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Europe only has itself to blame for its economic decline

There are no scapegoats for Europe's decline. Credit: Getty

April 5, 2024 - 10:00am

Europe’s economies remain in trouble as growth falters, budget deficits explode, and price levels remain stubbornly elevated. Unsurprisingly, these troubles have increased tendencies to find scapegoats for the continent’s decline. One argument is that it is a US-led conspiracy, with Washington planning to turn Europe into a vassal and deny Brussels its deserved position on the global stage. The sabotage of the Nord Stream 2 pipeline — which may or may not have been executed by the United States — was a plan to destroy the German economy, and the war in Ukraine is a proxy war waged to weaken Europe and sow division between Russia and the EU.

Certainly, blaming others is always easier than admitting mistakes. While it is true that the US is profiting from becoming Europe’s main supplier of gas, the true question is why the old continent has to depend on anyone but its own constituent nations in the first place. The problem is not a US conspiracy against Europe, but instead the latter’s tendency to try and have its cake and eat it. Take, for example, European energy policy during the Cold War: while it was comfortable under American military protection, Western Europe relentlessly pursued pipeline projects with the Soviet Union — much to the chagrin of the US, which feared the “Soviet oil offensive”. To put it differently, current US LNG policy is just the mirror image of the Soviet oil and gas policy which Moscow pursued for decades.

The true gamechanger occurred towards the end of the first decade of the 21st century, when the US underwent its shale revolution and Europe began to embark on its “energy transition” by focusing primarily on renewables. Nobody feared fracking more than Vladimir Putin, who called shale gas “barbaric” and who realised that Russia’s days as the continent’s main energy-provider would end if the Europeans obtained this new technology. Yet — luckily for him — instead of becoming energy-independent, almost all major European economies banned fracking outright.

More than that, there was an additional movement to outlaw another energy form which could have brought further security and independence: the anti-nuclear environmentalists, who pushed for the end of nuclear power in Europe. According to their worldview, the future of Europe would be based on wind and solar without any need for fossil fuels or nuclear fission. Moscow, Washington, and Beijing must have been stunned by the suicidal direction of Europe: instead of becoming energy-independent and thereby strategically autonomous, the Europeans trapped themselves to be either dependent on Russia or the United States for most of their fossil fuels (especially gas) and on China for solar panels and wind turbines.

Decade after decade, Europe has increased policies that make its economy dependent on others. While these other countries have certainly taken advantage, nobody forced Europe into the arrangement. Closing the Groningen gas field in the Netherlands, the fracking ban, the decades-long demonisation of nuclear power, entirely unrealistic “energy transitions” which promised wind and solar miracles, destroying the car industry with internal combustion engine bans, “carbon border adjustment mechanisms” that create layer after layer of red tape for companies, making them ever less competitive — all of these policies and more were chosen, not forced upon Europe.

Unless this reality is understood in Europe’s capitals, and if politicians do not stop taking the easy way out by blaming others, the old continent will continue to decline.

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El Uro
El Uro
1 month ago

Thank you for honestly

Berndt Hess
Berndt Hess
1 month ago

Couldn’t agree more.

Jim Veenbaas
Jim Veenbaas
1 month ago

North America is not that far behind. Trudeau and Biden hate fossil fuels just as much. Thank goodness the infrastructure has been in place to expand production by a certain degree, but substantial expansion is out of the question right now. Trudeau has also rejected repeated requests to build LNG capacity in Canada and Biden has stopped any expansion of LNG capacity.

Allison Barrows
Allison Barrows
1 month ago
Reply to  Jim Veenbaas

Biden “hates” what he is told to hate. It really doesn’t matter; he doesn’t run anything.

Robbie K
Robbie K
1 month ago
Reply to  Jim Veenbaas

No one hates fossil fuels, thankfully however people do understand the damage that is being done to our world and slowly doing something about it.
Other than the ridiculous roll back of nuclear power, the article utterly fails in every way to consider the issues of climate change – not sure how anyone can still be so ignorant.

