At the start of the heating season, Europe is engaged in an outright energy war with Moscow. And Vladimir Putin cannot win that war either. The showdown between the West and Russia escalated again last week when state-owned Gazprom completely shut down the important Nord Stream 1 pipeline, which brings Russian gas to Germany, indefinitely. What everyone did know now became unequivocally clear: Russia is no longer supplying gas through the pipeline in response to European sanctions. If the sanctions are lifted, the gas will flow again, according to the Kremlin. One third of the gas imported from Russia was transported via Nord Stream 1.
Putin’s war in Ukraine translates into an extreme price for gas and for electricity, the price of which is linked to the gas price. Gas was on average 83 percent more expensive in Europe this summer than a year ago, electricity 42 percent. Putin’s twisting of the gas tap is not the only cause of high prices, but it is the main one.
The war in Ukraine has thus penetrated to meter boxes in millions of Western households and is gnawing at the economic strength of Europe because companies run into problems. Aluminum production at Aldel-Damco in Groningen has been halted since the beginning of this month. In Germany, a manufacturer of toilet paper went bankrupt, a steel manufacturer applied for a reduction in working hours and a nitrogen manufacturer stopped production because the gas bill for October would be 30 million euros higher.
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Putin’s motive is clear: he wants to sow unrest in the West in order to drive a wedge in the alliance that has gathered around Ukraine. Dissatisfaction with the high prices plays into the hands of political parties on the flanks. 70,000 people took to the streets in Prague on Sunday to protest against the EU, NATO and the high energy price.
Governments across Europe are now diligently looking for solutions. A simple measure is financial compensation. Germany announced a support package of 65 billion euros, the new British government puts 150 billion pounds on the table. The Netherlands has already lowered taxes on energy and promised low-income households a one-off surcharge.
Many emergency programs suffer from the disadvantage of further fueling inflation, but they are a way to help households in need quickly and are therefore now indispensable.
In addition, Brussels is discussing measures that intervene in the energy market. For example, the Commission wants to impose a tax on companies that generate electricity with cheap energy, such as nuclear energy, but that benefit from the increased electricity price. The skimmed proceeds should benefit the consumer. She also proposes a solidarity levy on other companies that profit enormously from the increased price, such as the gas and oil producers.
A maximum price for Russian gas could also be set so that Putin makes less profit. The Commission accepts the risk that Russia will no longer supply gas at all: it assumes that Putin will turn off the tap in the winter anyway. There have also been voices in Europe for months to set a maximum price for all gas supplied via pipelines.
These are proposals whose practical elaboration is still unclear and which all have their own drawbacks. And they are measures that interfere with free economic movement. Under normal circumstances, price ceilings and skimmed profits do not correspond to the principles of a liberal economic order. But a hybrid war is not a normal circumstance.
There is one measure that certainly deserves support: energy saving. Less consumption translates into a lower bill and is good for the climate. The Commission is therefore looking into options for enforcing cuts in power consumption during peak hours.
Europe, and Germany in particular, has put itself in a predicament by relying heavily on one source of energy and one supplier for years: gas from Russia. That dependence becomes a danger if the supplier turns against you. European politicians have therefore scoured the world in recent months in search of alternative producers. In the long run, the dependence on Russia will therefore decrease. Until then, Europe must try to survive the winter with traditional and unusual interventions. In any case, there is no option: to give in to Putin.
A version of this article also appeared in the newspaper of September 10, 2022