Russia-Ukraine Flash Report for 6-15-22 10:30 PDT - SCHOLZ!

German Chancellor Olaf Scholz has been accused of promising a helping hand to Ukraine while offering a single pinkie. In our analysis, there are three underlying reasons for this.

1. The legacy of Angela Merkel and her relationship with Russian President Vladimir Putin. Merkel, who is fluent in Russia, was said to be able to stand up to Putin while maintaining a non-adversarial relationship. This isn't to suggest that Berlin is actively attempting to appease Moscow (OK, that is being generous). It is to suggest that Scholz is attempting to have the same relationship while lacking the language skills or talent, and refusing to recognize that President Putin is acting irrationally.

2. The military policies of Angela Merkel which has left the German military in a somewhat depleted state. This wasn't because of neglect on her part in so much as carrying forward previous defense policies that rely heavily on United States support in the event of a major war. These arrangements were made as part of post-World War II reconstruction, and Germany's history of wanting to rule the world every 20 to 30 years for about a century up to 1945.

3. Germany's dependency on Russian natural gas in part because of...Angela Merkel and moving away from other forms of electrical power generation including nuclear. Germany is particularly vulnerable because it lacks LNG port infrastructure and its industrial backbone is reliant on natural gas.

Scholz has gone out of his way to not upset the Kremlin and his reward apparently is economic warfare.

On Tuesday (United States time) Russia cut the flow of the Nordtream 1 pipeline by 40%, citing the lack of critical replacement parts needed from Canada, not arriving due to sanctions. On Wednesday (United States time) Russia announced the flow of gas to Germany would be cut another 20%. This is in addition to Gazprom canceling gas deliveries to Germany through the Shell Energy contract due to Shell's refusal to pay in roubles.

The cuts came just moments after Germany decided it would not nationalize the German Gazprom business unit and instead would provide a 10 billion euro loan to prop up the enterprise. The move was made by the Berlin government reportedly to appease Russian President Vladimir Putin.

German Vice-Chancellor Robert Habeck said Wednesday that Gazprom's initial move appeared to be political rather than a result of technical problems. He said the new developments “clearly show the Russian side’s explanation is simply an excuse.”

“Obviously, the strategy is to unsettle people and push up prices,” Habeck said.

In other news, it was Obvious Day at Camp Stupid - film at 11.