Warren Trees
Warren Trees
1 month ago
Reply to  Robbie K

Enough already with the constant whining about climate change. We are on the precipice of World War III, and you carry on about something as old as the earth itself. Please show us all how to stop earth’s climate from changing and prove us all wrong, so we can be done with this insanity. Once you are successful at preventing a volcano from erupting or altering a solar flare, I’ll eat my hat.

Robbie K
Robbie K
1 month ago
Reply to  Warren Trees

Ye Gods. What you need to eat is a primary school level book on Ecology.

David Giles
David Giles
1 month ago
Reply to  Warren Trees

Aah, now I see. That’s where you get it from: a primary school textbook on ecology.

Jim Veenbaas
Jim Veenbaas
1 month ago
Reply to  Robbie K

This is the power of Mother Nature and how little control we have over the environment. A single underwater volcano erupted in 2022 and released so much water vapour into the atmosphere they think it increased water vapour 10%.

Now think of all those scare stories we heard about 2023 being the hottest year ever. I defy anyone to show me one that noted the impact of the Mount Tonga eruption.

https://www.space.com/tonga-eruption-water-vapor-warm-earth

Robbie K
Robbie K
1 month ago
Reply to  Jim Veenbaas

We can’t do anything about that, we can however change human behaviour to reduce pollution – that is the fundamental problem here.

UnHerd Reader
UnHerd Reader
1 month ago
Reply to  Robbie K

Have you tried suicide? That would at least reduce your carbon footprint to 0.

Robbie K
Robbie K
1 month ago
Reply to  UnHerd Reader

Not if I was cremated.

Hugh Bryant
Hugh Bryant
1 month ago
Reply to  Robbie K

We can’t, I’m afraid. To understand why go door to door in Manila and tell the householders and shop and factory owners with air conditioning that they have to bin it. Then tell those who don’t have it that they never can. Take a bodyguard.

Jim Veenbaas
Jim Veenbaas
1 month ago
Reply to  Robbie K

CO2 is not a pollutant. It’s the giver of life. Right now we’re at about 435 ppm. In the history of earth, it’s been as high as 6000 ppm. Plants cease to grow and humanity starves at about 285 ppm.

You’re right though, we can do something about it if the world switched to nuclear. That is not happening though.

I think it’s fair to say that people like Trudeau and Biden hate fossil fuels, if you look at the language they use when discussing fossil fuels – the same language you have used to describe fossil fuel companies.

Robbie K
Robbie K
1 month ago
Reply to  Jim Veenbaas

Anything can become a pollutant in the wrong quantity. Please do not try and deny the link between burning fossil fuels and the greenhouse effect.

Jim Veenbaas
Jim Veenbaas
1 month ago
Reply to  Robbie K

You absolutely know I have never once denied this.

Warren Trees
Warren Trees
1 month ago
Reply to  Jim Veenbaas

Western civilization is not that far behind.

Susan Grabston
Susan Grabston
1 month ago
Reply to  Jim Veenbaas

The rhetoric maybe. But on the quiet Biden has opened the drill baby drill spigots. He knows gas prices are the key economic metric for the average person on the street. Similarly Yellen has turned on the QE spigots with the monetisation of short-term treasuries. Just waiting for more student debt forgiveness.and we’ll have the holy trinity for a Biden election push. A last ditch option is a deal with Mexico to.”slow the flow” until start of 2025. You gotta love politicians and, of course, complicit voters. We all want jam today irrespective of the virtue signalling.

Richard C
Richard C
1 month ago

Absolutely right; the only possible salvation comes from Biden’s pursuit of the same idiotic energy policies.

Andrew Fisher
Andrew Fisher
1 month ago
Reply to  Richard C

Well then the US can go down as much as Europe. China, India and many other non western states however will not be so utterly foolish.

