Price cap stunt will not stop Russian oil trade
But it will deepen and expand the fissures within the imperialist camp itself, as the demise of the west accelerates.
Imperialism is in a double bind. It wants to bankrupt the Russian economy, depriving Russia of the oil revenues that were its mainstay and (it hopes) making it harder for Russia to repulse Nato aggression. Yet at the same time it also wants to keep enough Russian oil flowing to feed western industrial production and prevent the collapse of the world oil market.
This self-contradictory set of goals is forcing the European Union and the G7 into adopting some bizarre postures.
On 5 December, the EU and G7 proclaimed their plan, long in gestation, to impose a price cap of $60 per barrel on the purchase of Russian oil, with the threat of sanctions against anyone found to be paying over that threshold. But in order to get everyone to stop arguing about how high the would-be price cap should be and to endorse the measure, it proved necessary to build in a series of waivers and special dispensations to mitigate the negative effects on economies with a strong reliance on shipping, such as those of Greece, Malta and Cyprus.
Whereas originally the EU wanted to slap a lifetime ban on any non-EU-flagged tanker that ignored the price cap, lobbying by Greece reduced the penalty to 90 days. Critics of this relaxation of the rules complain that shipping operators might just decide that the risk of temporary bans is outweighed by the lucrative profits to be made.
Meanwhile, whilst these pressures to raise the level of the cap built up, other more rabidly russophobic governments piled on pressure in the opposite direction, demanding a price cap so low that (they hoped) the Russian economy would be strangled outright.
In the days before the grudging agreement was reached, the cracks in the supposed ‘unity’ of the economic warriors was on full display. According to the Financial Times: “Brussels is racing to finalise the proposed price ceiling on Russian oil shipments in the coming days after EU governments clashed over the level of the cap and whether to link it to a wider round of sanctions.
“The EU was struggling to settle its differences over the weekend as it attempts to stay ahead of a 5 December deadline, when a previously agreed EU embargo on seaborne Russian oil kicks in. Talks have stalled in recent days as Poland has led a push for a far lower price ceiling than the European Commission advocates.
“Brussels has been working alongside the G7 nations to implement the proposed price ceiling on seaborne Russian oil with the goal of allowing the product to continue flowing while pushing down Moscow’s ability to fund its war in Ukraine.
“The initiative would ban insurance and other services essential to the seaborne shipment of Russian crude unless sold at or below a G7-agreed price level.
“But while EU member states are willing to sign up to the measure, they differ on the level of that cap. ‘This is a moment when we need to send clear signals of unity to Vladimir Putin,’ said one EU diplomat, criticising Poland’s decision to hold out for a low price ceiling. ‘This issue needs to be sorted out well before the fifth of December.’
“The commission is pushing for a maximum price level of $65 a barrel [they eventually agreed on $60], but hawkish member states led by Poland say this will be ineffective because it is too close to the price Russia already gets on the market, meaning the sanction would not punish the Kremlin …
“Warsaw has demanded a much lower price, arguing it is necessary to ensure Putin’s oil revenues are curtailed. One Polish official said on Sunday that its government supported the price cap in principle but considered the $65 level as ‘extremely high’ compared with Russia’s cost of production.
“Warsaw also wanted to include the oil price cap in a wider ninth package of EU sanctions on Russia, the official said, but the commission feared this could further snarl up negotiations. Poland and other states are haggling over a review mechanism for the price level.” (EU races to settle differences over level of cap on Russian oil price by Sam Fleming and David Sheppard, Financial Times, 27 November 2022)
Unsurprisingly, Ukrainian puppet president Volodymyr Zelensky has rowed in with the fairytale demand that the cap should be set at between $30 and $40 a barrel.
Meanwhile, as the EU and G7 tie themselves in knots trying to find a way of waging economic war against Russia which does not cut the ground from under their own feet and deepen the splits within the not-so-collective west, Moscow has gently reminded them that Russia has in any case no intention whatever of selling oil to any nation that signs up to the price cap nonsense, thus making a farce of the whole business.
In addition to the ‘price cap’ wheeze, the EU already strives to uphold an outright ban on all Russian seaborne oil. However, at present this only applies to seaborne traffic, so Russian oil continues to flow unchecked through the Druzhba oil pipeline into central and eastern Europe.
