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France Plays Russian Roulette: Why Europe Is Scared Of Sanctions Against Russia

Tyler Durden's picture




 

While everyone is by now fully aware just how dependent Europe is on Russia's energy supplies (and most are aware of the "nonsense" that the US will fill any gap if Russia steps up its actions - which Barroso said wouldn't happen because "Russia has self-interest not to play the energy card") but few are truly aware of the scale of contagious debt-driven defaults that could occur if the US (and a reluctant Europe) decide to undertake more aggressive economic sanctions, which, as Germany's Europe minister stated today, "are on the table." As the following chart of Europe's domestic bank exposure to Russia show, Roth's warning that Russia's retaliation could mean "anything is possible," is a major problem for the Germans, Italians, and most of all - The French.

Germany is nervous...

  • *ECONOMIC SANCTIONS `ON THE TABLE'; RUSSIA COULD RETALIATE: ROTH
  • *GERMANY'S ROTH SAYS `ANYTHING IS POSSIBLE' IN UKRAINE CRISIS

Because they know what happens if this house of cards falls down...

As The Council for Foreign Relations notes, in the fourth quarter of last year, with tensions rising between Russia and the West over Ukraine, U.S., German, UK, and Swedish banks aggressively dialed down their credit exposures in Russia... but levels remain huge...

But as the graphic above shows, French banks, which have by far the highest exposures to Russia, barely touched theirs.  At $50 billion, this exposure is not far off the $70 billion exposure they had to Greece in 2010.  At that time, they took advantage of the European Central Bank’s generous Securities Market Programme (SMP) to fob off Greek bonds, effectively mutualizing their Greek exposures across the Eurozone.  No such program will be available for Russian debt. 

 

And much of France’s Russia exposure is illiquid, such as Société Générale’s ownership of Rosbank, Russia’s 9th largest bank by net-asset value ($22 billion).

 

With the Obama Administration and the European Union threatening to dial up sanctions on Russia, is it time for U.S. money market funds and others to start worrying about their French bank exposures?

The bottom line - it's all well and good to let the people starve, freeze, or stagnate amid a lack of energy supplies... but start fucking our banking exposure and Russian sanctions just got real

 

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Thu, 05/01/2014 - 18:06 | 4717869 Theta_Burn
Theta_Burn's picture

Before nulands infamous "fuck the EU" and the coup de twat, things were fine between Russia and the west

How did we get here???

 

Thu, 05/01/2014 - 18:09 | 4717879 McMolotov
McMolotov's picture

We took the crazy train.

Thu, 05/01/2014 - 18:18 | 4717910 espirit
espirit's picture

It's easy to be tough when you're not freezing your balls off.

Waiting for winter.

Thu, 05/01/2014 - 19:00 | 4718027 Volkodav
Volkodav's picture

seems some have idea of freezing balls is 58 F in parents basement...

american don't understand  euro north coldness

now is may 1...winter is not so far...

Thu, 05/01/2014 - 19:15 | 4718083 zaphod
zaphod's picture

$50B?

The FED can print that up in no time at all if France requires. 

Thu, 05/01/2014 - 18:20 | 4717913 VD
VD's picture

France's GDP vs Germany's GDP = latter has significantly more to lose and also happens to prop up the formers'....

 

(ps Tylerz i gave Chumbawamba a nervous breakdown in chat via VD magnificence incarnate and he has managed to hack your chat part of site....a real sore lewzer....)

Thu, 05/01/2014 - 18:57 | 4718018 Bastiat
Bastiat's picture

Theta gets a +1 for "coup de twat."

Thu, 05/01/2014 - 19:08 | 4718049 Volkodav
Volkodav's picture

I had one of those...sloppy driver and all was cheap plastic when top was down

Thu, 05/01/2014 - 19:09 | 4718062 negative rates
negative rates's picture

But still missed the bus stop.

Fri, 05/02/2014 - 09:01 | 4719587 StychoKiller
StychoKiller's picture

That's what happens when pipelines aren't around...

Thu, 05/01/2014 - 18:11 | 4717880 Timmay
Timmay's picture

Problem? No, try solution.

Thu, 05/01/2014 - 18:26 | 4717930 sgt_doom
sgt_doom's picture

The aptly named coup de twat is gravy for Wall Street:  gas sanctions by Russia against Europe will hurt Germany's economy the most, meanwhile France's banking exposure hurts France --- with Germany and France's economies on the ropes, America's position looks stronger and more favorable --- not my reasoning, just examining the factoids.

