Ukraine Energy Minister Galushchenko Is Wrong. All Energy Company Profits Are Not Due To The War. Stop Putting Your Hands In Everyone’s Pockets. Ukraine Does Not Require Everyone’s Money.
“A lot of energy companies get enormous windfall profits due to the war. So, we estimated this at more than US$200 billion. They get this money because we are fighting, because of the war. I think it would be fair to share this money with Ukraine. I mean, to help us to restore, to rebuild the energy sector.”- German Galushchenko, Minister of Energy of Ukraine
No, Minister Galushchenko, You Are Wrong. Not Everything Earned By Everyone Is Due To The War And Required To Be Delivered To Ukraine.
Stop Seeking To Put Your Hands In Everyone’s Pockets. Not Everyone Is Responsible For The Russian Federation-Ukraine War.
If A Portion Of Energy Company Profits Are To Go Anywhere Other Than Shareholders And For Investment, Then It Should Be To Their Respective Governments From Taxes And Fees To Benefit Taxpayers… And Lessen Budget Deficits And Lessen National Debt Attributed To The Russian Federation-Ukraine War.
U.S. Taxpayers Have Borrowed US$113.1 Billion For Ukraine. They Deserve That Returned Too. And, US$38 Billion Might Be A Good Start…
Go After US$340 Billion In Assets Of The Central Bank Of The Russian Federation (CBRF) Frozen In France (US$74 billion), Japan (US$58 billion), Germany (US$55 billion), United States (US$38 billion), United Kingdom (US$31 billion), Austria (US$17 billion), and Canada (US$16 billion) Among Other Countries.
According to the Brussels, Belgium-based North Atlantic Treaty Organization (NATO), the organization and its allies have since 24 February 2022 delivered approximately 150 billion Euros (US$164 billion) in support to the government of Ukraine and to the armed forces of Ukraine. The support includes “financial backing to field assistance including generators, fuel, tents and medical assistance.” Some NATO members, bilaterally or as clusters, have provided the armed forces of Ukraine approximately 65 billion Euros (US$71 billion) in military equipment (aircraft, air defense systems, anti-tank weapons, artillery shells, tanks, etc.).
On 24 February 2022, the armed forces of the Russian Federation invaded and further invaded the territory of Ukraine in what Vladimir Putin, President of the Russian Federation (2000-2008 and 2012- ), defined as a Special Military Operation [SMO] then on 22 December 2022 he redefined as a war. The initial invasion by the armed forces of the Russian Federation was in part from the territory of the Republic of Belarus.
The war between the Russian Federation and Ukraine did not commence on 24 February 2022. The roots began their trajectories on 20 February 2014 when the armed forces of the Russian Federation invaded the Crimean Peninsula and the area known as the Donbas Region (Donetsk Oblast and Luhansk Oblast).
In 2022, the 117th United States Congress appropriated US$113 billion for Ukraine with those funds to be disbursed from 2022 through 2026 (or earlier as ordered equipment becomes available for delivery). The 117th United States Congress (House of Representatives and Senate) were controlled by the Democratic Party. The 118th United States Congress has a House of Representatives controlled by the Republican Party.
The White House proposes to spend US$842 billion in Fiscal Year 2024 for the United States Department of Defense (DOD) representing an increase of 3.2% from Fiscal Year 2023. The budget proposal includes funding for Ukraine- although not specifying whether the proposed funding is military-related or economic-related.
“Supports Ukraine, European Allies, and Partners. The Budget provides over $6 billion to support Ukraine, the United States’ strong alliance with the North Atlantic Treaty Organization (NATO), and other European partner states by prioritizing funding to enhance the capabilities and readiness of United States, allied, and partner forces in the face of continued Russian aggression.”
“In addition, the Budget requests $753 million for Ukraine to continue to counter Russian malign influence and to meet emerging needs related to security, energy, cybersecurity, disinformation, macroeconomic stabilization, and civil society resilience.”
