EU - what's next?

kondo wrote:Potresno je što je Putin odložio napad na Ukr za posle Merkelinog odlaska u mirovinu. Govori mnogo.

Game, set, and match to France - the new master of Europe
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12 April 2022 • 2:00pm
Ambrose Evans-Pritchard

The war in Ukraine and the interlinked energy shock have revealed the deep strategic strengths of France. Geopolitics has lifted the weight of Paris in European affairs, and diminished Berlin in equal measure.

The French have a credible energy system, however imperfect. They have an agro-industrial core that acquires strategic value in the impending global food crisis. They have armed forces worth the name, and a nuclear deterrent capable of striking at every level.

The Germans lack all of this. It is becoming ever clearer that 16 years of depressed public investment and clammy mercantilist reliance on Russia and China under Angela Merkel have degraded the country, leaving it floundering as the world reverts to its eternal Hobbesian character.

This reshuffling of fortunes has little to do with Emmanuel Macron. The same structural strengths would come through under a President Le Pen, who would not leave Nato, whatever nonsense she uttered before Putinism went out of fashion.

It is happening as Germany’s demographic crunch starts in earnest. Berlin expects the workforce to peak next year and then to decline by 5m over the course of the 2020s, pushing the old-age dependency ratio above 50pc. France (like the UK) is on a very different trajectory.

As Putin’s war pushes the UN’s food price index to a record high, the Élysée is seizing on the moment to derail the EU’s "farm to fork strategy", a set of measures that spell the end of the old Common Agricultural Policy and its mega-subsidies for French agro conglomerates.

The reforms pushed by German and Nordic greens aim to halve the use of pesticides and raise the organic share of produce to 25pc by 2030. It pushes an ethos of sustainable farming with less use of animal feed.

President Macron has other plans. “It was based on a world before the war in Ukraine, and would cut production by 13pc. These objectives must be reviewed. In no circumstances can Europe contemplate producing less,” he said.

That loss of 13pc is disputed. It skips over the science showing that status quo industrial farming erodes the soil and is untenable. But ecological objections are being swept away by the new refrain of European agricultural sovereignty.

“Since Russia is using food security as a weapon, we must counter it with a food shield. A paradigm shift is needed in the way Brussels thinks about agriculture,” said the powerful French farmers lobby FNSEA.

Brussels is bending to pressure from the agrichemical multinationals. It has delayed the revised directive on sustainable use of pesticides, and another on ecosystems.

It is a parallel story on the energy front. The worst gas crisis in living memory has finally ended the era when Germany could export its anti-nuclear ideology through EU regulations. Berlin has been unable to stop France labelling nuclear power a form of clean energy under Europe’s €1 trillion Green Deal. This unlocks large investment flows.

Putin has rehabilitated France’s nuclear industry, which still provides 70pc of its electricity. The network was in trouble earlier this winter when a fifth of its 56 reactors were shut for safety reasons, and France had to fire up two old coal plants to avoid blackouts.

It is still in trouble, of course. The first Hinkley-style reactor at Flamanville has been delayed again until 2023, 12 years late and four times over budget.

State-owned EDF expects a €26bn hit this year, partly because it is being forced to provide energy below market prices to help Mr Macron’s re-election. It will need a state bailout, so this consumer subsidy is disguised taxation.

Nevertheless, France’s nuclear power has proved to be a strategic buffer at a time of crisis, valued as Europe tries to slash dependence on Russian hydrocarbons.

It is Germany that is struggling to explain why it closed three well-functioning reactors in January, and why it plans to close the last three later this year, yet still insists that a gas embargo against Russia is too traumatic to contemplate.

France has the landmass and latitude to roll out a huge expansion of solar power at viable cost. Macron is pushing for a tenfold increase to 100 gigawatts and has ordered a fast-track planning process to end “intolerable delays and barriers”.

French solar is likely to prove the cheapest form of mass energy in core Europe and could turn France into the backbone of the EU’s electrification strategy, along with British offshore wind.

The state agency Cerema says it is technically possible to install over 1,000 gigawatts in France on parking lots, on brownfield sites, and along rail and road margins, as well as on rooftops, without encroaching on farmland.

As for the balance of military credibility, the war in Ukraine has exposed the full damage left by 15 years of German penny-pinching and disarmament.

