EU clubs together on energy and invites UK

  • 2022-09-08 16:02:05
"Gasmageddon" is bearing down on Europe this winter. It may sound like the stuff of nightmares. But this is no science fiction. The number of households facing energy poverty has doubled across the EU, according to financial services provider Allianz. Gas shortages could drive up retail prices by 200%. Three-quarters of companies in the bloc's economic powerhouse, Germany, say they're experiencing "severe strain" from spiralling energy prices. In the UK, energy bills have gone up 80%. The word "recession" is whispered everywhere. Vladimir Putin is not only using conventional military weapons in Ukraine, he is also weaponising energy to try to intimidate the West, as he seeks to readjust the balance of power in Europe to Russia's favour. On Wednesday, he railed: "We will not supply anything at all if it is contrary to our interests. No gas, no oil, no coal, no fuel oil, nothing." Squeezing the EU had looked to the Kremlin like a piece of cake. The bloc relied on Russia for 40% of its gas and a third of its oil before Mr Putin invaded Ukraine. Big EU powers Germany and Italy were even more dependent. The Russian president has been switching gas supplies on and off at whim for months and the colder months are fast approaching. Even countries traditionally less reliant on Russian energy, such as France, Spain and non-EU UK, are affected by the volatility and price hikes on the global energy markets. With businesses threatened with bankruptcy and vulnerable voters facing a choice of paying for food or fuel this winter, political and social tensions have soared alongside prices. Prague saw mass demonstrations last weekend, with angry crowds protesting against the cost of living crisis and demanding an end to sanctions against Russia. Bear in mind that the Czech Republic has, till now, always been hawkish towards Russia and outspoken about the need to defend Ukraine. But the economic pain at home is biting hard. As they did at the start of the Covid crisis, EU countries tried to find their own, national, solutions. Spain slapped limits on air conditioning in public buildings and Germany tried to discourage people from using their cars by reducing fares on public transport, while in Italy, a Nobel prize-winning physicist sparked a furious cultural debate, suggesting people could cook pasta with the heat off to save energy and cost. A number of member states have hastily assembled financial packages to help struggling households and/or businesses. Their aim: both to reduce energy consumption and to keep costs down for consumers. German Chancellor Olaf Scholz has become fond of peppering his (German-language) news conference with the English words of the Gerry and the Pacemakers song, You'll Never Walk Alone. But the focus now is on finding a European solution. And not a few EU figures, French President Emmanuel Macron included, have said they'd love the UK to be part of a plan. More on that later. The drive for the common EU approach is manifold. In part, it comes from the same post-Covid crisis realisation that as part of a single market, when the economies of some member states suffer, it pulls everyone down. There's also an appreciation that there's strength in numbers. Countries such as Italy and Germany have been busy trying to find alternative energy suppliers - in Algeria and the UAE, for example. But if the EU as a whole, with its economic clout, makes the energy deal, the conditions are likely to be more favourable. "We have to achieve that we only pay the world market price, rather than a higher price," said Mr Scholz on Wednesday. His Belgian counterpart, Alexander De Croo, pointed out that gas prices in Europe are currently double those in Asia and 10 times as much as in the US. EU purchasing power would also avoid one member state trying to outbid another in their scramble for energy. Not a good look when it comes to EU unity. There is, too, a very sincere desire in the EU to stop pouring energy money into Russia's war chest. It's true, the majority of member states have drastically reduced their reliance on Russia by now. But as one very irritated EU diplomat pointed out to me, sky-high energy prices mean EU countries still pay almost the same daily amount of money to Moscow, although they currently receive so much less. "Putin has to be roaring with laughter at us," he said. EU energy ministers have been summoned to an emergency meeting in Brussels on Friday to discuss a raft of proposals to jointly combat the crisis. "Russia is manipulating our energy markets," tweeted EU Commission chief Ursula von der Leyen, "[but] we have the economic strength, the political will and unity to keep the upper hand." EU countries have already reached agreements on reducing Russian oil imports and Russian gas reliance. The Commission established joint gas purchasing capabilities back in April and planned sufficient energy storage ahead of this winter.

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