America and Europe are each being buffeted by excessive inflation. Each will seemingly slide into recessions this 12 months or subsequent. However the state of affairs is much extra dire there than right here, in keeping with Harvard economist Larry Summers, due to Europe’s reliance on Russian oil and gasoline.
“We’re largely self-sufficient in power,” Summers instructed a Globe Summit viewers on the Harvard Kennedy Faculty on Thursday night. “Europe is totally depending on imports of fossil fuels.”
Through the session, hosted by Linda Henry, chief govt of Boston Globe Media Companions, Summers mentioned Europe, particularly Germany, left itself economically weak by not diversifying its power provides. Germany relied on Russia for 55 p.c of its gasoline earlier than Russia’s invasion of Ukraine in February.
Counting on Russia was “asking for bother if you happen to didn’t utterly belief President Putin. . . which is to say you have been asking for bother,” mentioned Summers, who served as treasury secretary through the Clinton administration and president of Harvard from 2001 to 2006.
Russia has slashed power shipments to Europe in retaliation for its monetary and navy assist of Ukraine. European nations have lined up different suppliers, together with Norway, however there may be nonetheless widespread concern of doubtless lethal shortages this winter.
In the meantime, Nice Britain, which will get most of its gasoline from Norway and now should pay extra, is planning to spend about $150 billion to subsidize residents going through utility payments that will likely be practically double these of final 12 months.
Summers, requested concerning the influence of China’s struggles with COVID lockdowns and excessive heatwaves, mentioned it could scale back the nation’s exports and likewise scale back consumption at residence.
“It would sluggish world progress,” he mentioned of China’s financial slowdown. One plus, he mentioned, can be a drop in commodity costs since China is a significant importer of oil, soybeans, gold, and copper.
Nonetheless, Summers mentioned his greatest concern was that “a weaker China might grow to be a extra truculent China.” With out rising prosperity to maintain its society collectively, the federal government might flip to nationalism and overseas scapegoating to advertise cohesion, he mentioned.
Requested by Henry for his outlook for the native economic system, Summers mentioned he was optimistic that Boston would stay important due to its focus of life sciences, which can drive innovation on this century.
“We now have the expertise,” he mentioned. “The query is, will we assist it?”
“That may be a central query for this metropolis,” he mentioned.