11 August 2022

The fallout from Europe's energy crisis

HAROLD MAASS

The European Union has called on members of the trading bloc to slash their use of natural gas as Russia cuts deliveries. European wholesale natural-gas prices jumped last week when Russia announced the reduction of flows through the Nord Stream 1 pipeline, which carries natural gas from Russia to Germany and is now down to 20 percent of normal capacity. Energy experts warn that a brutal heat wave, a hydropower shortage, and corrosion issues at French nuclear reactors are contributing to the continent's worsening energy crisis, according to The Wall Street Journal.

European leaders have accused the Kremlin of blackmailing them as punishment for supporting Ukraine's resistance to Russia's invasion. They are scrambling to find alternative fuel sources before winter and trying to reduce demand to help them stockpile fuel before cold weather hits. Spain, for example, published rules last week telling businesses not to cool indoor spaces below 81 degrees Fahrenheit, or heat them above 66 degrees. What does this energy crisis mean for Europe's future?

EUROPEAN VOTERS MIGHT PICK LEADERS LESS SUPPORTIVE OF UKRAINE

Moscow's "ultimate aim is to bring governments to power in Europe that aren't committed to supporting Ukraine and thus fracture the Western coalition," say Daniel Yergin and Michael Stoppard in The Wall Street Journal. And it just might work. "Last month a right-wing party pulled out of Italy's governing coalition, citing 'the terrible choice' that Italian families face 'of paying their electricity bill or buying food.'" This forced out Prime Minister Mario Draghi, who visited Kyiv in June to show Italy's support. But Europe, which got 38 percent of its natural gas from Russia before the war, has started importing more from the United States and other sources, and its higher prices are "acting like a magnet." Its winter stockpile is now 67 percent-filled, but Europe's fate this winter still will "hinge on the severity of the weather."

EITHER WAY, GERMANY LOSES

One outcome is certain as all of Europe struggles to contend with Russia's restriction of gas flows to Germany, says Maria Tedeo at Bloomberg. "Europe's era of 'Germany knows best' is ending." The region's biggest economy has long "commanded moral and financial authority in the European Union, guiding policy and playing bad cop to the weaker southern economies. The energy crisis has upended that balance." The crisis has "exposed the flaws of its economic model — high-intensity industry running on cheap gas" from Russia. Berlin's political leaders now look like fools for having blindly depended on the Kremlin for the fuel to make their factories run. "While Berlin is still coming to grips with the shock, Europe's south is growing assertive," unleashing pent-up resentment over "German-led austerity" during their recent debt crises. This doesn't bode well for Germany's leadership role in Europe, "but a recalibration of forces that may ultimately result in a healthier EU."

FRANCE'S APPROACH TO RUSSIA LOOKS BAD, TOO

"If Germany erred by failing to see the geopolitical risk posed by its reliance on cheap Russian gas," says The Economist, "France's mistake was to think right up until the eve of war that it could sweet-talk [Russian President Vladimir] Putin into better behavior." Just three years ago, French President Emmanuel Macron hosted Putin on the Mediterranean. That charm blitz confirmed that Macron's strategy to play nice with Putin "was at odds with that of much of the rest of Europe." His neighboring counterparts haven't forgotten. "No other Western leader called before the war for a 'new security architecture' to include Russia, nor after it started urged allies not to 'humiliate' Russia." Now, "as the war drags on and Europeans feel the energy crunch," other Western leaders are probably betting Macron will be the first one to "push Ukraine into suing for peace."

EUROPE BROUGHT THIS ON ITSELF

"It is ridiculous to expect Russia to keep providing a stable supply of natural gas to the countries that are imposing crippling sanctions on it," says China Daily, an English-language Chinese state media outlet, in an editorial. Now green-energy pioneers like Germany, faced with an energy shortage, are having to crank up coal burning to meet demand. "That means the U.S.-led sanctions, which are fundamentally contradictory to the needs to build a lasting, sustainable, and balanced security mechanism in Europe, are also overdrawing on the future development prospects of the world." If this causes division in Europe, it's not Russia's fault. The U.S. did this by "misleading the EU into believing that binding itself to the U.S. is the only way it can ensure its security."

RUSSIA CAUSED THIS CRISIS, AND MIGHT REGRET IT

"Europe is right to blame Russia" for its energy crisis, says Defense Priorities fellow Daniel R. Depetris at Newsweek. "But Moscow's own actions are an inevitable byproduct of years in which Europe, and Germany in particular, leaned on Russia as its main source of natural gas." International Energy Agency figures indicate that the EU used to get 45 percent of its gas imports from Russia. Germany got even more, "although that figure has since decreased to 26 percent, a remarkable climb-down in a short period of time." This made it easy for Putin to use his control of the gas valve to "make Europe sweat." For now, Putin is keeping some gas flowing, to cash in on the high prices, but a full cutoff is so likely that "Germany may temporarily reverse its decision to phase out nuclear power." But the crisis won't last beyond this winter. When it's over, Europe will have new natural-gas sources, and Russia will no longer be considered a reliable supplier. Then, Moscow will have to find new buyers in Asia, but it will take years to build the infrastructure to "fully replace the market it lost in Europe."

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