Thu, 05/01/2014 - 18:43 | 4717979 Matt
Matt's picture

Did Germany dismantle all the old coal plants, or are they just mothballed? Perhaps America could export coal as substitute for natural gas, if the infrastructure is still in place to turn it into electricity. If so, maybe long oil-filled heaters next winter?

Thu, 05/01/2014 - 18:33 | 4717934 Omen IV
Omen IV's picture

when Nuland said:  Fuck the EU  - she meant it literally

if russia stops the NG flowing due to war or sanctions - Economies in France et al in EU  - stop  - and default on their debt in a cascade - who wins ?  The US banks - they  foreclose and take the national and private assets and sell them to US PE for cents on the dollar in exchange for the debt resolution and say they had nothing to do with the step transaction - its Putin fault!

 USA fucks the UE and / or Russia its all good business!

 

Thu, 05/01/2014 - 18:49 | 4717997 Mitzibitzi
Mitzibitzi's picture

Yup. It's not by accident that the City of London has quietly agreed currency swaps with China. Nor that the UK only imports 11% or so of it's gas from Russia. Nor is it likely to be a co-incidence that Ireland has just (15 years ago, I'm told) found oil and gas of it's Atlantic coast (not a shitload, but a lot more than Ireland needs domestically, for the foreseeable future). Nor is it a coincidence that they're building an HVDC electricity link right in front of my house, that has Ireland's gas powerplants and Scotland's wind and hydro-electric sources at the other end.

Thu, 05/01/2014 - 19:08 | 4718047 CrashisOptimistic
CrashisOptimistic's picture

The UK still gets some oil and gas from Scotland's segment of the North Sea.

It's dying.

UK is now importing oil.  Nothing destroys an economy more readily than suddenly becoming an oil importer.  As the North Sea output falls, they will start importing from other sources, including Russia.

Thu, 05/01/2014 - 19:01 | 4718028 BlindMonkey
BlindMonkey's picture

I think you are assuming that Germany will go along with the US led sanctions regardless of the cost. I believe they are signalling to Washington to cool it. I believe they will split with the US sanction regime as they know what they have to lose while washington's exposure is very small.

The German's aren't stupid.

Thu, 05/01/2014 - 19:12 | 4718073 Pure Evil
Pure Evil's picture

You seem to have forgotten at least three episodes of German mania just within the 20th century.

WW1

The inter war period, (lots and lots of ctrl+P), and the rise of Hitler and Nazism

WW2

Are the Germans stupid?............occasionally

 

(Not that we have anything to brag about over in our neck of the woods)

Thu, 05/01/2014 - 19:19 | 4718109 BlindMonkey
BlindMonkey's picture

"Are the Germans stupid?............occasionally"

Ok. Ok. Point well made. :)

Fri, 05/02/2014 - 00:40 | 4718907 strannick
strannick's picture

Germany Will toe the American line for the sad, simple reason that Merkel knows her phone was tapped. Germany asked for the file, and likecwithvtheir hold, they were told to get lost

Thu, 05/01/2014 - 18:12 | 4717888 0b1knob
0b1knob's picture

Russia depends on energy exports for 70% of its foreign exchange and over 50% of government revenues.   If it cut off energy exports to Europe it would be like shooting themselves in the foot.   The only way they would do it would be if Putin were as dim witted as Obama.

And winter is over in Europe.  

Thu, 05/01/2014 - 18:23 | 4717921 Theta_Burn
Theta_Burn's picture

Please..

There just waiting to ink a deal with China. or whomever they want to really

Nope... they alienated the wrong country (with oil and gas) this time

Fri, 05/02/2014 - 04:36 | 4719049 SoDamnMad
SoDamnMad's picture

Someone is thinking China is going to pay full market price for all this gas.  NOT

The infrastructure isn't built yet and a lot of this mileage is over dreadful terrain.

Thu, 05/01/2014 - 18:27 | 4717932 sgt_doom
sgt_doom's picture

Excepting for thos counter deals with Iran, China, India, Bahrain, etc.

Thu, 05/01/2014 - 18:54 | 4718010 Volkodav
Volkodav's picture

Now is May 1....winter is not so far away

Thu, 05/01/2014 - 19:09 | 4718061 CrashisOptimistic
CrashisOptimistic's picture

Why do you imagine they can't find other buyers?

You need to embrace and take to heart one single, important word -- because it defines your life, and will define your death.

Scarcity.

Thu, 05/01/2014 - 19:10 | 4718068 rosiescenario
rosiescenario's picture

True, but they can begin now to build pipelines to China and I have a gut feeling that if Putin wants this done it will happen very quickly....there will be no EPA reports or anything to interfere....and then the markets will begin to have serious concern over the lack of gas supplies for Germany.

