The European Union Sticks to Its Suicidal Course
After the thunder, the rain: the European Union has advocated an energy embargo for the past three months. Now it has come – albeit not against Russia but against the EU. Gazprom has reduced gas flows through Nord Stream 1 to Germany by 60%, and flows to Italy by 50%. If you doubted the accuracy of Russian President Putin’s characterization of the European energy policy as “suicidal,” just look at how governments are reacting to those supply cuts.
Germany and Italy import 42.6 and 29.2 million cubic meters respectively. The common narrative in Berlin and Rome is that the cuts do not endanger the national energy supply for the moment, because that supply is currently running higher than demand. But the diminished deliveries do prevent a refilling of the stocks, jeopardizing next winter’s national supply, so consumption needs to be reduced now.
According to Wood Mackenzie, quoted last week by Bloomberg, if supplies through Nord Stream 1 stop completely, the EU is threatened with running out of reserves for the peak demand period of the middle of next winter.
Moscow’s use of the gas weapon was to be expected. Despite Brussels’ rhetoric to the contrary, EU nations are co-belligerents against Russia in that they deliver weapons to the Ukrainian government. Italian Prime Minister Mario Draghi himself admitted as much in his remarks in Kiev on June 16: “We are here to help Ukraine in the war,” he said.
Thus, the Europeans, who are now hit by an overwhelming force in retaliation, would be wise to help negotiate a ceasefire and be prepared to lift sanctions in order to prevent more severe damage to their populations and the economy. Instead, Rome and Berlin, as if following a common script (written in Brussels?), are planning energy cuts to companies, and urging households to “freeze for freedom”.
According to a five-page internal document of the German Economy Ministry, published by DPA, the German government plans the following steps: 1) A €15 billion credit from the state-owned Reconstruction Credit Bank (KfW) to the Trading Hub Europe to buy gas at the current expensive prices exclusively for refilling the stocks. Assuming they will find enough gas on the market, this money will go directly into the pocket of financial speculators; 2) Compensation for companies that cut production in order to save gas, which will be used to refill stocks; 3) Reactivation of all coal energy plants. Suddenly, the life-or-death issue of saving the planet has disappeared, replaced by the much more urgent desire to accept sacrifices ostensibly to help Kiev.
In Italy, Green Transition Minister Roberto Cingolani is preparing similar measures: 1) Cuts to producers, initially on “invitation” by the national provider Snam; 2) Full use of the six available coal energy plants; 3) Reduction by 1-2°C of the temperature for heating in households and public offices, with regulations for time zones in which heating can be switched on; 4) Reduction of public lighting for population centers and roads. Additionally, measures similar to those introduced during the 1973 oil shock could be contemplated, for example, traffic-free Sundays, etc.
High inflation, energy scarcity, production losses, social hardship: the EU is inflicting on itself what it wanted to inflict on Russia through sanctions. It’s time to get rid of such failed elites!