Kent Ausburn
Kent Ausburn
1 month ago
Reply to  Richard C

And how will that help Europe. Misery enjoys company?

Prashant Kotak
Prashant Kotak
1 month ago

Bingo!

Jim Haggerty
Jim Haggerty
1 month ago

As their Govt debt grows and economies slow, you have to wonder where the money to support defense spending and the subsidies for the energy transition will come from…taxes anyone??…which will only make the situation worse. Just like mandates or near mandates on EVs that the public can’t afford or won’t buy…..amazing to be so clueless

Warren Trees
Warren Trees
1 month ago
Reply to  Jim Haggerty

Of course it will be taxes. The end goal is totalitarianism, after all.

laurence scaduto
laurence scaduto
1 month ago
Reply to  Jim Haggerty

“Clueless” is the key word. The intelligence level of our leadership has definitely been slipping. And it’s not just the leadership. In general, our policy discussions never get to the day-after-tomorrow point. Too headache-y.

Andrew Fisher
Andrew Fisher
1 month ago

A brilliant succinct analysis of the grand standing, empty, pompous, contradictory and completely short-sighted policies that the EU and many individual European countries have followed in recent decades. The Chinese are not impressed by virtue signalling, and probably cannot believe their luck.

William Shaw
William Shaw
1 month ago
Reply to  Andrew Fisher

Unfortunately the UK government is following EU policies like a brainless fool.
Small nuclear reactors could help a lot if the government would simply increase investment.

Steve Farrell
Steve Farrell
1 month ago

“Economic suicide” is a bit of a cliche, but how else to describe this?

Dutch & UK shale gas deposits could have been powering an economic resurgence in both countries for the last 15yrs. I don’t know about the Dutch situation, but the UK deposits are right in an area that could do with a break.

Damon Hager
Damon Hager
1 month ago
Reply to  Steve Farrell

Middle-class Greens have no strategic sense and, frankly, very little patriotism. They shouldn’t be listened to, but they are, because our politicians all come from the same urban cohort. The fools won’t “save the planet”, but they’re doing a good job of wrecking Europe and, far more importantly, the UK.
(NB I’m using “middle class” in the British sense of “prosperous professional classes”.)

Graham Stull
Graham Stull
1 month ago

For me, this is glossing over the US’s role in hamstringing Europe’s energy independence. Europe had a reliable energy partner and means to diversify its gas supply further, and there can be almost no doubt over who blew up Nordstream, just as there is little doubt who instigated Euromaidan.
That’s not to say Europe isn’t also to blame – but to brush off the US role in this is to set Europe up for continued reliance on its ‘great transatlantic ally’, who in reality is anything but.

Nicholas Moles
Nicholas Moles
1 month ago
Reply to  Graham Stull

That’s just the point – they didn’t have a reliable energy partner. You can’t rely on Putin’s Russia.

Graham Stull
Graham Stull
1 month ago
Reply to  Nicholas Moles

I mean, at no point did Putin stop wanting to sell the gas to Europe. He was always willing to supply. The EU refused to buy it.

Kent Ausburn
Kent Ausburn
1 month ago
Reply to  Graham Stull

Of course Putin is willing to sell nat-gas to Europe, until he isn’t, when he decides to use it as strategic leverage to get Europe to do what he wants. Who in their right mind would put the health of their economy and their security in Putins hands?

Graham Stull
Graham Stull
1 month ago
Reply to  Kent Ausburn

Ok, so your argument boils down to: “Putin might have a decades-long track record of being a reliable energy partner for Europe – but that might have changed, so the best thing to do accept that the US blows the $h1t out of the pipelines, and forces Europe to buy their LNG at three times the price.”
I counter with: “It’s a bad idea for Europe to have strategic energy dependence on any one source – whether the American Empire or its nascent rivals. We (Europe) needed to build out LNG to keep monopsony power vis-a-vis our main (Russian) supplier, while all the time slowly building out a network of next gen nuclear.”