Thu, 05/01/2014 - 23:23 | 4718779 TungstenBars
TungstenBars's picture

Don't poke the Russian bear with a stick. It's not the USA..it has the balls and the means to create the real trouble. 

Thu, 05/01/2014 - 18:13 | 4717893 rosiescenario
rosiescenario's picture

"Russia's retaliation could mean "anything is possible," is a major problem for the Germans, Italians, and most of all - The French."

 

I'd hazard a guess that DB's incredibly large derivative spider web means that if something economically bad happens to Germany, we shall see every TBTF bank impacted....and in a very big, bad (from their standpoint) way.

Fri, 05/02/2014 - 03:29 | 4719021 sushi
sushi's picture

Immediately before the Ukraine issue went hot Obummer was reported to have two private meetings with the heads of the TBTF US banking oligarchs.

There has been no reporting on the substance of those meetings.

Would not be suprised to learn there was advance notice being given of the anticpated outcome of US actions in Ukraine.

It is also odd that given what we know of NSA's ability to vacuum up every digital sneeze and hiccup that the USSA does not have a good sense of the pressure points and likely financial failure modes. The EU appears to be relying on the USSA as a "friend" and views Russia as the "enemy." They may learn to their chagrin that thos positions shold be reversed.

The present day actions of the USSA make the Comintern look like the pikers they were.

 

Thu, 05/01/2014 - 18:15 | 4717896 CrashisOptimistic
CrashisOptimistic's picture

Come on.

We've played this game before.

No credit exposure is going to be allowed to damage anything significant.  If swaps threaten anything, triggers will be disallowed.  We already watched this.  It's not even remotely scary anymore.  It evokes yawns.

This is just silly.  There is no money significance here.

There is hydrocarbon significance.  If you want them, pay, and no, not in gold.  In whatever we -- the hydrocarbon supplier -- lets you pay with. 

For now, that will be Euros, as long as your Mr. Draghi continues to do what he's told and not execute any QE.

Thu, 05/01/2014 - 18:16 | 4717901 CHX
CHX's picture

It's all fun n'games la-di-la-di-laa-la-ladi

until the gas gets turned off by Vladi

 

Thu, 05/01/2014 - 23:31 | 4718797 Aussiekiwi
Aussiekiwi's picture

Winter is coming

Thu, 05/01/2014 - 18:17 | 4717904 Stoploss
Stoploss's picture

Britards.

They have been cowering in the corner since initiating the whole thing with the new twat order.......

Putin wants to fuck the twat.

Thu, 05/01/2014 - 18:18 | 4717905 aleph0
aleph0's picture

US is trying to make Russia the patsy for the coming (self induced) financial crash ... & most J6Ps will believe it and enlist.
Western MSM is like Orwell on steroids right now ... worse than the worst Hollywood trash film.

 

Thu, 05/01/2014 - 18:25 | 4717927 Atomizer
Atomizer's picture

The EU is just a cash burn payday loan away from crashing. Have a look...

Payday Lending

Fri, 05/02/2014 - 02:54 | 4719003 the tower
the tower's picture

That's only in the UK, payday lending is illegal in most european countries.

It's the UK that is crashing but they are hiding it well...

Thu, 05/01/2014 - 18:34 | 4717949 topshelfstuff
topshelfstuff's picture

seems like a great spot for DeGaulle's warning in 1965

 

https://www.youtube.com/watch?v=_hmKmhfXDKg

 

Charles De Gaulle warns of a monetary system based on a single nation's unbacked currency over 45 years ago! This was the spark that motivated America, under Nixon, to "close the Gold Window."

Thu, 05/01/2014 - 18:39 | 4717962 socalbeach
socalbeach's picture

OT. For those wondering what Andrei Fursov meant when he was talking about Yellowstone, the link that aleph0 provided gives the answer in the Q&A section following the lecture.  It had to do with population reduction.  It's a google translation so it's not very good, and parts of it are not translated.

"... What is to be a thousand atomic bombs? It is unclear. But it is clear that it will not destroy life on the planet, but, paradoxically, it may decide to western tops that problem she can not solve. Reducing the world's population - the main goal of the Western elite. Reducing the world's population by 80 percent..."

Thu, 05/01/2014 - 18:45 | 4717990 Paracelsus
Paracelsus's picture

I remember chatting with a New Zealander Lad once about Russia.

