The Duran Podcast - EU pressures Russia to rejoin grain deal. Shoigu says Poland main threat to Russia

Episode Date: August 12, 2023

EU pressures Russia to rejoin grain deal. Shoigu says Poland main threat to Russia

All right, Alexander, let's revisit the grain deal, the collapsed grain deal. And it looks like the EU was more reliant on Ukraine grain than they led on to be. What is going on here? Well, this is absolutely correct. And we can see, as a result, a massive campaign to try to press pressure cajole. the Russians into rejoining the Green Deal. Now, you know, there's been floods and floods and floods of articles

appearing in the Western media. There's been comments by people like Yosef Borrell. None of them, I have noticed, ever address the complaints that Putin has been making about Western non-observants of the Green Deal.

The fact that the West never, in fact, implemented the various promises that it was supposed to implement. Giterres, who who was the UN Secretary General, who said that the Russian concerns were valid, and I think we should remember that. And by the way, so has Erdogan.

So just mentioning all of this. But it is now clear to me that Ukrainian food, and I should say food, not just grain, most of this food is animal food, by the way, was absolutely essential for keeping food costs in the EU area down. This is something I had not fully appreciated. It's not been widely spoken about before. It also turns out that the EU and was heavily dependent on Ukraine for certain essential oils, food oils,

sunflower oil in particular. If you live in Britain, by the way, you would know that sunflower oil is by far the most widely used cooking oil in Britain. And of course, food inflation in the EU area, in the European area, is, of course, a very hot political issue at the moment. It's probably driving inflation increasingly. So we see a concerted effort to try to get the Russians to come back into the grain deal. And that's taken two forms. One is a massive media campaign and diplomatic campaign,

going around telling people in Africa, in Latin America, in Asia, you see these wicked Russians, they're raising global food prices, More likely they're raising food prices in the EU area, but anyway, that's what people are saying. And an attempt to try and enlist these countries to put pressure on the Russians. And that's only worked to a very small degree. And the second is a major campaign to disrupt Russian shipping in the Black Sea. So that was what those attacks on Novorosk, as it turns out, were about. an attempt the attack on the Russian oil tanker.

That was what it was all about. Remember, Russian grain foodstuffs also tend to transit via the Black Sea. And the idea is get the Russians to go back into the grain deal and offer them as a quid pro quo. The fact that if they do, these attacks will start to wind down. and its furious campaign Erdogan has been sort of brought in to try to convey this message to Putin

at their forthcoming summit meeting which is probably the reason by the way why Putin isn't particularly keen on meeting Erdogan at the moment but this is the campaign that's underway for the time being now I will be very surprised indeed if the Russians agree to this and I'm going to say a few quick things here there's been various articles there's been lots of attempts apparently by the west to find alternative means of transporting food from ukraine which don't go

through the black sea or at least not from ukrainian ports there's been talking sending food down the danube through you know Romanian ports like constanta and also along the Romanian and Bulgarian coastlines. Apparently people have looked into all of this. These are not viable alternatives for all sorts of reasons. There's a long article of the Guardian talking about this of all places. There's also, of course, the attempt to create land routes across Poland and Germany to reach the German ports, which would be the places that you could re-export this Ukrainian food from,

or indeed send it to the European Union. That is a major political problem for Poland. The polls have basically said they're not prepared to agree to that. They will even impose unilateral restrictions on imports of Ukrainian grain in September if the EU doesn't impose similar blanket restrictions. There's talk about setting up green corridors through Poland to get around this problem.

I think Polish farmers would not accept that because they wouldn't believe in those corridors. The Polish government is facing re-election in October. It depends on the votes of Polish farmers. It's unlikely to agree to this. So major campaign to get the Russians back into the grain deal. And there is also two further worries. Firstly, Ukraine's... cut off from its one big independent source of funding, which was food exports.

Secondly, Ukrainian farmers, it seems, are reacting to this by cutting their sewing. And there are now reports in Ukrainian channels. I saw a piece in Stranagh, for example, which is a Ukrainian website, that before long, Ukraine is a food producer, it might be past the point of no return if they can't export. grain through the Black Sea. But the other thing, the second thing that's really worrying the Europeans is, of course,

that there is one big grain exporter, food exporter, able to step in, which is Russia. They've had another bumper harvest. The ruble is soft, intentionally so. Russian food is now

extremely cheap on world markets. They're in a strong position. to exploit Ukraine's disappearance from the food scene to take over Ukraine's markets. And, of course, the EU, because of the sanctions, is basically unable to take advantage of this. So you're going to see floods of Russian grain, 60 million tonnes of it, apparently,