Defence minister Christine Lambrecht admitted this week that the Bundeswehr has exhausted its stocks and cannot ship more weapons to Ukraine without endangering Germany’s ability to defend itself. “I have to be honest, we have now reached a limit,” she said.

Macron has hardly covered himself with glory since the onset of the Ukraine crisis. He scoffed at US and UK warnings that Russia was poised to attack. He became Putin’s useful idiot in early February, falling for assurances of “de-escalation” and becoming a conduit for tactical disinformation.

He has continued to legitimise Putin by talking to him promiscuously. He has sent Milan anti-tank weapons to Ukraine but so far only in modest numbers. One almost has the impression that Macron’s policy, like that of Chancellor Olaf Scholz, is to nudge the Ukrainians into early capitulation to be done with the problem.

But France is indisputably the EU’s paramount military power, and the shock of full-blown Russian aggression has turned this into gold dust at Europe’s top table.

The spoiler for France’s rising fortunes is that the country is on a trajectory of slow fiscal ruin with arguably the highest structural deficit in the OECD. Its public debt has reached Club Med levels of 116pc of GDP, up 18 points since the start of the pandemic. The debt-gap with Germany has widened to 50 percentage points.

But this loses relevance once Paris gets its hands on Berlin’s credit card through a permanent EU “fiscal entity”, a euphemism for a Hamiltonian EU treasury able to raise debt collectively.

French hopes of turning Europe’s €800bn one-off Covid Recovery Fund (actually nothing to do with Covid) into an irreversible debt union was going nowhere a few months ago. Putin has come to the rescue.

There is a rising chance that it will be beefed up and repurposed for the cause of energy solidarity. Brussels is exploring options for some sort of Ukraine Fund (which will have nothing to do with Ukraine) to keep the game going for joint EU debt issuance, until it becomes irreversible practice by the Monnet Method of creepage.

If so, chapeau, mes amis. Or as we say: game, set, and match to France.


https://www.telegraph.co.uk/business/2022/04/12/game-set-match-france-new-master-europe/

Vol. 44 No. 10 · 26 May 2022

Germany Inc.

Jan-Werner Müller on Europe after the invasion

In​ 1990 the heavy metal band Scorpions released ‘Wind of Change’, a song celebrating the end of the Cold War: ‘The future’s in the air/Can feel it everywhere.’ It also contained the hopeful lines: ‘Let your balalaika sing/What my guitar wants to say.’ It turns out, though, that they had it the wrong way round: it is Putin who calls the tune to which European leaders dance. Fittingly, the Scorpions come from Hanover, home base of Gerhard Schröder, the pre-eminent example of a particular kind of post-Cold War politician: devoted to making serious petro-money while serving as living proof for Putin’s claim, unfailingly delivered with a smirk, that the West is hypocritical – and, by implication, no less corrupt than his own regime. The war on Ukraine has made it clear to everyone that something has gone wrong in the decades since the fall of the Wall. But it’s the German model of politics in particular – hard-nosed pursuit of economic advantage combined with high-minded moralising – that faces a fundamental reckoning.

Spoiler:

Europeans will need to pay a “national security premium” in the future as they unwind their dependence on cheap Russian gas and Chinese labor @vestager tells @handelsblatt https://t.co/Km78XK8s6y

— Noah Barkin (@noahbarkin) May 25, 2022

Bugarska traži objašnjenje: Neke zemlje drugačije tretirane?

Sofija -- Potpredsednik bugarske vlade i ministar finansija Asen Vasilev zatražio je objašnjenje od Evropske komisije.

Naime, on je pozvao EK da objasni da li su neke zemlje drugačije tretirane od strane Gasproma u odnosu na druge zemlje članice EU, prenosi BNR radio Bulgaria.

To se dogodilo nakon što je saopšteno da su sve grčke kompanije, uvoznici ruskog gasa, prešle na plaćanje u rubljama.

Vasilev je izrazio rezerve i prema finansiranju koje je EK predložila zemljama članicama kako bi nadoknadile ekonomske gubitke od sankcija Rusiji.

EU admits impact of 2/3 Russian gas cut ‘not assessed’
By Margherita Montanari, Oliver Noyan, Sarantis Michalopoulos and Vlad Makszimov | EURACTIV.de and EURACTIV.it

The European Commission has not conducted an economic impact assessment of its push to cut Russian gas imports by two thirds by year’s end, the first step of its €300 billion plan to eliminate Russian energy imports altogether by 2027, EURACTIV has learned.