Germany, Austria and Poland have pledged to end reliance on Russian oil, but it’s a different case with Bulgaria, the Czech Republic, Slovakia and Hungary, countries which rely heavily on oil piped through from Russia.
The EU is tolerating their continued import of pipeline oil until they can find another supplier. But this is easier said than done, and meanwhile stern injunctions from the European Commission that such imports must not be sold on to other countries are purely wishful thinking.
And should the west persist in stirring up trouble, Moscow has it within its power to unilaterally shut down access to the pipeline.
Russia will find it easier to do without the EU than will the EU without Russia. Russia’s permanent representative to international organisations in Vienna, Mikhail Ulyanov, summed up the situation in a phlegmatic tweet: “From this year, Europe will live without Russian oil.” (Russian oil price cap: Five things you need to know by Priyanka Shankar, Al Jazeera, 5 December 2022)
Europe’s loss will be a gain for India, China and Turkey, strong and independent countries which have no argument with Russia and are content to cut bilateral deals. And if the customary shipping operators are too gutless to stand up to G7/EU bullying, then there are plenty of others eager to seize the opportunity of rejigging the supply lines.
Russia is reported to be well advanced in its plans to build up a ‘shadow fleet’ of massive tankers, capable of delivering oil to energy-hungry markets in China, India and Turkey. It is understood that this fleet is already over a hundred strong.
The Financial Times claims: “In 2022, operators linked to Russia are suspected to have purchased as many as 29 supertankers – known as VLCCs, very large crude carriers – each capable of carrying more than 2m barrels, Braemar told the International Energy Agency in a presentation last month. The country is likely to have also added 31 Suezmax-sized tankers capable of carrying about 1m barrels each, and 49 Aframax tankers that can each haul about 700,000 barrels, it added.
“Andrei Kostin, head of Russia’s state-owned bank VTB, appeared to confirm the push in October by saying the country needed to spend ‘at least Rs1tn ($16.2bn)’ for ‘the tanker fleet’s expansion’. Russian deputy prime minister Alexander Novak in March said the country would build up its ‘supply chains’ in oil.” (Russia assembles ‘shadow fleet’ of tankers to help blunt oil sanctions by David Sheppard et al, Financial Times, 2 December 2022)
As the saboteurs of Nord Stream and the Crimean bridge discovered, neither bombs nor sanctions can reverse the decline of US hegemony or the growth of a multipolar world. Such supposedly ‘rules-based’ attempts to resurrect American ‘greatness’ can only accelerate the process of decline.
Meanwhile, on the military side of the struggle, occasional glimpses of what is really going on penetrate the fog of lies generated by the Ukraine-embedded imperialist media.
Whilst the Ukronazi forces prove to have a penchant for the cold-blooded murder of surrendering Russian soldiers, as captured on video and now under grudging scrutiny by the United Nations, the picture that emerges is of badly trained troops running out of ammunition and suffering widespread demoralisation, condemned to be used as cannon fodder in a war they cannot win.
“Captured in early and mid-November near Bakhmut, servicemen of the 71st, 58th and 53rd brigades of the Armed Forces of Ukraine claim that the training course in the UK and on the territory of Ukraine with the support of instructors from the United States, Canada and Australia was not designed for intense battles and harms the Ukrainian infantry.
“According to the Military Chronicle, soldiers of the Armed Forces of Ukraine were trained under the Nato Coin programme (Counterinsurgency – counter-guerrilla warfare). The Coin program was created to combat ‘non-state forces’ and insurgents and does not assume that the enemy has effective artillery and heavy weapons, which are available in a large numbers in the Russian Armed Forces.
“In addition, the Armed Forces of Ukraine did not conduct a full training course of six months. For assault units, the crash course was conducted in 20 days, and for ordinary infantry, the training was completed in two weeks.
“After the courses, Ukrainian military personnel trained according to Coin standards began to die en masse in battles. At first, losses were recorded in the Kherson direction, but now the most massive losses of the Armed Forces of Ukraine are observed in the Artemovsk and Liman directions, where the forces of the southern group of the Armed Forces of Ukraine were transferred.