exported around the world at cut prices, bulging the Russian exchequer, because the ruble helps the Russian exchequer in these kinds of situations. And so Russia wins and the EU loses. And this is what we're now seeing. Okay, so can you say that this is confirmation that Putin's claims about 3% of the grain

was actually reaching the poorest nations and the rest was going to the rich nations of the West? Does this confirm Putin's statement? Yes. I mean, it does. I mean, can I just say, I mean, there are all sorts of attempts to sort of argue around this. I've seen claims like, you know, well, if you depress food, if you lower food prices in Europe, that will lower food prices globally and things of that kind. But ultimately, that is absolutely correct. The biggest importer of Ukrainian food, by the way, was China. That was where, that was where, that was the single biggest importer. I think Turkey and Spain were joint second, except of course that in Turkey's case, Turkey is a food exporter. So what Turkey was doing was simply repackaging Ukrainian food, as I said, this is mainly animal food, and re-exporting it to Europe.

So that was where it was going. So, and then of course if you look beyond that, it's various other EU countries. So it was not going to Africa or Egypt or all of those places to any degree. They mainly import their food, as it turns out, from Russia. Okay. So can you explain a bit about the rubble that you mentioned, how the rubble exchange where the rubble is at right now is helping Russia? Yeah.

What do you think about the fact that the ruble is, is, uh, is, is far. in comparison to the U.S.D. and the Euro. Yeah, I think this is an important thing to try and understand. Because I always come up with these issues about the rubble. Every couple of years, people talk about the rubble, and there's a ruble crisis. You remember they were doing that last year, now they're doing it a bit this year.

What the Russians do is they operate what's called a dirty float. Now, in a kind of a way, they would never admit this, by the way. They manipulate the rubble. value. Now, last year, Russia wasn't importing and oil prices were high. So, because the Russian economy at that point was in recession and it was recovering from the sanctions shop. So it made sense at that time to try to build confidence in the ruble and to use the ruble to lower inflation in Russia by a lot of inflation. allowing the ruble to become very strong.

And it did become extremely strong. It reached something like 59 to 62, 63 to the USD. And that brought down inflation, that stabilised the financial system. It gave the Russian government time and space to sort things out. And because oil prices were very high last year, it didn't really affect the budget very much because oil receipts were very, very strong. Now, this year it's been different.

Firstly, the Russian economy is surging. It's growing very fast. Faster, I suspect, that the official figures suggest. There are signs of overheating. And that means that imports, not from the West, of course, but principally from places like China, India, and those kind of places are rising. Secondly, Russian exports have taken a hit

because over the course of the winter and spring, oil prices fell, and that was in part because the Russians responded to the restrictions on their oil exports to the EU and to the US by pumping a lot more oil into the markets, into the global markets, especially in the Far East, in order to win market share there. and they were keen at that time to give discounts. Now, what's happened is as time has progressed, fall in Russian energy revenues meant a sharp fall in the Russian trade surplus

and the Russian current account, that's not just the trade surplus, but the money that goes in and the money that goes out in Russia in the second quarter of this year almost went from surplus to balance and the one thing the Russians will not allow is their current account to go into deficit. It's absolutely something they do not want to see happen. So what you have seen are two things.

Firstly, the Russians, having now one market share in the Far East, are now cutting oil production. And together with the Saudis, that is putting an upward pressure on oil prices. Oil prices are now rising. Whether coincidentally or not, they've pulled out of the grain deal, they've stopped Ukrainian grain exports to all intents and purposes. They're well positioned to increase their food exports as well.

So rising oil prices, Russia gaining dominant position in world food exports, you are going to increase the amount of rubles you get for your oil by allowing the value of the ruble to fall. And you're also going to increase the competitiveness of your food exports, because your food is being produced cheaply in rubles and is being sold globally.

in other currencies. So the result is that we're going to see a rebound in the Russian trade surplus and a strengthening of the Russian current account over the second half of this year. We're going to see imports choked off to some extent, which is good because it will take off some of the pressure within the overheating economy. And bear in mind the Russians are also taking steps internally to cool off the economy by raising interest rates. And at the same, same time, the budget is going to be strengthened as well because there's going to be more receipts from the exporters, the oil and the energy companies, and of course the food exporters, which will strengthen the budget. Now, if you remember at the very start of this year,

we were talking about the Russian budget. There was one month when the budget was $25 billion dollars in deficit and everybody was saying Russia is going to run out of money now the Russian budget deficit has fallen drastically it's quite likely to move

back into surplus over the next couple of months and we will probably have a situation by the end of this year when it either balances or if there is a Russian deficit in the budget it will be very small so it works for the

to allow the ruble to fall. It's a temporary phenomenon. It doesn't greatly affect conditions within the Russian domestic economy anymore. There will be a small rise in inflation, or at least there will be an inflationary rise, but inflation was brought so low at the start of the year

that they have space to manoeuvre in order to let it happen. That's the story of the rule. people don't understand how this works, but this is what the Russians do. They've done it before. They're going to do it again. They have handled this whole situation, both with their exports and with their oil revenues and with the grain and with a ruble with their accustomed skill.

