aggravate the deep-seated problems of European societies. There will be a further growth of inequality, which will split their societies still more. Such a disconnect from reality will inevitably lead to a surge in populism and extremist and radical movements,” he said.
Last Friday, Mr Putin seemed to cock the gun for something more extreme, broadcasting his purpose in a staged meeting with officials: “Further use of sanctions may lead to even more severe – without exaggeration, even catastrophic – consequences on the global energy market,” he said.
European leaders have been formulating policy in a parallel universe, discussing unenforceable schemes for a $40-$60 price cap on Russian exports of crude, supposedly with extraterritorial reach into Asian markets. The false assumption – breathtaking in its serial fallacies – is that the Kremlin needs the money and will oblige meekly.
It supposes that Mr Putin will allow the EU to reduce its dependence on Russian fossil fuels in an orderly fashion and on its own leisurely timetable, even as several EU member states cross the line in Ukraine from engaged neutrals to something closer to co-belligerents. “We think Russia will seek to make Europe’s energy detox plan as debilitating as possible,” said Helima Croft from RBC Capital.
Vladimir Milov, Russia’s former vice-minister of energy, said Europe’s decision to stop purchases of Russian seaborne crude by the end of the year has brought matters to a head.
The talk within the Kremlin apparatus is that Russia must now take preemptive action, exploiting its energy lockhold to stop EU states rebuilding natural gas stocks before winter. “It is highly likely that no more gas at all is going to be flowing. The Russian leadership knows just how vulnerable Europe is,” he said.
The risk of a total halt to Russian gas supply is by now well-understood. Not a single Gazprom molecule has been flowing to Europe through the Yamal pipeline via Poland for six weeks. Flows through Nord Stream 1 via the Baltic have been running at 40pc of capacity since mid-June. They dropped to zero this week for ten days of scheduled maintenance.
Europe’s leaders strongly suspect that the Kremlin will concoct a pretext to keep Nord Stream 1 closed at the end of inspections on July 21 – the next red-letter day for the global economy. France’s finance minister Bruno Le Maire warned on Sunday that a “total cut-off” is more likely than not.
Germany’s Green vice-chancellor Robert Habeck is preparing to activate his country’s stage three “emergency” plan, with gas rationing for heavy industries. “Anything could happen,” he said.
Goldman Sachs estimates that the eurozone would contract by up to 2.7pc if the gas stops flowing, with GDP potentially falling by 3.2pc in Germany and 4.1pc in Italy. The first talk of an EU “energy bail-out” for Germany and Italy has begun. Others will be expected to share their scarce gas reserves – in other words, to do what Germany did not do with PPE kit at the start of the pandemic. This will be fractious.
What is less explored is what would happen if Mr Putin triggers a full-blown oil shock on top of the gas squeeze order to push the cost of living crisis to breaking point.
It is widely assumed that he would not play the oil card because the import revenue is too valuable – worth $700m a day, viz $400m for gas – and because crude is too fungible a commodity on global markets for targeted use against Europe. But this overlooks the internal structure of the Russian economy, and may underestimate Mr Putin’s willingness to create maximum havoc as an instrument of foreign policy.
Natasha Kaneva and Ted Hall at JP Morgan think the Kremlin may be seriously tempted to try. They argue that Russia could halve its total output temporarily and starve the world of up to five million barrels a day – 5pc of global supply – without doing lasting damage to its drilling infrastructure, or suffering an intolerable economic hit. They estimate that a shock and awe squeeze of this magnitude would drive prices to $380 a barrel, levels that would bring the global economy to a shuddering halt.
The more likely calibration is a cut of three million barrels a day. This would lift Brent to $190, still high enough to blast through the all-time record of $148 in mid-2008. “The tightness of the global oil market is on Russia’s side and strong public finances could absorb the revenue losses without too much difficulty,” they said.
Hopes have fizzled for a nuclear deal with Iran that would free up a million barrels a day of global supply. President Joe Biden is trying to coax more crude from Saudi Arabia but even the Kingdom is running out of spare capacity. The rest of OPEC is 2.5 million barrels short of production targets. The stars are aligned for Mr Putin to strike a quick knock-out blow.
Halting production is a technical headache. The longer that wells are left idle, the greater the damage from pressure and rising water content, above all in the declining Soviet fields of Western Siberia where permafrost is melting. Marginal wells might never recover. However, JP Morgan thinks Russia could cut several million barrels a day for a few months by rotating wells and by “throttling” wells to reduce output.
There is no immediate financial constraint. Russia’s National Wellbeing Fund has $116bn set aside in usable money. The treasury’s cash balance is a further $85bn. Together this is enough to cover a total loss of budget revenues from fossil fuel exports for almost a year, perhaps longer than Europe’s comfortable societies can endure the pain. Russia would be exchanging lower volumes for higher prices in any case, so it might not lose that much revenue.
Furthermore, Western sanctions against the central bank are creating a perverse incentive for the Kremlin to escalate. Russia is currently awash with more fossil fuel revenues than it can handle, unable to sterilise a current account surplus of 20pc of GDP by accumulating foreign reserves.
The result is a surging rouble, currently at an eight-year high against the euro. There is little that the Kremlin can do about this other than pushing through fiscal stimulus packages and imploring consumers to spend more on imports.
Mr Putin has good reason to think that Germany will throw Ukraine under a bus if the pressure is great enough. Berlin is currently blocking the release of €9bn of EU financial aid to Ukraine that was already agreed by the 27 states, ostensibly because it objects to the method of joint debt issuance.
Berlin has just violated the EU’s sanctions regime by strong-arming Canada into handing over a pipeline turbine in hopes that this will restore flows on the Nord Stream 1 pipeline. The Canadians obliged, with a delay and barely concealed disgust. Volodymyr Zelensky recalled his ambassador from Berlin.
The Kremlin must of course weigh large geostrategic matters. China has so far tolerated a global gas shock since it still relies largely on domestic coal for power. But as the world’s biggest importer of oil, it would be more than a collateral casualty if oil prices double or triple again.
Mr Putin likes to blow smoke in our faces, keeping us permanently off-balance. He may decide that the gas weapon alone is enough. But as former White House Russia guru Fiona Hill likes to put it: if you think he won’t do something beyond the pale, “yes, he will”.