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Jakobsen: A new cold war is emerging
Twenty five years after the fall of the Berlin Wall, we’re seeing a new division between East and West amid global concern about Russia’s intervention into Ukraine. “This is essentially a new cold war”, according to Saxo Bank’s Chief Investment Officer, Steen Jakobsen. European stock markets fell sharply on Monday with the German Dax bearing the brunt of the losses, not least because of the countries’ close trade ties.
Steen says there is the potential for the crisis to deepen with a worst case scenario that terrorists will attack the gas pipeline which is essential for Western Europe’s energy needs.
Steen says Russia is in a corner, both politically and economically. Despite high energy prices, the country’s looking at a deficit and growth has slumped to 1.3 percent against government expectations of 3 percent. The country’s no longer the dominant force in natural gas production as it once was thanks to increased competition from cheaper shale and liquefied natural gas from the States. The rouble has plunged to new, record lows and the country’s central bank hiked interest rates by 150 basis points on Monday morning.
02:15 minutes
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