UnHerd Reader
UnHerd Reader
1 month ago
Reply to  Graham Stull

Of course he was willing to sell. Europe was overly dependent on his gas. He wanted it that way so they could do anything against him. Your blind to the obvious because you have an irrational hatred of the US.

Graham Stull
Graham Stull
1 month ago
Reply to  UnHerd Reader

Why is it always the anons who make the most absurd, ad hominin attacks?
What possible reason could you have for imagining I harbour an irrational hatred for the US? Because I want the EU to be a free and strong pole in the new multi-polar world order, instead of a series of vassal-states to the American Empire?
In what way is this irrational or even hatred? In fact, I was raised in the United States, my family lives there and I regularly go there to enjoy the many beautiful things that country boasts. But I am a proud and loyal European, and so I want to protect Europe’s strategic interests, which I see as distinct from those of the American Empire (which, btw, are themselves distinct from those of the United States).

Alex Lekas
Alex Lekas
1 month ago
Reply to  Nicholas Moles

What is the evidence for that claim?

jules Ritchie
jules Ritchie
1 month ago
Reply to  Graham Stull

‘ there can be almost no doubt..’I can’t tell whether you are inferring that the US blew up Nordstream or it was the Russkies.

Graham Stull
Graham Stull
1 month ago
Reply to  jules Ritchie

Watch the video of Victoria Nuland and Joe Biden saying they will blow it up.

UnHerd Reader
UnHerd Reader
1 month ago
Reply to  Graham Stull

Have you a shred of evidence that the US blew up the pipeline, or did you just decide that?

And for the record the nordstream pipeline was beneficial really only for Germany.

UnHerd Reader
UnHerd Reader
1 month ago
Reply to  UnHerd Reader

They either blew it up or know who did.

UnHerd Reader
UnHerd Reader
1 month ago
Reply to  Graham Stull

You’re right in at least one point, Europe has proven itself to be a fatally unreliable ally to the US.

AC Harper
AC Harper
1 month ago

I’ve argued before that the EU is a modern version of the Hanseatic League and dedicated to the support of Big Business. Big businesses alone do not result in a strong economy.
A message that other economies (e.g. the USA) should take note of perhaps?

Stephen Barnard
Stephen Barnard
1 month ago

Absolutely right. Sadly.

Robert
Robert
1 month ago

Yup. And now we’re doing the same thing here in the US in the name of preventing the climate ‘catastrophe’.

Jürg Gassmann
Jürg Gassmann
1 month ago

This is nonsense.
We praise Adam Smith because he pointed out the dead end of mercantilism, of protectionism and autarky policies. Buying things you don’t have and can’t produce efficiently from those who have and can was the road to prosperity.
Now we’re supposed to return to autarky – not recognising that one of arguments for the Greens’ push toward wind and solar is precisely that it will provide energy self-sufficiency, the very policy Schoellhammer criticises. If Schoellhammer’s point is that Europe should have gone all-in on nuclear, then his understanding of the role of natural gas beyond energy production and the limitations of a purely electricity production-focused energy mix is as simplistic as that the German Greens’ energy policy.
Yes, Europe is dependent on energy imports, but swapping US LNG for Russian pipeline gas is not an even exchange. Russia has for over 40 years been a consistently reliable supplier at reasonable prices, never once leveraging the contracts in reaction to political crises. The curtailing of Russian gas supplies now is due to European idiocy, not Russian actions.
Russian gas fuelled European industry – the very industry that produces steel, tanks, and munitions. Cutting off Russian gas means deindustrialising Europe, and means destroying any prospect of an economy capable of the industrial strength that underpins defence.
As events over the last weeks have shown, not only is US LNG far more expensive, its availability is subject to the whim and vagaries of US domestic politics, lurching unpredictably in response to the never-ending political campaign seasons.

