by Ralph Schoellhammer
Wednesday, 27
July 2022
Analysis
07:30

The energy crisis will divide Europe

Familiar Eurozone fault lines are starting to re-surface
by Ralph Schoellhammer
Is Germany the new sick man of Europe? Credit: Getty

It has been nearly six months since Putin launched his invasion of Ukraine, but for Europe, the worst is yet to come. Already companies are contemplating shutting down production, including aluminium smelters in Slovakia and fertilizer producers in the UK. Corporations need to plan long term, and forward contracts for electricity (which are supposed to lock in energy costs) are at all-time highs for 2023 and 2024.

For the foreseeable future, high energy costs will be the new normal, making the production of everything from food to paper to chemicals more expensive. Furthermore, it is not at all clear to what extent hot water, electricity, and heating will be available in countries like Germany, Austria, Italy, or Hungary – or how the population will react if there should be real shortages in these areas.

Not all countries, however, depend on Russia to the same extent which is becoming the newest point of contention within the EU. Ideally the 27 member states would present a unified front, attempting to face the ongoing energy crisis together. Yet none of this is actually happening, and one way or another everyone is fending for themselves. Hungary went even so far to send their foreign secretary to Moscow in order to ask for continued gas flows, while solidarity between member states is starting to wear thin.

The proposition by the European Commission to reduce gas consumption by 15% as soon as possible was met with fierce resistance by Portugal, Spain, Greece, Italy, and others who depend less on Russian gas and feel that they are being forced to compensate for the mistakes of others, especially Germany. But given that the agreement is based on a voluntary reduction in gas consumption until next spring, the announcement is basically meaningless.

The idea that any European government will “voluntarily” inflict even more of an energy crunch on its electorate than absolutely necessary is unrealistic. The EU and its members do not have the best track record when it comes to respecting binding rules (just remember the no-bailout clause for states’ sovereign debt during the Global Financial Crisis in 2008 to 2010), so it is even less likely that a voluntary agreement will be very effective.

With rampant inflation in the Eurozone the ECB will be forced to raise interest rates, which will create similar conditions to 2010 and could plunge southern Europe into a new sovereign debt crisis. And once again it will most likely be Germany that will have to take the lead in keeping the Eurozone together. The question is, however: will Berlin still have the resources to do so if its own economy is in a recession?

German economic power is waning, and with its industrial base getting weaker and its population poorer, the willingness to support other members of the Eurozone will be more limited. This is not a recipe for stability, and it seems more likely than not that European solidarity is already past its high point.

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Jim Jam
Jim Jam
23 days ago

Notice also, before even the true misery of this situation starts to bite, how the predicament is beginning to be framed. The coordinated refrain from the media: its an over-reliance on non-renewables that’s to blame for the impeding extreme, probably life threatening poverty for those towards the bottom of Europe’s society. No mention of the true cause, i.e. an utter failure to put in place secure and reliable sources of energy while a measured, responsible transition to greener forms is undertaken. No mention either of the inherent limitations of renewable technologies, or how strict adherence to arbitrary ‘net zero’ targets is likely to compound problems and grind economies into recession. Instead – a continuous and coordinated continent wide excercise in gaslighting: that the cause of the problem is also somehow the only solution to it.

Last edited 23 days ago by Jim Jam
Peter Buchan
Peter Buchan
23 days ago
Reply to  Jim Jam

You have a good sense of it, Jim Jam. In fact, your perspective nests well into the over-arching, and now rapidly mounting, political and structural problems faced by the EU. Decades of mismanagement, erosion of (founding) democratic values, loss of national sovereignty and identity, collapsed fertility rates etc, etc – all in favour of a new – and wildly hypothetical – future where “rationality” and “institutions” were to take care of one big “you will be (or seem) happy (or else!) European family.”
You can ignore reality, but you cannot ignore the consequences of having ignored reality. The European project which, by the way, was originally conceptualized in no small measure by US elites (for those prepared to do their homework), was ultimately only going to last for as long as a) national debts could be inflated b) the Davos-drive towards globalization could be maintained (at the expense of global south) and c) the rise of still-unresolved geostrategic realities could be averted, or at least held at bay.
Regarding Brexit: I always told my British friends that the question was not whether the UK should leave the EU, but rather whether it should be FIRST. Well, that’s been answered now, hasn’t it?
It’s elites and many/most of its citizens having mistaken ideology for destiny, Brussels and the European project will now be swiftly hollowed out until it is unrecognizable from its peak grandeur as well as its founding goals. When? Well, it will be a process not an event, accompanied by much wailing and the grinding and gnashing of teeth – made all the more regrettable for having been so avoidable. But the opportunities to change course passed long ago.

Last edited 23 days ago by Peter Buchan
Peter Johnson
Peter Johnson
22 days ago
Reply to  Jim Jam

Elite politicians and their friends in the mainstream media seem supremely confident that ordinary plebs are too stupid figure this out. However they aren’t stupid and when energy costs get high enough they are going to get very angry. Literally the first thing Biden did in office was cancel the Keystone pipeline from Canada. Now he is begging Saudi Arabia for oil. People won’t forget that.

Peter B
Peter B
22 days ago

could plunge southern Europe into a new sovereign debt crisis” !!!
They still haven’t sorted the first one. It’s the same crisis.

Christopher Barclay
Christopher Barclay
23 days ago

Breaking up the EU was almost certainly one of Putin’s long-term objectives.