“To assist Ukraine and manage the aftershocks of Putin’s invasion, the request includes 469 million to bolster the economy and ensure the continuity of government services, strengthen their energy infrastructure and cyber security, and ultimately promote the resilience of the Ukrainian people.”
“This request includes $1.7 billion that will help Ukraine win the war and lay the reform and recovery foundation for winning the peace and help other partners impacted by the war stabilize their economies and prepare for recovery.”
Politico
Brussels, Belgium
6 April 2023
PRESSURE BUILDS ON WESTERN ENERGY FIRMS TO DONATE WINDFALLS TO UKRAINE: A Ukrainian proposal for Western fossil fuel firms that made big bucks last year to voluntarily hand over some of their windfalls is picking up steam, with the initiative getting positive signals in some EU capitals.
Profiting from the war and driving inflation: As POLITICO’s Victor Jack reported last week, Kyiv’s Energy Minister German Galushchenko said “it would be fair” for Western oil and gas companies that made bumper profits during the energy price crisis last year to donate some of those profits toward Ukraine’s reconstruction. “They get this money because we are fighting,” Galushchenko said. He raised the idea with EU ministers at last week’s Energy Council.
By the numbers: BP, Chevron, ExxonMobil, Total and Shell made $200 billion in profits in 2022.
The initiative is receiving positive signals in some EU countries. Austria’s energy ministry told me it “welcome[s] voluntarily contributions by [fossil] energy companies, which have made profits in the wake of the crisis, for the reconstruction of Ukraine.” A Lithuanian government official, citing the example of the partly Lithuanian-state-owned Ignitis Group that’s already decided to donate 10 percent of its windfalls, said Vilnius “encourage[s] all member states to follow Lithuania’s example.” Another EU energy ministry said they “are open to exploring” the idea, but it “should be investigated and planned throughout Europe.” A senior diplomat from a fourth country also said they were “obviously open” to encouraging the idea, though the proposal was so far “vague.”
Role model: Darius Maikštėnas, CEO of Ignitis Group, which is planning to donate €12 million “this year,” told me it would be right for energy firms with the “largest windfall profits” in 2022 that “care about true corporate responsibility” to donate to Kyiv — also to “protect Western type of democracy and business environment.” While he was skeptical about more government-imposed windfall levies, Maikštėnas said “it would be fantastic for European Union officials to step in” and encourage voluntary donations. The Commission declined to comment.
But how would it work? Maikštėnas dismissed practical concerns, arguing that “all companies” could do something similar to Ignitis. He said the company first calculated its windfall profits by comparing its 2022 results to early projections and its market guidance for earnings before interest, taxes, depreciation and amortization. Then it proposed the move to shareholders, 99.9 percent of whom voted in favor of the measure — and they will now send the cash to Kyiv through a special legal vehicle.
WORST COULD STILL BE TO COME: Amid that backdrop comes a new report out this morning that argues that while Europe won Putin’s gas battle last winter, a lengthy energy war is ahead. Cheap Russian pipeline gas has been replaced by pricier LNG — a structural change that will make EU industry less competitive over years to come, the report by consultancy BCG argues. Europe’s chemicals, steel, building materials and automotive sectors all face a structural loss in cost competitiveness from significantly increased production costs — more than 10 percent in 2030 over 2020.
Risk of complacency: “In steel, using hydrogen and direct-reduction routes in Germany would lead to around 35 percent higher costs than in the U.S.,” Patrick Herhold from the Boston Consulting Group told Playbook. And he warned that industry is underestimating the impact: “While scenarios point to an uplift of 50 percent to 100 percent in gas prices by 2030, more than half of our survey respondents expect increases of only 11 percent to 50 percent.”
Go green or go bust: The obvious way out is to develop green industries, BCG argues. “Our very future is in green markets … growth will not come from fossil-based business models. But European companies need to move beyond crisis response and take a bold leap of faith,” Herhold said.
