Krugman on Europe’s Coming Winter of War

Wartime Economics Comes to Europe

In order to save energy in Germany, buildings and monuments lit for aesthetic purposes will no longer be illuminated at night.
Credit…Lukas Barth/Reuters

Opinion Columnist

The West isn’t exactly at war with Russia. However, it isn’t exactly not at war, either. Western weapons have helped Ukraine to stall Russia’s invasion and even to counterattack, while Western economic sanctions have clearly created serious problems for Russian industry.

Russia has retaliated with a de facto embargo on exports of natural gas to Europe. This shows how Vladimir Putin actually thinks the war is going. After all, this will have huge long-run costs: Nobody will ever again consider Russia a reliable trading partner. But Putin appears willing to bear those costs in an attempt to bully the West into reducing its support for Ukraine — which he wouldn’t do if he were confident about the military situation.

In any case, the embargo has raised the economic stakes. Six months ago, there was a lot of discussion about whether Europe could or should stop importing energy from Russia. Well, Russia has in effect made that decision on Europe’s behalf.

And Europe seems set to respond by doing what democracies always do when confronted with wartime inflation: imposing windfall profits taxes, price controls and (probably) rationing.

One thought on “Krugman on Europe’s Coming Winter of War”

  1. The US led sanctions against Russia have backfired. Russia unable to sell oil and more significantly gas to Europe consequence of these sanctions, switched to selling its oil and gas to India and China. The sanctions pushed up prices making the energy sector a sellers market due to demand for what was now in short supply, and this has increased rather than decreased Russia’s capital.

    Rather than it being Russia hurting because of the sanctions, Russia has profitted and it has become those that imposed these sanctions that are now hurting.

    This war in Ukraine is an entirely predicatable and totally unnecessary one. Those who devoted years to starting it, have blood on their hands.

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