Peter Buchan
Peter Buchan
23 days ago

That a break-up of the EU might suit Russia geo-strategically is incidental. What the EU elites and apologists should be answering is why, after Russia collapsed in the 90’s, it never reached out to assist or draw them in. Not only that, but it did the opposite in acting as proxies, apologists and stooges for US hegemonic ideals in Eurasia – all of which are set down for those prepared to read. Russia even asked to join NATO back in the day and were laughed out of town. UnHerd readers should familiarise themselves with geo-strategic theories like Sir Halford Mackinder’s “Heartland Theory”, Spykman’s “Rimland Theory”, Brzezinski’s “Grand Chessboard” (aka Eurasia) and “The Wolfowitz Doctrine”. Then step back to (re)consider modern post-WW2 history and Washington and NATO’s many adventures, and then ask themselves if “Russian Aggression” still stacks up.
It is the habit of viewing and framing complex issues in binary terms that got us here.

Last edited 23 days ago by Peter Buchan
Peter B
Peter B
22 days ago
Reply to  Peter Buchan

Seriously ? You think that we would want an utterly corrupt and untrustworthy country like Russia “inside the tent” in NATO with access to military secrets and intelligence ? There are certain standards that a country needs to meet to join NATO. Do you have evidence that Russia have ever met these ?

Peter Buchan
Peter Buchan
22 days ago
Reply to  Peter B

Two observations here: First, and assuming your assertion is correct, you/we will never know how Russia may have “turned out” since the Moral West shut them out from the outset. Second, the trail of blood and scandal that follows the “Atlanticist” cabal and its hand picked totalitarian friends (games in the Yemen, anyone?) makes the Russians look…almost…naive, somehow.
That the team backing the team that made a sport of regime change and black ops all over the planet, and is happy to see the slow execution of people like Julian Assange, dares lecture anyone on standards and/or morality has become the entertainment nouveau of the internet. I’d say pass the popcorn Peter but, sorry, it reeks. For your own sake, find a mirror and look at it. Fast.

Last edited 22 days ago by Peter Buchan
Peter B
Peter B
22 days ago
Reply to  Peter Buchan

The question you raised is whether Russia could ever belong in NATO. I’ve answered you here twice. You haven’t addressed my points at all, but just deflected into another incoherent rant. Please focus on the point you yourself raised (if you can) and cut out the emotional claptrap.
We know perfectly well how the Russians have behaved for the past 100 years and their impact on other countries. They have form: it has never been beneficial. Has their intereference of intervention ever improved any country ? They have never been our friends for a century and have absolutely no intention of being so. You’re deluded if you think so.
What is happening in Yemen is primarily a proxy war between Saudi Arabia and Iran. How is this even relevant to the discussion about NATO ? Personally, I never support Saudi Arabia and detest that regime. But that doesn’t mean that the other side are the “good guys” (clue: as in Syria and Libya, there aren’t many “good guys”).

Peter B
Peter B
22 days ago
Reply to  Peter Buchan

One other reason. Joining NATO means using and producing NATO standard equipment. Russia had a large defence industry producing to different standards. It could never have adapted and competed and would have been killed. It was never in Russia’s own interests to join NATO.
But the Russians are killing their defence industry anyway. There won’t be many buyers left after the current sales demo fiasco in Ukraine. Without defence export earnings, they won’t have the volume to compete internationally anyway.

John McKee
John McKee
22 days ago
Reply to  Peter Buchan

Beautifully put!

Nicky W
Nicky W
19 days ago

the EU states are the Wests canary, and it was always a foolish to think Russia would play against the west with one arm tied behind its back, or it’d not target the weakest points, it’s doing what most should have expected which is play with the full hand it has.
It was naïve of the west to think otherwise and with issues starting to converge it looks like we’ll all be in the crucible this autumn/winter, not quite the winter of discontent those on all sides think they can use to shape the world to their liking.
At worst I don’t see scope for dissolution of the EU or West but rather a split into smaller aligned blocks, but rather embrace a reformation of sorts.

Dermot O'Sullivan
Dermot O'Sullivan
23 days ago

This is along the lines of a worse case scenario, exaggerating conflict where different energy issues exist. It fits a pattern whereby everything EU is bad and by implication everything Brexit is good. I’ll put my legs up now and await the down votes.

Jim Jam
Jim Jam
23 days ago

Dare I suggest that you’re possibly projecting your own binary thinking here?

Dermot O'Sullivan
Dermot O'Sullivan
22 days ago
Reply to  Jim Jam

Au contraire mon ami. I can happily accommodate two or more opposing views without too much difficulty. I see the point of view of both Brexitears and Remainers and accept that it is a decision for the British people. I also see it as a neighbour and the potential ill effects it has on my country. We are allowed to look after our own interests I assume?

On the other reply to my comment:
Where have I said, or even implied, that Brexit is to blame for Russia’s invasion?

E. L. Herndon
E. L. Herndon
21 days ago

I have always considered that it was the zombie President, with his party’s extreme Green New Deal, that gave Putin the green light. (And the main reason Western powers are “defending democracy” in Ukraine, which does not faintly resemble a democracy, is that it’s a haven for a lot of dirty money and offers satisfactorily muddy waters to go fishing in.) Although it is presumptuous and poorly thought out to try to “go green” too quickly, changing horses in mid-stream, the countries which moved away from nuclear before reliable substitutes are on line, are going to suffer. A long as the US was energy-independent, as it was when Trump was in office, things ticked over. When Biden canceled the Keystone Pipeline, with the closures that followed, it effectively said to Putin, “Walk right in.” The subsequent destabilization is going to be rough on the West, profitable to Putin, and a fine opportunity for China’s loan-sharking Belt and Road dealings.

Martin Brumby
Martin Brumby
23 days ago

Happy to oblige.
We really need even more out of control incompetent bureaucracy and Globalist nonsense.
Like a hole in the head

Kate Heusser
Kate Heusser
22 days ago

And Russia’s behaviour towards Ukraine is a result of Brexit – how?