Ukraine, Putin declares: “independent Donbass”. One step war, what is Italy at risk?

1) War of nerves, war about to break out, energy war: Ukraine is a nightmare for everyone, even for Italy.

Especially after the decision by Russian President Vladimir Putin to recognize yesterday the independence of the self-proclaimed separatist republics of Donbass, Donetsk and Lugansk, whose pro-Russian leaders have been asking for military protection from the ‘mother country’ for days. “Ukraine and the Donbass are integral parts of our history”, said the head of the Kremlin, addressing the population on live TV with a speech that started with Lenin and culminated in the definition of Ukraine as a “corrupt and nationalist “:” It was never a state, it is an American colony “. A decree of recognition that involved above all – late yesterday evening – the deployment of armed forces in the Ukrainian territory, formally “to ensure peace” in the Donbass. Local media already report Russian military columns in the breakaway region: videos are circulating but official confirmation is lacking. The move was, of course, immediately challenged by the international community, starting with the US and the EU. Whose prime minister, Charles Michel, has announced that he will vote on heavy sanctions against Moscow (the US, on the other hand, will ban investments in the two breakaway republics). While the Ukrainian president, Volodymyr Zelensky, has called for UN intervention and the clashes along the eastern contact line have continued amid violence and violations of the ceasefire, of which pro-Russian and Ukrainian continue to accuse each other. The meeting between the Russian ‘Tsar’ and the American President Joe Biden, on which the French President Emmanuel Macron has worked in the last 48 hours, becomes a difficult hypothesis at this point. In the afternoon, US intelligence had defined the Russian aggression against all of Ukraine as a matter of “a few days if not hours”. And Putin subordinated face-to-face readiness to security reassurance. Which refer to the feared, hypothetical, adhesion of the “enemy” to NATO, unacceptable to him: “Ukraine in the Alliance is a threat to us”. In short, the Tsar considered it necessary to first establish what the objectives to be achieved are. And Macron himself, disappointed by recent events, had nothing left but to convene a summit with Zelensky and the German Chancellor Scholz (already in conversation with Putin), in the hours in which 70,000 evacuated from Donbass reached regions under Russian control. Mario Draghi’s government is ready to report to the Chamber.

2) The implications of an increasingly concrete conflict put at risk, among other things, the energy plans of various states.

In addition to the uncertainty on the financial markets, Italy too would lose out, and a lot, in economic terms. If Putin’s army were to enter Ukraine, a buffer zone that has so far guaranteed equilibrium on the Continent, the Euro-American sanctions will indeed be very harsh and Russia, at that point, could react by cutting off supplies of natural gas not only to our country, but also to Germany and France. And Italy, which imports about 40% of its natural gas from Russia, essential for heating homes and generating electricity, would not be able to quickly replace all Russian gas (supplied through Ukraine) with other sources. . And so we would go towards a further increase in costs in the bill and a rapid containment of consumption. Because the acceleration on gas extraction, anticipated by the Minister of Transition Roberto Cingolani with a new map of the plants, cannot arrive in time. The signs of the changed energy scenario occurred between December and January, when Russia cut supplies to Italy by 30-40% and to most of Europe, with the exception of Germany through the Nord Stream 1 gas pipeline. And the drop in shipments from the giant Gazprom translated into a huge surge in energy prices in February, which are impacting industrial production and raising bills. An emergency that forced Draghi to call Putin on February 1, who reassured him about the maintenance of supplies. But now the premier – whose fears have been acknowledged by US vice president Kamala Harris – could fly to Moscow next week. According to Davide Tabarelli, president of Nomisma Energia, “if we get to the war between Russia and Ukraine, with a simultaneous tightening of gas supplies by Putin, we will immediately return to December 22. Indeed, the price of gas could rise even at 200 euros per megawatt hour “. Among the raw materials, for example, nickel reached $ 24,610 per ton: this is the highest level since August 2011.

3) Trade and exchanges are at stake.

Moscow is the 14th destination in the world for Italian goods. And the commercial exchange is equal to 20 billion euros. In 2020 alone, Italy sold products and services to Russia for 10 billion dollars, according to data from Trading Economics, with a prevalence of industrial machinery, electrical or electronic appliances, fashion and pharmaceuticals. New repercussions on the economy would represent, especially in this restart phase, a weight that is difficult to sustain. Already in 2016, due to the sanctions against Russia for the annexation of Crimea (which Putin declared yesterday in danger), the made in Italy to Moscow had halved: three years earlier, it was worth around 14 billion dollars.

4) Then there are the costs of wheat and bread.

Kiev plays an important role in the production of about 36 million tons of corn for animal feed (5th place in the world) and 25 million tons of soft wheat for bread production (7th place worldwide). The country ranks third as a world exporter of wheat while Russia, Coldiretti specified, ranks first: together they guarantee about a third of world trade. The emergency, therefore, would directly concern Italy, which is a deficit nation and imports even 64% of its wheat needs for the production of bread and biscuits. In 2021, more than 120 million kilos of wheat arrived from Ukraine and about 100 from Russia, which on the other hand has already announced its intention to limit its exports from 15 February to 30 June. In just one week, the international quotations of wheat for bread and corn for animal feed thus recorded a jump of 4.5% and 5% respectively. A situation, to reread the history of our country in the last decade, determined by the disappearance of one wheat field out of five with the loss of almost half a million hectares of cultivated land.

5) The Stock Exchanges also descend into the “Ukrainian trench”.

The winds of conflict weigh on the European stock exchanges, which concluded lower yesterday: Paris, Frankfurt and Amsterdam lost 2 percentage points, Milan 1.72% to 26.050 points, Madrid 1.1% and London tried to contain losses, down by 0.4% in the end. The worst blow was the Moscow stock exchange: the Moex index collapsed, in the face of the possible economic sanctions that could be imposed on Moscow and lost almost 11% (-10.50%), the decline worst since March 2020. After betting (at the opening of the session) on the possible Putin-Biden summit, pessimism prevailed in the financial markets. And, in the world, fear.