Yeah. How are they handling the situation in Poland? We had some interesting statements from Sergei Shui-Gu. Let's shift gears a bit and talk about those statements from Shoygu. He mentioned Poland a lot in his statement to military officials. What do you make of that? Top, top senior military officers. And I mean, what he's now making clear is that Poland is now perceived by Russia as the major threat.

He complains at length about the fact that there is a huge military buildup going on in Poland. This is a direct threat to Russia, that the Russia is. need to be preparing for this, and he is singling out Poland as a potential adversary. Now, Russian statements about Poland have been getting stronger almost by the week. So you remember about two weeks ago, we had that meeting between Naryshkin and Putin

at the Security Council that exchange in which Naryshkin was talking about the polls moving into Western Ukraine at the invitation of the Ukrainians, and Putin said, watch the situation. Ultimately, it's nothing to do with us. And the following day, Lukashenko came along and said, this is what, this is not actually acceptable. If the polls moved into Western Ukraine, it would put Belarus in a very dangerous position. We need you to be behind us and

support us in this. And now we have Shoyugu coming along. Strengthen strengthening the Russian position even further, making it increasingly clear that the Russians see the Poland as a potential threat, as an adversary, the scale of the build-up that Poland is undertaking in terms of his military power. He says it's alarming. So what you see is that the Russians are gradually moving to a position where they're going to say if Poland does move into Western Ukraine, it will not be acceptable to Russia.

And in fact, the situation is being prepared, I think, for a potential conflict with Poland. If you look at Shoygu's words, I mean, conflict with Poland in Western Ukraine. And I suspect strong warnings have been given to Poland, not to even think of going there. So this is what Shoyugu's message is intended to convey. And by the way, this is where pulling out of the grain deal works again to the Russian strategy,

because what it has led to is this bitter argument between Poland and Ukraine. The Ukrainians are furious with the Poles for restricting their grain exports. The Poles then retaliated by saying that Ukraine ought to be grateful to Poland for the military help. given. This infuriated people in Ukraine. The Polish ambassador was called into the Ukrainian foreign ministry and given a talking to. That resulted in even more strong words from the Poles. Zelensky has tried to sort of calm things, but the whole thing is flared up again. So you can see that the Russians at the same time as that they're warning Poland about the risks it's running by getting involved in Ukraine.

The grain deal, perhaps unintentionally, is also working to the Russian advantage in that it's creating conflicts between Poland and Ukraine. Yeah. Very interesting. Good way to connect those dots. I haven't thought about the grain deal and how it affects Poland's possible incursion into the west of Ukraine. Do you think, a final question, do you think Poland's going to enter Ukraine and enter Belarus?

because Shoygoo talked a lot about the Union State. Yes. And while he was warning Poland about West Ukraine, I mean, he was at the same time warning Poland not to enter Belarus because it would be an attack on the Union State and it would obligate Russia to respond. So, okay, so you have Poland eyeing the West Ukraine. We've been talking about this for months. All the analysts have been talking about this for months. But what do you think is the possibility? of Poland entering Belarus?

Or is that too far for Poland? I think that's too far for Poland. I mean, I think, bear in mind, there are Russian nuclear weapons, tactical nuclear weapons in Belarus. I think any Polish leader who went that far would be putting Poland at unacceptably high levels of risk.

I think NATO, Germany in particular, would absolutely not support a Polish move into Belarus that might result in a nuclear war in the regions west of Germany. So I don't think it's going to happen. My own personal view is that all of this pressure that the Russians are imposing on Poland and the issue of the Green Deal and the quarrel between Poland and Ukraine. I think actually that Polish order, if you like, to intervene in Western Ukraine is now dimming. I think that Polish society is far from united about this.

I think many people in Poland would oppose it. There's elections coming in October, difficult elections. I think that the Polish government might have calculated before that if the Polish army marched into Western Ukraine before the elections, that would be a popular move. it would be, you know, Levov, is being brought back under Polish control again, conjuring up all those old memories. I think what they're probably discovering is that it's actually not a popular move in Poland at all, that most people in Poland, even many of them who are very antagonistic to the Russians,

do not want to be drawn into a war with Russia. All right, we will leave it there at the durand.m.orgals.com. We are on Odyssey, Bitch, Shoot, Rumble, Telegram, and Rock Finn and go to the Duran Shop. 10% off. Use the code. Good day. Take care.