Politico
Brussels, Belgium
23 March 2023
BRUSSELS — Major international energy companies that raked in bumper profits because of price spikes over the course of the war should pour some of that cash into rebuilding Ukraine's shattered power infrastructure, Kyiv's Energy Minister German Galushchenko told POLITICO.
In a wide-ranging interview, Galushchenko also argued the West needed to close sanctions loopholes on Russian energy sales to prevent an "endless war" in Ukraine, and said Kyiv could provide alternative nuclear fuel so some EU countries could wean themselves off their dependence on Russian supplies. "A lot of energy companies get enormous windfall profits due to the war. So we estimated this at more than $200 billion," Galushchenko said on a visit to Brussels. "They get this money because we are fighting, because of the war."
"I think it would be fair to share this money with Ukraine. I mean, to help us to restore, to rebuild the energy sector," he added. The $200 billion figure given by Galushchenko has been widely cited as the profits of five top companies — BP, Chevron, ExxonMobil, Total and Shell — in 2022. The Kyiv School of Economics estimates the damage to Ukrainian infrastructure at close to $140 billion. The minister noted that a Lithuanian company, Ignitis Group, is already looking to hand over some 10 percent of its profits to help reconstruction in Ukraine and said bigger companies should follow suit.
Galushchenko also warned that Moscow would be able to wage a perpetual war in Ukraine for as long as the Kremlin is able to rake in cash from selling fossil fuels. Despite sanctions against Russian oil imports imposed by the EU and a price cap set by the G7 club of rich democracies, he warned that Russian President Vladimir Putin was still finding ways to beat international embargoes. "If on one side you're trying to restrict them and on the other you're giving them opportunities, you'll allow them to make endless war," he complained, arguing the Kremlin was using its energy export earnings "not to help Russian people to live better" but "to produce weapons" and keep the war going. "This money costs Ukrainian lives," he said.
Russia boasts that it has diverted its oil supplies to friendly countries such as China and India, but there are signs that restrictions from big Western markets are biting hard. Calculations by Bloomberg on March 3 suggested that tax revenues from oil almost halved in February from a year ago, while gas revenue dropped 42 percent from a year earlier given reduced sales to Europe. The EU's ban on Russian oil has been a key factor is torpedoing the price of Urals crude. Keen to keep up that pressure, Galushchenko protested that some oil was still seeping under the cordon. "It's important not to help Russia to escape sanctions," he said, arguing that "sanctions are efficient only if you have no way to escape and we see the Russians are trying to escape — in some cases, they find a way."
His warning comes amid recent reports that Moscow's hydrocarbons may be reaching EU countries via Azerbaijan and Turkey. Allegations are also growing that Russian oil has been discreetly sold at prices far exceeding the $60 cap imposed by the G7 in December. The EU's plan to make the bloc independent from Moscow's fossil fuels before 2030, called RePowerEU, includes encouraging member countries to jointly purchase natural gas, and the Ukrainian minister said his country also wanted in on that program. While the EU has slashed its oil and gas imports from Russia, the bloc still has 18 Russian-designed VVER reactors — located in Finland, Slovakia, Bulgaria, Hungary and the Czech Republic — for which no alternative fuel supply exists so far.
Rather than continuing to rely on Russia, they could soon buy their supplies off Kyiv, he said. Ukraine is in the process of making specially-tailored replacement nuclear fuel along with Westinghouse of the U.S. that could be ready by "the beginning of next year." He also called on the European Commission to set an EU-wide target for eliminating countries' reliance on Russian nuclear technology, while reiterating Ukraine's call to bring sanctions against Moscow's state-run atomic giant Rosatom for its role in overseeing the occupied Zaporizhzhia nuclear power plant. So far, the EU has refrained from hitting Russia's nuclear industry with sanctions. "They are participating in the capture and illegal operation of [this] nuclear station," Galushchenko said.