The Kiwis had sent a huge ship of frozen mutton and butter to Russia,but the economy imploded before the ship got there. So the Russians say "sorry but we don't have the foreign exchange".The Kiwis say "that's cool.We will take half in paper and half in whatever ya got".So the New Zealanders end up with a whole bunch of Lada jeeps running around their islands.Problem solved...

The French on the other hand have been poisoning the Pacific for decades with their nuke testing in Polynesia.They send a clouseau team of frogmen (and women) to limpet mine the Rainbow Warrior in Auckland harbor,killing one man aboard,and then get caught and jailed.So France leans on the banks and threatens to embargo Kiwi exports to Europe (butter,etc.). So the Kiwis had to let the Frenchies go free.

There is always a third way to go in diplomacy if one is allowed to look for it.I am sick of the bullying nature of large countries and "spheres of influence",etc.

This could get messy in the Ukraine very easily if someone doesn't back down.

Syria was just a warm up.I think both of these proxy wars are a diversion from the main problem of credit markets being completely fucked worldwide.

Two things still amaze me. #1-Venezuela got their gold back from the Brits,and #2-that the worldwide central bank cartel allowed the Cyprus "Bail-in" to proceed. 

(And #3,I wonder what the effect of all this tear gas will have on world tourism.)

Happy May Day everyone!

 

Thu, 05/01/2014 - 18:57 | 4718021 El Vaquero
El Vaquero's picture

Mayday, that's right.  Think we'll get some good riot cam video out of Seattle this year?

Thu, 05/01/2014 - 19:09 | 4718060 daedon
daedon's picture

Don't be amazed

1. Venezuela got their gold out first, the first ones out of the ponzi scheme are always ok.

2. Cyprus "was" a pilot project / beta test for the central banks.

3. Tear gas ? What tear gas ?  There's no tear gas on PBS news.

Thu, 05/01/2014 - 23:19 | 4718772 Aussiekiwi
Aussiekiwi's picture

Those  french agents who sunk the rainbow warrior were so incompetent that it was easy for the NZ Police to catch them, if they represent Frances best there is not much to worry about. However, Kiwis still have a deep seated distrust of the French and their crooked ways even after all this time, many people still will avoid buying French products, we have long memories.

Fri, 05/02/2014 - 17:49 | 4722009 Analyse2
Analyse2's picture

@Aussiekiwi

Stupid.

Concerning the Rainbow Warrior (only 1 accidentally death indeed)

It was actually a fault of French military security service (DGSE), that France recognised.

Having admitted responsibility, France initially offered an official apology and acknowledgement of breach of international law.

Additionally, the UN secretary-general awarded New Zealand 7 million USD. This is in addition to compensation which France paid to the family of the only victim of the mission and to Greenpeace (settled privately).

France also offered a new boat to Greenpeace.

Thu, 05/01/2014 - 18:59 | 4718023 ThisIsBob
ThisIsBob's picture

Russia is not the EU's problem, the United States is.

Thu, 05/01/2014 - 19:10 | 4718067 Lumberjack
Lumberjack's picture

Watch the GE/Alstom play.

Thu, 05/01/2014 - 19:14 | 4718079 Continue With This
Continue With This's picture

The majority of Europeans (western and eastern ones) are quite anti-British and anti-American.

They don't like the Russians, but now europeans can clearly see through the propaganda bullshit that's coming out of the mouths of british and american dickheads.

Should continental Europe unite with Russia and China against the anglo world, I think the USSA is toast.

Right now, americans are doing all they can to poison the relations between the EU and Russia. It will fail.

Thu, 05/01/2014 - 19:24 | 4718121 Bazza McKenzie
Bazza McKenzie's picture

Don't kid yourself that it is all the fault of the US and UK.  The EUSSR controllers have been keen to expand and get more of Europe under their control, buying local politicians to betray their people.  They are up to their armpits in the subversion of Ukraine.

Thu, 05/01/2014 - 19:37 | 4718159 Continue With This
Continue With This's picture

Really?

 

That's why the Germans seem to be on Russia's side?

 

All the show in Ukraine is MI6/CIA zionists plans in action.

Of course publicly the Germans or the French will make speeches that don't sound too anti-American. But behind the scenes, continental europeans are making an alliance with Russia.

 

How do you explain the fact that leftist socialist german ex-chancelor is now a vice-president in Gazprom?

 

Americans these days are doing all they can to fuck Europe. They will fail.

Thu, 05/01/2014 - 21:03 | 4718392 flapdoodle
flapdoodle's picture

Along that line, Putin assisted Schroeder's birthday party a couple of days ago and was treated as a long lost buddy...

http://www.telegraph.co.uk/news/worldnews/europe/ukraine/10795042/Gerhar...

