Europe: The EU is already preparing emergency plans in the face of the risk of new Russian gas cuts | International
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The shadow of an economic crash in the EU has planned this Friday on the summit of leaders in Brussels. Like a dark cloud, the community sky is becoming covered with gloomy figures and data that refer to a past universe, with an aroma reminiscent of the oil crisis of the 1970s, in which the already skyrocketing prices of energy and food, the supply disruptions carried over from the pandemic and the threat that Russia will continue to play capriciously with gas tap cut-offs in the coming months, with the risk of something similar to an energy Lehman Brothers being unleashed. Faced with this, the EU aspires to create an “energy union” capable of putting together an articulated response at the community level and is already preparing emergency plans for future additional reductions in energy supply.
Since Russia invaded Ukraine four months ago, 12 countries in the Union have suffered total or partial gas cuts from Moscow. The danger of this unpredictable Russian roulette continuing is high. And the Heads of State and Government of the Twenty-seven have faced this disruptive and almost black scenario during the second day of the last European Council before the summer break. The response has been in part to look back on the lessons learned during the first months of the health crisis, when lack of coordination reigned among the Member States, to do just the opposite: in the face of possible upcoming gas disruptions by Russia, the EU wants to bet on a coordinated replica from Brussels, in the style of the mechanism designed for the joint purchase of vaccines.
“Faced with the use of gas as a weapon by Russia” the community club has entrusted the European Commission to “continue its efforts as a matter of urgency to guarantee the supply of energy at affordable prices”, can be read in the text of conclusions agreed this Friday by the 27 leaders. It also asks you to take any measure “to ensure greater energy coordination between Member States” and also asks you to explore formulas to curb the increase in energy costs, such as introducing caps on the price of gas imports.
The President of the Community Executive, Ursula von der Leyen, explained during an appearance at the end of the summit that all the national emergency plans -claimed by the Commission in recent months- have already been reviewed to ensure that they are ready for eventual closures of the flow of gas pipelines. Brussels, she has pointed out, is also working on a common European emergency plan to reduce energy demand together with industry and community partners. The objective is to present the plan in July to the Member States. “We have learned the lesson of covid 19”, Von der Leyen stressed. “When we act together as Twenty-seven, when we avoid fragmentation, we are strong.”
The President of the Commission has spoken directly of “rationing”, one of those words considered taboo in Brussels until very recently, and has opted for an “Energy Union”, on which work has already been carried out since the beginning of the year. Mechanisms such as joint voluntary gas purchases will be key in it, a measure that is beginning to take shape (its first meeting was held in April) and for which Spain has been pushing hard for months. And Brussels reserves a central role in the coordination of the industry, in order to prevent the measures taken at the national level by stopping the activity of a certain industrial sector considered non-essential from affecting other corners of the Union or the internal market.
“It is important that we have real supervision,” the head of the EU’s executive arm has claimed. Von der Leyen has also recalled, once again, that consumption gestures matter: lowering the temperature of heating in homes and businesses by two degrees could save a flow of gas equivalent to that of Nord Stream 1, the tube that connects Russia with Germany under the Baltic Sea.
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The scenario is really volatile: inflation rises to 8.8% in the EU as a whole and although the economic forecasts for the euro zone continue to point to growth for 2022 and 2023, but revised downwards, there are already organizations that warn even that the blow may be even greater: “Further interruptions in the supply chain and economic sanctions are likely to push the European economy into recession,” warns a recent report by the European Investment Bank. Disruptions of gas from Russia, on which the EU is highly dependent (they accounted for around 40% of imports before the war), represent another step towards negative territory.
Emmanuel Macron, President of France, the country that has held the presidency of the Union during this first semester, has outlined this “accelerated return of inflation” and has referred to “the first signs of slowdown” during his appearance with Von der Leyen and the President of the Council, Charles Michel, at the end of the summit. “All this creates a situation that forces us to make quick decisions on these issues, including energy,” Macron said.
The talks of the Twenty-seven have been marked by the news that arrived from Germany the previous day: Berlin announced on Thursday that it is raising the level of alert to the second phase after the recent cuts in the supply of Russian gas and the country is already preparing for a possible fuel rationing in the event that deliveries from Moscow are completely interrupted and in anticipation of not being able to fill the tanks before the fall arrives. The German Minister of Economy and Climate, the environmentalist Robert Habeck, warned of a possible “Lehman Brothers effect” on the energy system, with the market “at risk of collapse”.
The German chancellor, Olaf Scholz, has been much more contained in his responses this Friday: “I am convinced that we are on the right track to coordinate our energy policy”, he commented at the end of the meeting. “Now we have the possibility to work freely on joint purchases.”
The European strategy does not only go through emergency measures. Brussels trusts much of the plan baptized as Repower EU, a compendium of measures that seek to eradicate dependence on fossil fuels linked to the Kremlin. The tools range from accelerating the deployment of renewable energy sources to the introduction of heat pumps as an alternative to heating. The Union has also spent months working on agreements with partners related to the community bloc, such as the United States, Norway and Azerbaijan. Last week, Brussels signed agreements with Egypt and Israel with an eye on their fuels. It all adds up to put aside at the highest speed the supply of Moscow.
Russia continues to hold on to the gas tap. The Kremlin uses energy as one of the destabilizing elements. And with autumn on the horizon, Moscow has already shown signs that it will fill tanks less than is necessary to keep European consumers on edge. Another increase in prices would fuel social discontent.
Already in autumn 2021, after the pandemic and at a time of hyperactive prices, Russian President Vladimir Putin exhibited his strength as the great European supplier, by withholding supplies as a pressure measure to speed up the approval of the controversial Nord gas pipeline. Stream 2, built to pump gas directly to Germany, and which has been parked due to the Russian invasion of Ukraine.
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