The EU countries are moaning about high energy prices and inflation, but are divided about measures to lower the gas price. That’s risky.
The spectacular attack on the bridge over Crimea was yet another military setback for Russian President Putin in his war against Ukraine. But on the economic front, Putin succeeds in putting heavy pressure on his European opponents, as emerged on Friday during the informal European Union summit in Prague.
The EU Member States are strongly divided about measures to lower the price of gas. They only have a short time to make a plan: decisions must be made at the summit in Brussels at the end of next week.
The pressure is great. Europe is groaning under high energy prices and inflation, while populist and nationalist parties threaten to profit from the discontent about this.
In this crisis, governments are prepared to intervene strongly in the market. For example, fifteen EU Member States want a price ceiling for gas. However, that is risky: if Europe does not want to pay more than a certain amount, the gas threatens to go to China or other countries.
It is clear, however, that Europe must purchase jointly and use its market power as an economic bloc to achieve a lower price. In recent months, the EU Member States have been bidding against each other, which has only pushed the price higher.
A mutual race not only costs a lot of money, but also threatens to undermine unity within the EU. Rich member states can outbid the poorer ones. The same danger exists with the national support packages. Last week, Germany presented a package of two hundred billion euros to support citizens and businesses. This brought the country heavy criticism from other member states. According to Polish Prime Minister Morawiecki, ‘German selfishness’ is even destroying the European internal market. There is no longer a level playing field if companies from rich Member States are generously supported, while their competitors from poorer Member States are much less able to fall back on help from their government, according to the critics. The accusations against Germany are exaggerated. Member States such as Italy, France and the Netherlands have also generously supported citizens and businesses.
It is very important that the Member States reach an agreement. She must not only keep their economy afloat and protect their citizens, but above all maintain their unity. Europe is engaged in an economic war with Russia. A divided Europe is a battle won for Putin.