July 3, 2022

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US concerns – Corriere.it

from Federico Rambini

High inflation, to which the cost of energy contributes, affects the purchasing power of households and corporate accounts. The fall of Wall Street is not reassuring

Is America really profiting from this conflict? A theory dear to Italy’s potentine. They present it as a certainty: the United States will reap benefits from the war, which is why they have an interest in making it last as long as possible. The fact that US stock market indices have been falling since the start of Russia’s aggression against Ukraine should raise doubts. If this war had really been a business of the American economy, the news would not have escaped investors. Those who have the pulse of the US market are in the grip of pessimism.

The only concrete basis for the above theory is gas and arms sales. For these two sectors, a comparison with reality is instructive. America is an energy superpower, self-sufficient for years and exports various types of hydrocarbons. The US gas industry did not need the war in Ukraine. Last year it was already exporting at its highest levels, especially to China and Japan. Now it’s diverting some of those sales to Europe, not so much because the Old Continent has a few regasifiers to process the liquid gas carried by tankers.

Moreover, the gas industry is not increasing its production much, and Joe Biden, under pressure from environmentalists, has also been under pressure to grant new extraction permits. The profits of the oil and gas industry are undoubtedly abundant. But America is not a petro-state like Russia, and it does not have an economy that is primarily dependent on selling energy. The weight of this sector is limited, has diminished since the time George W. Bush launched the Iraq War, and continues to decline. Emblematic: The largest US oil company, Exxon Mobil, was removed from the Dow Jones stock market index in 2020 because its capitalization is too small. Dwarf compared to the powerful forces of American capitalism, almost all in the big tech sector, all consumers of energy, not producers. Even financing decarbonization, banks and investment funds from fossil energy and investing in renewables. Rising gas prices benefit the balance sheets of a small portion of the US economy while hurting everything else, business and consumers alike. Inflation also punishes Biden’s popularity.

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As for the weapons that are unfortunately sold in every war, they are not only made in the USA, where among the largest producers on the world market there are Russia, China, France, Germany, Italy and others. On the American side, the Washington Congress yesterday approved an aid package for Ukraine. valued at $40 billion, bringing the total amount the United States has paid Ukraine since the start of the conflict to 54 billion. Almost half of the economic aid, the rest weapons. To get a sense of the proportionality, it may be useful to compare the pro-Ukraine law to other recent spending moves. For example, $5 trillion in aid to American families and businesses for the pandemic. Or the 2 trillion infrastructure investment that Biden launched. By comparison, military spending on Ukraine is a trifle that leaves no trace in the world’s richest economy.

The latter does not explode with health thanks to the war, on the contrary. High inflation, to which the high cost of energy also contributes to the domestic market, affects the purchasing power of households and corporate accounts. A strong dollar (a safe haven currency in crises) punishes exports. Recession fears are growing. The fall of Wall Street confirms that America was better off before this war and would happily dispense with its aftermath.

Less than a year ago, the US withdrawal from Kabul – which took place under such tragic circumstances as the dbcle talk – signaled to the entire world the Biden credo: This America does not have the means to be the world’s darkest, it should focus on “the only challenge that matters (with China)” It is disengaging from other responsibilities. Russia’s aggression against Ukraine has created an opportunity aligned with this goal: strengthening NATOAt the same time, Europeans finally got to pay for their security with more resources. If Putin could even intimidate the Finns and Swedes by turning them away from neutrality, he generated a geopolitical benefit for America in terms of expanding alliances.

It is a gain that presents risks and unknowns. Biden should be careful not to be dragged into an old role – from the first Cold War – by his global establishment that overexposes him in Europe. The doctrine that China is the only long-term strategic competitor is still validIn fact, Biden is visiting Japan and South Korea to emphasize interest in the Indo-Pacific.

Another long-term unknown is the solidity of the US commitment to NATO and the White House’s concern for Europe’s problems. The vast majority of bipartisans agreeing to aid Ukraine in the Washington Congress is a reassuring sign at a time when Democrats and Republicans are fighting over everything. to The future Republican president may be less spacious; It will force the European pillar of NATO to bear greater defensive burdens. For those who advocate the birth of an independent European defense, a very common proverb applies here: Beware what you wish for, your wish may come true.

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May 20 2022 (change on May 20, 2022 | 21:39)