“Due to heavy losses of the Ukrainian armed forces in Bakhmut in September, October and November, American instructors were sent to the units of the 30th, 53rd and 71st Brigades of the AFU, who were assigned to help with the management of Ukrainian infantry and reduce the level of losses.
“According to the prisoners, the AFU’s training in Coin tactics, both abroad and at the Yavorov training ground, was built around actions in small mobile groups. At the same time, the main areas of training were manoeuvres on light vehicles (the so-called pick-up truck war), storming buildings and filtration of civilians.
“Earlier, the Military Chronicle has already written about the mistakes of American officers when planning counterattacks of the Armed Forces of Ukraine near Bakhmut.” (The AFU are suffering heavy losses due to the Nato tactics of Coin by Tony Cyberspec, vk.com, 4 December 2022)
A chilling account of the horrors of combat on that same Bakhmut front came from the Ukrainian commander of the fascist-led Svoboda battalion, Petro Kuzyk. He said his troops were “staying in trenches full of corpses, fighting in extremely cold conditions and in knee-deep water against Russia’s attacks”.
His testimony reflects the depth of demoralisation amongst the infantry: “I apologise for speaking slowly now, because I’m very cold – it’s making me dizzy. I’ve now left the first line (since I was called). I’m warming up in the car, I’m almost falling asleep, because I haven’t slept all this time.
“They charged yesterday, quite seriously. They felt a weakness in our defence, because (I will not name the numbers of the units, so as not to spoil their honour) there are units that are less motivated than ours. And yesterday they weakened our defence a little in the area just around the Bakhmut. Some units could not withstand this artillery onslaught and retreated.”
Kuzyk described the terrain as “a swamp full of mud”, noting that this made it “very difficult to evacuate the wounded or to deliver ammunition. The trenches are constantly deteriorating, and in this swamp they must be constantly rebuilt.”
He went on to recount: “Today is the first day without rain, but yesterday when it fell, all the water flowed into the trenches. And the shelling was such that it was impossible to get out of the trench, so the guys were constantly wet for a day or two. Plus the temperature is like this. Many are contused, many with pneumonia.” (Continuous assaults, water-logged trenches, and cold: How Ukraine is holding the line in Bakhmut by Orest Kuzyk, Yahoo News, 30 November 2022)
One can only imagine the bitter inmost thoughts of these young men, fooled by the nihilistic cult of nazism into throwing away their lives in an unwinnable war on behalf of the collective west, as they face a death that is lacking in any ‘honour’ whatever. How many of them would truly embrace the battalion leader’s apparent Wagnerian vision of a glorious Ukrainian gotterdammerung?
He waxes lyrical: “But we hold our ground, and we defend. I see young guys standing with their teeth clenched. I would really like someone to write about their achievements, because few people in the country know about it.”
The only authentic narrative of these ‘achievements’ will take the form of a charge sheet enumerating the egregious war crimes of the Ukronazi leaders and of their imperialist backers.
The Bakhmut struggle is one example given by retired top-brass Colonel Douglas Macgregor, in a recent interview concerning the war. In his view, the west is overly impressed by showcase Ukrainian advances, setting great store by the capture or loss of this or that city and blinding itself to the bigger picture.
He singles out Bakhmut as a case in point, with Russia making strategic advances and withdrawals in such a way as to lure the enemy into a trap or “cauldron”. (Odessa falls and Ukraine becomes a landlocked country, Interview between Dr Michael Vlahos and Col Douglas Macgregor, YouTube, 12 December 2022)
In this kind of long-haul war, the short-termism of fighting the war with one eye constantly on the public relations cachet of any temporary acquisition of territory only distracts attention from the overall prosecution of the conflict. And a key consideration here is the ability of each side to maintain a sufficient level of munitions production to match requirements. In this respect too, the west has been found wanting.
The only thing keeping the war churning on is regular infusion of weaponry from the west. But this seemingly endless supply of materiel is revealing itself to be finite. Since the collapse of the Soviet Union, western governments have been pouring money into high-tech warfare, yet when push comes to shove find themselves running out of some really basic kit – like bullets, for example.
“Germany has been facing pressure to maintain its defence commitment to Nato while providing Ukraine with the necessary weaponry to fight back against Russia. According to local reports, the German army has been left with only ‘two days’ worth of ammunition to sustain active combat if necessary.
