European Council warns
International Business News – According to a recent report on the website of the French newspaper Le Monde, the 27 countries of the European Union, united in their front since the outbreak of the Ukrainian crisis, are well aware that today their unity is threatened by hyperinflation.
Since the outbreak of the Russia-Ukraine conflict, EU countries have been doing everything possible to avoid Russian gas: increasing stocks to 90%, diversifying energy supplies and reducing energy consumption. But energy prices have accelerated as a result. Macron thankfully said, “We have greatly reduced our dependence on Russian gas, but we still have to face price problems in the short term.”
Germany’s single-handed purchase of gas at high prices to replenish its reserves, followed by the announcement of 200 billion euros in tax incentives on Sept. 29, presents a major dilemma for the EU. On top of potentially causing the EU’s internal market to fall apart, the euro rate hike could also lead to a compromised monetary union.
In the current situation, countries are rolling out their own proposals, without rules and in their own interests. However, the energy models differ from country to country: some countries like France are betting on nuclear energy, while countries like Hungary are heavily dependent on Russian gas and countries like Spain are developing renewable energy.
In any case, none of the many proposals will satisfy the special case of each of the 27 countries if a solidarity mechanism cannot be implemented within the EU. Moreover, these proposals will be challenged by Germany, the Netherlands, Austria or Denmark and Luxembourg.
These countries believe that capping the price of natural gas would lead suppliers to sell outside Europe. Luxembourg Prime Minister Xavier Bettel warned: “On paper this seems good, but it will create some problems. Maybe there could be capping of prices, but there might be no energy left, because we are not their only customer.” There is another important reason for the Netherlands and Germany that such a price capping mechanism could lead to higher consumption, putting efforts to decouple from Russia and curb global warming at risk.
In order to be able to reduce the price of natural gas (which today is higher in Europe than in Asia and the United States), Berlin and its allies prefer to negotiate with Norway or the United States, and today EU countries are buying LNG from both countries at sky-high prices. Another idea advocated by Germany is the creation of a common procurement platform for natural gas. The European Commission had proposed this in March this year, but it has since become a dead letter. Macron said, “Now, we now want to implement it immediately.”
The 27 countries hope to come up with a decision at their next meeting, which is expected to be on October 20 and 21. European Council President Charles Michel warned, “There is no time to waste.”