Instead of an assessment, the Commission conducted a “simulation” in its spring economic forecast that considers the impact of an abrupt stop of imports of any Russian gas.

“Compared to an abrupt stop of Russian gas imports, a gradual reduction by 2/3 would be much smoother, as firms and consumers would have the time to prepare, and governments could secure critical infrastructure for alternative imports,” a Commission spokesperson told EURACTIV.

Germany sneezes

However, businesses across the bloc are wary of the coming economic fallout from the move.

Since the onset of the war in Ukraine, Germany reduced its reliance on Russian gas imports, amounting to more than half of all gas imports, by around 35%.

By the end of the year, Berlin plans to further reduce imports to 30% of its overall gas imports, almost half of what it imported last year.

However, the diminished dependency achieved so far is partially driven by a decrease in demand from German industry.

“Due to the rapid increase in gas prices, the demand for gas is falling incessantly anyway, by up to 10% in the industry in the first months of the war alone,” Claudia Kemfert, head of the department for Energy, Transportation and Environment at the German Institute for Economic Research (DIW) told EURACTIV.

Meanwhile, German businesses are critical of the Commission’s plan to reduce Russian gas imports by two thirds until the end of the year.

“The strong will and the plan of the EU Commission to cut off the money supply to Russia by means of an energy embargo will not pass companies by without a hitch,” Marc S. Tenbieg, Executive Director of the German Association for Small and Medium-sized Enterprises (DMB) told EURACTIV.

Even if an alternative to Russian gas imports were to be found, a gas embargo “would not only lead to considerable additional burdens on the German economy in the short term, but also to compensation demands on the part of companies,” he added.

According to Tenbieg, the European Commission’s plan to reduce Russian gas imports is wishful thinking.

“While a reduction of this magnitude is certainly possible with a very great effort, it is not possible in the short time available,” he said.

“Unfortunately, what has led to energy dependency over decades cannot be dissolved within a few months,” Tenbieg added.

However, analysts are convinced that such a reduction is tenable under certain conditions.

“It is possible to reduce Russian gas imports and that they can even be dispensed altogether,” economic expert Kemfert told EURACTIV. Germany would have to increase LNG imports, fill up gas storages, introduce measures to save gas, and invest heavily in renewable energy to reach this goal.

Cutting Russian gas could lead to losses of up to 5% of the gross national product in Germany and considerable negative repercussions in other European countries.

Economic performance is falling even without the Commission’s push for an accelerated phase-out of Russian gas “due to the very strong overall increase in prices for fossil energies and the associated inflation,” Kemfert emphasised.

“The better and more intensively we prepare for a gas embargo, the smaller the negative effects on the national economy,” the economic analyst stressed.

Cold water on Italy’s growth

Other big European economies might be even harder hit.

Italy’s GDP growth slowdown will be more evident than in the rest of Europe due to the country’s energy and economic ties with Moscow, said Economy Commissioner and former Prime Minister Paolo Gentiloni at the Italian banking association (ABI) in Rome on Monday.

Following Confindustria’s economic forecasts in case of a possible Russian gas shutdown, Gentiloni said he expects “a significant impact on growth prospects this year, especially for a country like Italy that is among the largest importers of Russian gas in Europe.”

“In a worst-case scenario that simulates the impact of higher energy prices for a longer period, along with a complete halt in gas supplies from Russia, would give negative growth for this year”, he added.

Gentiloni recalled that the European Commission forecasts Italy’s economy to grow 2.4% in 2022 and less than 2% in 2023.

Gentiloni also repeated the Commission’s call on countries to adopt more “cautious” policies as Brussels has halted the bloc’s fiscal rules until the end of 2023. High-debt countries like Italy “need to have special attention to public finance in these circumstances,” he added.

Gas is off the table

After weeks of intense talks and disagreements, late last night, EU leaders finally reached a political agreement to impose a partial oil ban on Russian oil.

A move to ban Russian gas too is “realistically off the table”, an EU diplomat told EURACTIV yesterday.

“If there was such a mess with Russia’s oil, imagine what would happen with a proposal to ban gas”, another diplomat representing a southern EU member state told EURACTIV on 17 May.

“The 7th package of sanctions against Moscow will be extremely difficult […] We are very close to reaching our limits. What will the 7th package include?” the diplomat wondered.

https://www.euractiv.com/section/politics/short_news/russian-gas-cut-eu-economy-enters-uncharted-territory/