“German affairs expert Oliver Moody noted Berlin is not the only Nato country to have been left facing stock issues as he noted the end of the cold war nearly 30 years ago ushered in a change towards more technological types of warfare, leaving ammunition stocks thinner.” (Nato countries running out of ammunition as Germany left with ‘two days’ of stocks by Aurora Bosotti, Express, 3 December 2022)
The Financial Times noted that “the allies that have backed Kiev’s effort are increasingly concerned by the struggle to increase ammunition production as the conflict chews through their stockpiles”, drawing the conclusion: “At stake is not only the west’s ability to continue supplying Ukraine with the weapons it needs but also allies’ capacity to show adversaries such as China that they have an industrial base that can produce sufficient weaponry to mount a credible defence against possible attack.” (Military briefing: Ukraine war exposes ‘hard reality’ of west’s weapons capacity by John Paul Rathbone and Sylvia Pfeifer, 2 December 2022)
Yet it is precisely the industrial base of western countries that is being hampered by the high fuel prices and disrupted supply lines resulting from the sanctions war initiated by imperialism.
Nor has the west’s predicament been helped by the triumph of the ‘just in time’ philosophy in every economic sphere, swearing by the virtues of minimal inventories and in the nick of time deliveries. The vulnerability of such supply lines to any external shock had already been rubbed home with the deadly chaos affecting PPE provision during the Covid pandemic. Now the same anarchy of production is putting the supply of lethal weapons at risk.
Whether the commodity in question is weapons to kill people or PPE gear to keep them alive, the same pressing capitalist need to make a fast buck gets in the way of any rational planning. The FT chides western governments for their failure to plan ahead and place orders for military hardware in good time, but in reality this inability to plan for the long term is inherent in all capitalist commodity production, whether the products are armaments, PPE protective gear or anything else.
“After sending more than $40bn of military support to Ukraine, mostly from existing stocks, Nato members’ defence ministries are discovering that dormant weapons production lines cannot be switched on overnight. Increasing capacity requires investment which, in turn, depends on securing long-term production contracts.
“The USA has sent about a third of its stock of Javelin anti-tank missiles to Ukraine and a third of its stockpile of anti-aircraft Stinger missiles. But it has little prospect of being able to replace these quickly. ‘There’s no question that … [supplying Ukraine] has put pressure on our defence industrial base,’ Colin Kahl, US under-secretary of defence for policy, said last month.” (Ibid)
Whilst Kiev continues to chase after PR rainbows, there are signs that workers in Europe are less ready to be fobbed off with sob stories about Ukrainian refugees now that the cost of living crisis dominates everything.
There have been dozens of protests against the war in towns and cities across Germany, and these protests increasingly come to include pro-Russian sentiments, to such an extent that nervous demo organisers of one protest in Leipzig felt obliged to appeal to angry demonstrators: “Please do not provoke the police and note that Russian flags or signs that show support for Russia’s armed forces are not welcome!”
Undeterred, the very first speaker declared: “Germany is serving as a puppet exclusively for American interests and those of Nato,” going on to note that the “embargo policy against Russia has failed completely and is being directed catastrophically against ourselves” and denouncing the war as a “paradise” for “warmongers, arms companies and profiteers”.
A pensioner chipped in, insisting: “We want Nato warmongers to stop creating a conflict between Germany and Russia, between Ukraine and Russia.” One slogan was “Nordstream 2, open it immediately!”
Antiwar protests have also sprung up in the Czech Republic. Back in September, 70,000 protestors gathered in Prague to oppose the government and Nato.
The Financial Times noted: “It is in Austria where antiwar messaging and pro-Russia sentiment appear to be enjoying the greatest currency,” adding: “Against the backdrop of an unpopular and divided central government dogged by corruption scandals, Austria’s populist Freedom party has clawed back voter support in recent surveys, having relentlessly blamed sanctions and hostility to Russia for the mounting economic hardship facing working-class Austrians.” (‘Ordinary Germans are paying’: antiwar protests stretch across central Europe by Sam Jones and Raphael Minder, Financial Times, 21 November 2022)
Attempts to control the global oil price are only serving to further expose the disunity in the western camp.