Jim Veenbaas
Jim Veenbaas
1 month ago
Reply to  Jürg Gassmann

I think this is a strong, well reasoned argument, but wind and solar do not offer a path toward energy self sufficiency. If your grid relies too much on intermittent sources of power, you are forced to import electricity from other grids. After nearly two decades of trying, there is not a single grid in the world run 100% by wind and solar, not even a small island somewhere. Once the power grid exceeds about 25% wind and solar, electricity costs increase dramatically. That’s why Germany and Denmark have the highest rates in the world.

Jürg Gassmann
Jürg Gassmann
1 month ago
Reply to  Jim Veenbaas

I don’t disagree, but saying nuclear is the salvation and delivers independence is equally nonsensical. Nuclear depends on fuel as well – one of world’s main suppliers is again Russia, and the US has taken care not sanction itself against purchasing fuel rods from Russia.
France relies to heavy extent on nuclear, but depended on being able to despoil Niger of the uranium. That’s why France is in such a snit about getting kicked out of Niger.

Alex Lekas
Alex Lekas
1 month ago

Blowing up Nordstream was certainly not helpful. Whether noticing that amounts to ‘blame’ or not is up for debate but the effects remain. Also, anyone opposed to nuclear is not pro-environment or pro-green or anything of the kind.

Steve Houseman
Steve Houseman
1 month ago

Poor Germany. It’s whole industrial base is caput. Their doing de-industrialization and de-growth/net zero simultaneously! Not sure they’ll all be happy though?
The article is good and interesting and mostly well known. I’d be interested to know more about Siemens and the massive problems it has with it’s onshore/offshore wind turbine fleet? Siemens = Germany?

Hugh Bryant
Hugh Bryant
1 month ago

Well, the verdict is in. Boomer liberalism has been an unmitigated catastrophe, not just for the West, but for the world in general. Let’s bin it, along with all the mediocre political hacks it came with, go back to the 1990s and start again.

A D Kent
A D Kent
1 month ago

Any discussion of the slow decline of the European economy that doesn’t even mention the disastrous effects of the Euro, the now treaty enforced and therefore irreversible) fiscal constraints and the (frankly sociopathic) board of the ECB, is bound to be rather wide of the mark. The circular firing-squad of the Russian sanctions have turbo-charged this, but the rot set in a few decades ago now.  

Peter Stephenson
Peter Stephenson
1 month ago

Our managerial class has been mentally taken over by a juvenile search for endless feelgood moments! Europe is a continent run to the tune of fourteen year old girls bent over their screens! You pick one feelgood idea out of a bag and make it all yours, and then you ignore every single collateral consequence, all while feeling better and better the more rigorous the ignoring. Our descendants won’t be able to believe it. There is about all of this something of a search for the selfish comfort of feeling good about one’s compassion and kindness. The cruel consequences are always put down to insufficient commitment to the cause. Our descendants will see us a generation of kiddies.

David Morley
David Morley
1 month ago

descendants?

John Riordan
John Riordan
1 month ago

Brilliant article, but of course if the clowns in charge were capable of understanding this then they wouldn’t be clowns in the first place.

Anna
Anna
1 month ago

I also wonder why neither Europe nor the UK has jumped on board the tech revolution. Instead Europe takes a punitive approach to US tech companies. Why not compete instead?

John Riordan
John Riordan
1 month ago
Reply to  Anna

Because the European economies, UK included, are not interested in paying the price required to compete, namely the free market deregulation that makes big tech possible in the first place.

Robbie K
Robbie K
1 month ago

Well done Unherd. Mission accomplished yet again with suppressing the comments you don’t want displayed for the main debating phase.

Andrew Armitage
Andrew Armitage
1 month ago

Germany’s anti nuclear lobby are simply neurotic you don’t have to be a fan of nuclear to see it’s a least worst option for where we are now

DenialARiverIn Islington
DenialARiverIn Islington
1 month ago

There’s nothing to stop us starting now……..

John Riordan
John Riordan
1 month ago

Nobody in power is listening. It’s insane, but here we are.