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25 Aug, 2022 10:35

EU branded ‘third world’ economy

The reason for this is sanctions imposed on Russia over the conflict in Ukraine, a senior contributor to Forbes magazine claims
EU branded ‘third world’ economy

The fallout of the sanctions imposed on Russia over the conflict in Ukraine has turned the European Union into “the third world of the Western world economies,” a senior contributor to Forbes magazine has claimed.

“These days, the European stock market is the worst in the Western world,” under-performing the US by ten basis points, Kenneth Rapoza pointed out in his article on Tuesday.

“The most significant headwind” for such a state of affairs has been the “Russian sanctions on energy as punishment for its war with Ukraine,” Rapoza insisted. Those restrictions “set off a massive commodity price spike that’s hurt the European economy the most,” he added.

The author advised investors against putting their money into the bloc, at least until Brussels figures out how to compensate for the massive reduction in energy supply from Russia, and how to mitigate the harmful impact of its own sanctions.

If there’s no ceasefire in Ukraine soon, chances are that “Europe becomes so desperate this winter and supply chains so stretched that it has no choice but to relax some sanctions or convince non-EU partners to relabel and transship Russian commodities to look in [compliance] with their own rules, but really doing an end-around,” he wrote.

Until some solution is provided, Europe will remain “the third world of the Western world economies,” Rapoza stressed, saying that this was how one investor on Twitter had recently described the situation on the continent to him.

The author also asked Vladimir Signorelli – the head of US-based consulting firm Bretton Woods Research – to comment. 

“They’re certainly heading that way,” Signorelli acknowledged. “And you have the Greens still opposing nuclear in Germany. I just don’t understand them. They are on the fast track to a third-world energy program.”

Only China is now “worse as an investment” than the EU, Rapoza claimed, citing Beijing’s “heated political fight” with Washington, internal struggle within the Chinese political elites and the country’s harsh Covid-19 curbs.