Energy crisis: Economic and political ramifications

In this interview with Khaled Karaoui from France24 Arabic, Dr Carole Nakhle, CEO of Crystol Energy, discusses the political and economic ramifications in Europe, the Middle East and North Africa of the ongoing war in Ukraine.

Dr Nakhle first comments on President Putin’s request for gas exports to be paid in Rubles. Europe has adopted a tougher stance on Russia even before the invasion of Ukraine started. Germany’s suspension of Nord Stream II pipeline in Autumn 2021 is one example. Europe also has refused to alter its gas purchase agreements with Russia, thereby rejecting President Putin’s request. If Russia acts on its threat and cuts its gas supplies off, of course the European consumer will face higher energy prices, but in the longer term, Russia will be the biggest loser, not only because of the loss of revenues but also because it is sending the wrong signal to potential customers, particularly China, due to the risk of being labeled as an unreliable supplier. 

Dr Carole Nakhle discussing the political and economic ramifications in Europe and the MENA region of the ongoing war in Ukraine

On the economic impact, Dr Nakhle argues that Europe has been struggling with inflationary pressures due to rising commodity prices following the Covid-19 pandemic. Then came the Ukrainian war which has exacerbated the problem. Referring to the latest statement by the Organization for Economic Cooperation and Development (OECD), she shares concerns that the world is underestimating the impact of the war in Ukraine on energy security, food security, cyber security, payment systems, trade and refugees.

On a final note, Dr Nakhle says that the picture in the MENA region is divergent. Oil exporters, such as Saudi Arabia and the UAE, are gaining significant revenues from high energy prices and are in a much better position than net oil importers who are struggling with spiralling import bills – whether for energy or food/grain prices. On the bright side, oil exporting countries could support oil importing countries financially to alleviate the downturn; the latest agreement signed between the UAE and Egypt is one such example.

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