Fri, 05/02/2014 - 01:58 | 4718981 ohaitieaqui
ohaitieaqui's picture

So true sick of this zionism / Us propaganda, we know russia is not and never will be a democracy, so if the UU/BRIT could mind a little their own business, we don't one another broke country in the EU, ask Goldmann to take care of ukraine and make it a paradise for US/jews investors like they did for Greece...

Fri, 05/02/2014 - 03:04 | 4719008 the tower
the tower's picture

Not just these days, it's not a secret that US and UK businesses assisted Hitler.

Europe needed to be crushed and burnt so it could be could put in recovery-debt, while the war industry provided instant economic relief for the US.

The US and UK have been playing this game over and over again, and since they are on their asses - again - they need to crush and burn a big player again: Europe.

Very few people in Europe see the US and UK as their "liberators" anymore: the war-generation has died, and their children know the truth.

Thu, 05/01/2014 - 19:51 | 4718199 Fíréan
Fíréan's picture

Hungary is opposed to the sanctions too, and voiced concern a whole month ago.And it's not just concerns for the Russian Gas.:

 

BUDAPEST (Reuters) - Hungary is against the European Union imposing a round of economic sanctions on Russia over its intervention in Ukraine, Prime Minister Viktor Orban was quoted as saying in an interview published on Friday.

The central European country of 10 million people relies on Russia for about 80 percent of its natural gas needs and recently signed a 10 billion euro deal with Moscow for Rosatom to expand Hungary's Paks nuclear plant, a major power generator.

Russia is also Hungary's largest trading partner outside the European Union, with exports worth 2.55 billion euros in 2013.

http://www.reuters.com/article/2014/03/28/us-ukraine-crisis-russia-hunga...

 

Thu, 05/01/2014 - 21:09 | 4718409 Herdee
Herdee's picture

Major European Banks are insolvent.That's the real reason that the EU is afraid.Oh,and just a little extra note because the Federal Reserve is barely holding them up with swap lines.Yes,U.S. taxpayer money sent to prop up a bunch more corrupt banksters and not just in the U.S.We'll take your Euros as good credit.

Thu, 05/01/2014 - 21:14 | 4718427 Herdee
Herdee's picture

And standing up for democracy and freedom is - Ms. Victoria Nuland - trained fully as a right wing, Ukrainian Nationalist Nazi supporting neocon bitch under former Vice President Tricky Dick Cheney.

Thu, 05/01/2014 - 23:29 | 4718791 Aussiekiwi
Aussiekiwi's picture

I'm not a great Russian fan, but I just don't like the way the US plotted and schemed to throw out the democratically elected Government in a country right on Russia's border, replace it with an extreme right wing Nazi party, then when the obvious repercussions of its actions start to loom blames Russia and attempts to bully Russia into supporting its actions under the threat that if it doesn't play ball they will destroy its economy. One word comes to mind 'Bastards' I hope Putin teaches Obama and Kerry a lesson.

Fri, 05/02/2014 - 00:59 | 4718925 lolmao500
lolmao500's picture

Meh. Just bail those banks out. 70$ billion exposure? That's freaking peanuts.

Fri, 05/02/2014 - 03:14 | 4719017 russwinter
russwinter's picture

Russia and China’s economic retaliation plans for the West:

http://winteractionables.com/?p=11250

Fri, 05/02/2014 - 05:06 | 4719062 falak pema
falak pema's picture

Roubalised France; hahaha...

After the decay of French industry which is rampant, after the decay of French connection to Germany's powerhouse as the economic gulf widens, after the smack on France's deficit spending by the threat of EU sanctions against Hollande's government, the Putin put on banking assets would be last last nail in coffin for Hollande's promise of : "I President, I will make France strong and full of employment"...

When political rhetoric meets hard geopolitical reality, his brinkmanship-- like that of predecessor in Africa and in ME/Syria/Iran, as Pax Americana spear carrier-- becomes a tight rope act with the great void looking up at you from foggy bottom!

Don't, don't please start getting the Vertigo feeling like in a Hitchcockian movie! Not now! 

Its time to renovate France... like Montebourg ride! Tally -ho ! 

Fri, 05/02/2014 - 05:28 | 4719080 pacrim888
pacrim888's picture

This article does not seem to agree with the Banks European exposure to Russia cited in the below Zerohedge article ;

http://www.zerohedge.com/news/2014-04-20/all-you-need-know-about-russia-charts

Disinformation ?

 

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