PERFECT STORM IN EU

"What doesn't kill us makes us strong

Friedrich Nietzsche

Apparently, Europe is going to experience a perfect storm caused by the consequences of the COVID-19 pandemic and the ongoing war in Ukraine, as well as the green agenda and extreme climatic conditions. There is also a permanent migration crisis, which, incidentally, could be seriously exacerbated by the factors listed above. A number experts warn that all of them make social and political upheaval and divisions within the EU quite real. The European population is already suffering from double-digit inflation rates, steep risein heating and electricity tariffs and rationing, tax increases, the closure of some businesses and the consequent loss of jobs.

Estonia is leading the list of European countries by the inflation rate, followed by the two other Baltic states—Latvia and Lithuania. According to Euronews, the Czech Republic, Bulgaria, Hungary, Poland, Romania, Croatia and Slovakia, i.e. all Eastern European countries, are next on the list, which makes it possible to draw relevant conclusions. 

Dependence on Russia

Remarkably, the sanctions against Russia have also had a negative impact on Europe itself. "In the short term, the European Union will face serious challenges from sanctions against Russia because of the war in Ukraine," Josep Borrell, High Representative of the Union for Foreign Affairs and Security Policy, said.

He complained about the rising cost of gas. "But we must be prepared to pay the price for freedom," the Kronen Zeitung quoted Borrell.

As of August 25, spot gas prices have once again crept upwards hitting $3,300 per 1,000 cubic metres. Europe will somehow survive the winter without Russian gas, but the situation is still alarming. For example, last year Germany received more than half of its gas from Gazprom - no other major EU country is so dependent on Russian energy sources. And Germany is Europe's largest economy, which again gives cause for concern. Experts believe that in the third quarter the German economy is likely to fall into deficit, according to Marcel Fratscher, head of the Berlin-based German Institute for Economic Research (DIW).

Many Western media outlets are trying to understand why Europe has been unable to do anything substantial to critically reduce its energy dependence on Moscow. According to David O’Byrne, an Istanbul-based journalist who covers energy issues on Eurasianet.org, the root of the problem lies in Brussels' insistence that gas pipeline projects be developed by private companies in order to make them commercially viable.

"The EU has not been willing to underwrite the necessary infrastructure, assuming that market forces would take the lead. Maybe that would happen in a world of perfect competition. But market forces have been unable to compete with Gazprom, a Russian monopoly that plays by its own rules… If, like Gazprom, you have the finance, you can go ahead and build the pipelines and then secure the buyers – whose main interest is short-term supply, not long-term security. In the process, Gazprom has effectively blocked the development of rival pipelines," says David O’Byrne.

There have been long discussions on the need to replace Russian pipeline gas with American LNG. But not all European countries have the necessary terminals and tanker capacity. According to Bulgarian Energy Minister Rosen Hristov, LNG, for example, is 50% more expensive for Bulgaria than gas from Gazprom. Temporary solution would be an increased supply of coal, but this was hampered by climatic conditions. In many of the large shipping canals used to transport coal to the EU, the water level is too low due to the drought. Shipping coal by rail also leads to congestion.

Climate challenge

Record-breaking heat levels in Europe has become a ‘black swan’, albeit an expected one. According to a report by the European Commission's Joint Research Centre, two-thirds of the European continent has experienced its worst drought in five centuries. Italy, Spain, Portugal, France, Germany, the Netherlands, Belgium and several other countries suffered the most. In total, this represents 47% of the continent, where the soil has dried up completely this summer.

Extreme heat in European Mediterranean countries can last until as late as November. Such weather is naturally accompanied by forest fires and severe damage to agriculture (over $30bn by June), which already suffers from high fertiliser prices. The price of fertilisers was high even before the war in Ukraine. As a result, the harvest is already 20% lower than last year. Compared to the averages of the previous five years, the EU forecasts for grain maize, soybeans, and sunflower crops will be 16%, 15% and 12% lower, respectively.

In turn, high temperatures lead to an increased demand for gas, which is necessary to run air-conditioners, motors and replace hydropower. Shallow water levels in rivers also lead to a reduction in nuclear power production due to a lack of cooling water. Therefore, the European green transition plan raises many questions. On the one hand, there is determination and statistical evidence of considerable progress in this field. On the other hand, many points remain unclear about the timing, scope and sources of funding. After all, the production of alternative energy technologies also requires conventional energy and many rare minerals, which are extracted and transported mainly thanks to conventional energy.

Does the EU remain united?

According to experts, there are even more reasons for disagreement and disputes within the European Union. Particularly, along the well-known East-West and North-South lines. For example, those countries that have worked hard to diversify their energy sources in previous years are not happy that they now have to reduce consumption to help those who have not done so. The British Over the past 15 years, at least – as the EU has dealt with the 2007-2009 financial crisis, multiple government debt crises, and the pandemic – Germany and other EU members have negotiated, from a position of strength, with the more financially fragile Mediterranean countries. But the pressure of Russian gas is now leaving Germany and other countries in the northern part of Europe particularly vulnerable, while Italy and Spain find themselves, this time, in the role of rational partners called to the rescue." The current crisis may indeed be a moment for some to recall past grievances. It’s enough to recall how furiously the EU member states divided refugee quotas at the height of the migration crisis.

Permanent migration crisis

Yet the scale of illegal immigration to Europe is increasing again. Compared to last year, it is already up by around 80%. Apparently, the main cause of this problem lies in the Middle East and Africa, as well as in Europe but on a much larger and sometimes even catastrophic scale. The conflict in Ukraine has already led to food shortages in Iraq, Syria, Egypt and a number of North African states.

György Bakondi, chief security advisor to the Hungarian prime minister, told M1 news channel on August 24 that the number of arrivals along the so-called Balkan migration route has increased by 150%. The number of asylum seekers at the Italian, Greek and Turkish borders is also increasing. Bakondi said some 36 million people have fled their homes in Africa because of hunger, which will lead to a serious migration situation in Europe in the long term. Meanwhile, the flow of refugees from the Middle East and Africa is increasing as a number of European countries have already received many Ukrainian refugees.

According to the Office of the UN High Commissioner for Refugees, the Czech Republic hosts more than 413,000 Ukrainians (about 4% of the country's population). 1.3 million Ukrainian refugees are registered in Poland (3.3% of population), about the same number are in Romania. There are also many Ukrainian citizens who escaped the war and its consequences to find shelter in Germany, Italy and other countries.

War in Ukraine

It is unlikely that the war in Ukraine will be fatal for the European unity, but it has clearly exposed the problem areas within the EU. They show up occasionally as various political crises in Italy, the UK, Bulgaria and other countries. And they depend on who is willing to cover the costs associated with military support to Kiev. Experts also say that Europeans increasingly demonstrate a sense of weariness about the consequences of the war and the news about it. As of June, about half of Italians protested against sending weapons to Ukraine. Even in Poland, which has been known for its strong support for the cause of the Ukrainian war, the public community is complaining about the government favouring Ukrainians over its own people in resolving some issues, especially the social ones.

Political and other problems are most often exposed during the times of crisis. Grappling with a number of serious challenges, Europe is likely to learn lessons about itself and its unity in the future. As a consequence, the EU cannot help but change. There are many questions to be answered and important conclusions to be drawn. As once expressed by Friedrich Nietzsche, "What does not kill us makes us stronger!”. Let's hope that this principle comes true for the European Union as well.