Economic Impact of Sanctions on Russia Begs for 2022 Presidential Election – Liberation

Presidential elections – 2022case

The announcement of retaliatory measures against Putin’s Russia has left Marine Le Pen and Jean-Luc Mélenchon worried about soaring energy prices and a backlash against French purchasing power. Even before the attack on Ukraine, inflation had already risen to 3.6% for the year, according to INSEE. And the phenomenon promises to be permanent.

Economic sanctions against Moscow will “long term impact” to the French. In his “message” Emmanuel Macron addressed Parliament on Friday afternoon and read out the Presidents of the National Assembly and the Senate. He warned the public that the decisions announced by the United States, the European Union and “consequences, including for us.” “But we assume this because the protection of our values ​​is at stake,” – the Head of State insisted in his text, promising “take[e] in this regard, all the decisions necessary to protect our compatriots and our business”.

The message is slightly more alarmist than that of his economy and finance minister a few hours before the start of the meeting with his European counterparts in Paris. Bruno Le Maire assured that the French economy “little open” to Russia, “secondary economic partner” from France. “I know that these sanctions may affect some French companies, [mais] French households have nothing to worry about.” he promised.

Next Expected Debate

Weeks before the first round of the presidential election, and at a time when the election campaign is de facto suspended due to the lightning advance of Vladimir Putin’s army on Kyiv, the president of the republic is nonetheless looking forward to the next debate in France. What can be done to save the French from a new surge in the prices of energy and certain commodities such as wheat, when inflation is already rising due to the effects of months of economic recession due to the Covid-19 pandemic?19?

Inflation has soared to 3.6% in the past twelve months, a level not seen since July 2008, according to INSEE data released on Friday. Energy prices and grain prices follow the same trend. A barrel of oil is trading above $98 (€87) a liter after hitting $100 on Thursday. As for a ton of soft wheat, it reaches 314 euros. The surge in prices is largely due to the war in Ukraine, a state that is in eighth place in the world in the export of this cereal.

What revives the opponents of Emmanuel Macron, who are waiting for the head of state in line, since he declared himself a candidate. Marine Le Pen urged “do not treat over leg” possible consequences “terrifying” sanctions against Russia because of purchasing power, already a concern of the French from the very beginning of the campaign. “I say, pay attention to the nature of the sanctions, she warned on BFM TV. If we are victims, it doesn’t make sense. “The French are extremely weakened today due to the collapse in their purchasing power and rising energy prices, she insisted. If we do not take this situation into account, we will get prices that will double, or even worse.” A few minutes earlier, Jean-Luc Mélenchon appeared from Réunion. “persuaded” that these fines “do not serve[ont] nothing but complicate life” for “some Russians” corn “In any case, we in France have a lot, because the price of oil will rise, the price of gas will rise, the price of wheat will rise.” “All prices will rise and we will be the main victims,” alarmed the candidate for La France insoumise.

However, the price increase was not long in coming, until the fears of the two candidates came true. Over the past twelve months, according to INSEE, energy prices have risen by 21%, which, according to the co-founder of the Economists collective, has led to Henri Sterdynyak, “Sustained inflation at about 3.5% through the end of the year, which will lead to higher wages.” However, he believes that “That’s not the most tragic aspect of the conflict.” The same calm is on the side of the liberal Jean-Herve Lorenzi of the Circle of Economists: “If inflation were to reach 15%, as it did in the early 1980s in the US, that would change behavior significantly. But at this moment, it seems to me that the movement is under control.” On the other hand, Lorenzi is much more concerned about the evolution of energy prices: “We are in a situation reminiscent of the first oil shock in 1973, and the question arises of the impact on economic growth. It seems to me that the European Central Bank will be careful not to break the expected curve of this growth. It is clear that there should be no increase in interest rates, a weapon commonly used to keep prices down.

Energetic “by all means”

Inflation of energy raw materials, according to the economist of the French Observatory of Economic Conditions Eric Heyer, “the price to be paid to show Vladimir Putin the red line and respect for borders and international law.” The consequences of this rise in prices, in his opinion, should be borne by the national economy. “We could imagine energy, whatever the cost, but unlike the health crisis, it should really be targeted at the populations most in need. he warns. This is not about giving 100 euros to 3.8 million people, but about 300 euros to the 1 million least resourced consumers. And those who are richer will be able to pull on their woolen stockings, which have seriously risen in price over the past two years. Over the past two years, 170 billion euros of savings have been accumulated that have not been spent.

Given the measures already taken, the government also seems to be moving towards “at any cost” energy. Extending an energy voucher, creating a “price shield” to freeze gas prices and limit electricity price increases, or reassess mileage allowances have already cost more than 15 billion euros.

The question remains about the impact on the European economy of possible retaliatory measures from Russia after the first sanctions. So far, the announcement of a freeze on the financial assets of Vladimir Putin, his Foreign Minister Sergei Lavrov, several Russian banks and the assets of twenty-three oligarchs is still far from a nuclear weapon. Under pressure from Germany, neither the United States nor the European Union finally excluded Russia from the indispensable system of international financial transactions Swift, even if Bruno Le Maire spoke in favor of this measure. A warning that reminds Jean-Herve Lorenzi of the outcome of the first oil crisis, when the price of a barrel of oil tripled half a century ago: “In 1975, governments ended negotiations with the Organization of the Petroleum Exporting Countries when it was considered an absolute enemy.”

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