Xinhua News Agency, Brussels, March 22 (International observation) Where is the EU’s energy outlet when the conflict between Russia and Ukraine continues?
Xinhua News Agency reporter
Recently, the supply uncertainty caused by the conflict between Russia and Ukraine has further exacerbated Europe’s energy dilemma, and it has once again cast a shadow over the European economy, which is desperate to get rid of the new crown epidemic. EU leaders will meet with U.S. President Joe Biden this week and face a tough decision on whether to target Russian energy with sanctions.
Energy blockade remains divided
In recent weeks, several European leaders have visited the Gulf region, aiming to strengthen energy cooperation and seek potential alternative suppliers. German Federal Minister of Economics and Climate Protection Habeck said during his visit to Qatar on the 20th that the two sides agreed to establish a long-term energy partnership and conduct consultations on issues such as the development of renewable energy and improving energy efficiency.
Italian Prime Minister Draghi held talks with Spanish Prime Minister Sanchez, Portuguese Prime Minister Costa, and Greek Prime Minister Mitsotakis on the 18th to promote European countries to form a rapid and joint response to the energy crisis under the influence of the situation in Ukraine. Draghi said Europe needed a “two-pronged approach” to rapidly increase renewable energy supplies while seeking multiple sources of energy such as natural gas.
Analysts pointed out that the U.S. announcement of an energy embargo on Russia has put “great pressure” on European allies, and it is not realistic for Europe to get rid of its energy dependence on Russia in the short term. On the one hand, members of the Organization of the Petroleum Exporting Countries are reluctant to undermine the agreement with Russia and will not rapidly increase crude oil production significantly. The natural gas industry requires a lot of investment, and it is difficult for other markets to meet the European market demand immediately. Even a big LNG exporter like Karta cannot adjust its export market anytime soon.
On the other hand, there are differences within Europe on whether to block Russian energy. Although some member states have asked the EU to impose an embargo on Russian oil and natural gas, countries with a high degree of dependence on Russian energy are cautious. European Commission executive vice-president Frans Timmermans warned that a “decoupling” from Russian energy could do “more harm” than the Ukraine crisis.
Analysts pointed out that as EU countries are looking for new channels to make up for the energy supply gap, the United States can profit from it. According to media reports, U.S. LNG exporters have recently signed a large number of long-term agreements, becoming the beneficiary of Europe’s energy supply crisis.
Russian State Duma (lower house of parliament) chairman Volodin previously stated on social media that the United States has extended sanctions against Russia to an energy embargo, aiming to seize the European market, and the losses caused by this approach will be paid by European companies and people.
The economy and people’s livelihood have been hit hard
Long queues at gas stations, difficult operations for transportation companies, and carpooling for commuters… As the West continues to escalate sanctions against Russia, these situations have appeared in many European countries. Rising energy prices have also affected areas closely related to life, such as food and daily necessities.
Fertilizer prices are now at “terrible levels”, five times higher than at the same time last year, said Joachim Ruckerveld, president of the German Farmers’ Association. “Farmers and food manufacturers have to pass the cost on to consumers, adding a lot to people’s spending.”
For a week, small road freight companies and individual truckers across Spain have launched an indefinite strike to protest rising fuel prices. The strike jeopardized the market supply of products such as dairy products, fruits and vegetables, meat and grain in Spain, and many industries faced the risk of shutdown.
The economic uncertainty has increased sharply, according to Matthias Splager, senior economist at Danish Southern Bank. Consumers have been hit hard, from fuel to heating to food prices.
The European Central Bank has significantly raised its inflation forecast for the euro zone in 2022 to 5.1%, 2.1% in 2023 and 1.9% in 2024; it also lowered its forecast for economic growth in the euro zone in 2022 to 3.7%, with growth expected in the next two years and the next two years, respectively. 2.8% and 1.6%.
Stefan Coates, deputy director of the Kiel Institute for World Economics, said that the impact of the Russian-Ukrainian conflict on the German and global economy has offset the “catch-up effect” brought by Germany’s lifting of epidemic restrictions on economic development. The institute’s spring forecast report lowered its forecast for Germany’s economic growth this year to 2.1% from the original 4%.
The Danish Ministry of Finance said a few days ago that if Russia completely shuts down its natural gas supply to Europe, Denmark’s economic growth in 2022 will be reduced by about 3 percentage points, and the inflation rate will increase by about 3.5 percentage points.
Multiple measures to ease the crisis
The situation in Ukraine has brought great instability to Europe’s energy supply, making the already fragile European energy market even worse. Recently, many European countries have adopted measures such as tax cuts and fee reductions to support vulnerable companies and households.
The Italian government has taken a number of measures to ease the burden on companies and the public caused by rising energy prices, including an additional 4.4 billion euros in grants and a cut in gasoline and diesel excise taxes. Italian energy giant Eni said it would put more energy into the market to deal with the knock-on effects of the Ukraine crisis.
The German government says it is taking positive action on the energy transition. The German Federal Ministry for Economic Affairs and Climate Protection has proposed to bring forward the goal of 100% renewable energy generation to 2035.
The Austrian government plans to invest 2 billion euros to ease social pressure, measures include slashing electricity and natural gas taxes; providing subsidies for the public transport sector; investing 250 million euros in expanding wind power and solar energy projects.
The Greek government also announced a package of financial support measures worth about 1.1 billion euros to deal with the current energy crisis. The main measures include substantially increasing electricity and natural gas subsidies for businesses, and providing electricity and natural gas subsidies to low-income and middle-class households.
Spanish Prime Minister Sanchez has announced that he will reduce electricity, gas and fuel prices through tax cuts and other forms. (Note-taking writer: Kang Yi; participating reporters: Zhu Sheng, Huang Yan, He Fei, Lin Jing, Liu Xinyu, Yu Shuaishuai, Feng Junwei, Meng Dingbo, He Lili, Tian Ye) (End)