There is less and less talk of a united European approach

What was presented as a radical and effective medicine just three weeks ago, seemed to have shriveled into a small bandage on a gigantic wound on Friday. There is less and less talk of a united European approach.

During the third crisis meeting in three months, European energy ministers agreed in Brussels on three measures to alleviate the pain of high energy prices for citizens and small businesses. But the joint measures are in stark contrast to the steps being taken in individual Member States.

The meeting in Brussels should have sent out a strong signal to the outside world that the EU countries are united in tackling the energy crisis. But in the background, in recent weeks, there has been mainly division about what Europe should do, as well as resentment about the lack of European solidarity. Even before the measures are properly implemented, many EU politicians feel they are already hopelessly outdated.

Putin and NordStream

Not least because the meeting in Brussels took place at a thorny political moment: while in Moscow Vladimir Putin laid out his feared ‘annexation plans’ in Ukraine. Two days earlier, explosions at the NordStream 1 and 2 gas pipelines in the Baltic Sea had already convinced European countries of their economic vulnerability. And the new historic high inflation figures released on Friday showed just what is at stake for the European economy.

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In addition, a mega support package was presented in the German capital Berlin just on the Thursday evening prior to this new European crisis meeting. This already caused bad blood. As the crisis deepens, inequalities within Europe are beginning to stand out – between countries that can greatly support their citizens and businesses, and those that have much less room in the budget to do so.

The outgoing Italian Prime Minister Mario Draghi made that most explicit reproach, in response to the presentation of the German aid package on Thursday afternoon. Hours later, he released a statement emphasizing that “no member state can do this alone”, not even “those who seem less financially vulnerable” – an implicit sneer at Berlin. “We cannot divide ourselves according to our fiscal leeway, we need solidarity.”

Berlin’s Unprecedented Package

The German package is somewhat similar to what the Dutch cabinet presented last week, with a price ceiling for the energy costs of households as well. The size is especially unprecedented: the government of Chancellor Olaf Scholz is allocating a total of 200 billion euros for what he himself described as a “double kaboom” – a nod to a similar support package in the corona crisis.

In addition, the package of measures that was agreed in Brussels on Friday suddenly looks pale. This includes two levies on electricity products and fossil companies respectively, which must yield a maximum of 140 billion euros in total. For all of Europe.

Moreover, the differences in revenues within the EU vary widely and with it the sum that governments can use to compensate their citizens. In theory, EU countries should work together to find a fair distribution mechanism in the near future. But the details of this are still far from clear after Friday.

Slovakian Prime Minister Eduard Heger announced Financial Times already this week the alarm bell about the sapping heavy industry in his country. “The energy crisis could kill our economy,” said Heger, who pressured Brussels to provide more financial funds. He estimated the proceeds of the package agreed on Friday at 100 million, where the country spends 24 billion need for support packages.

And thus within Europe there is growing dissatisfaction about a lack of solidarity and the fear of unbalanced growth. This explains why the tone in the run-up to the energy talks in Brussels sharpened considerably this week. In a spirited letter, 15 member states, including Italy and France, finally asked the European Commission to speed up a proposal for a price cap on the wholesale gas market. The fact that in response the committee mainly emphasized why such a price ceiling is an extremely bad idea, soured the mood from the outset.

Heated discussion

At the same time, on Friday, when energy ministers had a heated discussion about additional measures, it remained unclear exactly what kind of emergency response the noisy countries are counting on.

Fixing a single price for gas trading, both to the outside world and within the EU, is very risky, the European Commission emphasized beforehand. This is partly because security of supply is at risk: ships sail past Europe, for example. In practice, according to EU officials, there is a real chance that Europe would have to switch to gas rationing.

But no one seems seriously interested in that right now. But what should be done then? Even after Friday, that question remains in the air and the Commission was instructed for the umpteenth time to look at it again. But European Commissioner Kadri Simson (Energy) emphasized that a radical intervention can only be accompanied by ‘non-negotiable conditions’, including much more substantial, mandatory cuts.

In its response, Brussels continues to emphasize savings. But the signals in that area were also not very good recently. An internal survey from Brussels this week showed that some countries are far behind the agreed 15 percent. And also in Germany, one of the major consumers of gas in the EU, the savings measures are not working sufficiently.

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Network manager Bundesnetzagentur said on Thursday that gas consumption was above average in the previous cold week, instead of below. “Without significant savings, including in the private sector, it will be difficult to avoid a gas shortage in the winter,” agency president Klaus Müller said on Thursday.