“At the pharmacies in my neighborhood, it is no longer possible to get iodine pills in case of a radioactive accident. In Lithuania, the residents are instructed how to escape a Russian invasion by side roads only. In Poland, there are long queues near coal mines, as the residents try to get supplies for the winter, and in the United Kingdom, packages of butter in the supermarket are protected by electronic means “, this is how Assaf Oni, a reporter for “Globes” in Europe, described today the new geopolitical reality on the continent, against the background of the series of crises taking place on the continent.
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The review opened a panel titled “Between War and Inflation: Where the World Is Going”, which was held as part of the Globes Israel Business Conference. The examples he mentioned, he said, reflect the alarming convergence that has been taking place in recent months, in which several crises together create a kind of “perfect storm” that threatens Europe, and changes the geopolitical situation on the continent – and beyond – in a way we have not known in recent decades.
Weaning agony and unpreparedness
In the field of energy, Europe is struggling to find a replacement for 160 billion cubic meters of natural gas, and has essentially “weaned” Russian gas and is switching to American, Qatari, Algerian and even Israeli gas. It is also weaned – with the exception of a few “recalcitrant” countries that received an exemption so as not to break up the union – from the 2.2 million barrels of crude oil per day imported from Russia before the war. “Europe is going through withdrawal pains, no less,” he noted. A German survey that was presented revealed that a quarter of companies are preparing to lay off workers because of energy prices. Almost 20% of them are considering closing.
On the security front, European unpreparedness for war on its soil has become public, and military buildup is going to gradually take place throughout Europe – from Estonia to Greece, from Poland to Britain. “The American pleas in the previous decade from European countries to spend 2% of GDP on defense are now being met with promises to spend 3% and more,” he noted. Some of these expenses will go to the Israeli defense industries, Oni said.
“If the Americans give permission to sell the Arrow 3 to the Germans, there will be a “Maid in Israel” defense umbrella over all of Central Europe, including even drones and perhaps an “Iron Dome… It still sends a certain historical chill to think that Israeli systems will protect Germany from threats ballistic missiles”.
Weaning off Russian energy is so difficult that it can even eliminate the entire competitive advantage of European industry, it was shown during the review. “The huge German trade surplus that was a kind of ‘natural phenomenon’ for the past few years has simply disappeared since the war, and it is suffering a deficit because of energy payments,” Oni said. “The German economy is critical to the European economy in general. When Germany sneezes, as the saying goes, all of Europe feels the chills.”
In addition, these parallel crises also coalesce to create political instability inception. The extreme right in Germany – “AH-FDA” – which was no longer relevant, jumped from a historic low to a renaissance of 15% in the latest polls. In France, the parliament is “politically deadlocked” because the cost of living in the country irritated the French so much that in the elections they created a tie between the extreme left and the extreme right. To pass a budget last week, Macron and his government had to use a kind of presidential veto. Britain experienced a rapid change of government due to financial and economic crisis.
Volatility permeates
In Italy, Oni said, what is less interesting is that a party with post-fascist roots now leads the country’s ruling coalition, because it has abandoned them and broken to the center. “What is more interesting is the very fact that a party can jump from 4% support in the previous elections to 26% without any problem, and become the largest party in the country.”
“In general”, he added, “more and more it seems that the volatility of the economic markets permeates the political and even social level. In Europe, which is used to stability, which celebrated it in the last decades with economic prosperity, and also by preaching to the world about the way it “cracked” the system of living in peace, this is a factor very scary”.
The conference is in cooperation with Bank Hapoalim, sponsored by Phoenix, Amdocs, BDO, HOT, Geely, Shufersal, El Al, Tnuva, Profimax, the Medical Organization, MyDesk, Contigo, Cisco and with the participation of Mekorot, the Innovation Authority, Mobileye, Start Up Nation Central, Nemal Ashdod and Electricity Company