Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Europe’s war economy gets real

Europe’s war economy gets real

Solidarity with Ukraine is forcing EU countries to face gas rationing as Russia cuts supplies.

At the last scheduled meeting of European commissioners before the summer recess on Wednesday, Brussels technocrats will attempt their most far-reaching power grab yet seen in 2022: the right to impose mandatory gas rationing on the bloc's 27 member countries.

As citizens from Portugal to Poland swelter and perish in record-breaking heat, their governments are being asked to sign over their right to energy sovereignty in six days. The measures are being rushed through using emergency protocols, which mean no country will be able to veto the plan and the European Parliament will have no say.

Such extraordinary steps show just how close European countries have come to the edge of what is viable as a consequence of their actions to support Ukraine against Russia's invading forces. With inflation already spiking across the region, in part driven by war-induced market disruption, the EU's fight with Russia over gas is set to test the bloc's resolve to the limit. The economic hit may only just be beginning.

Documents obtained by POLITICO detail the blueprint for an EU-wide alert mechanism that would allow Brussels to decree mandatory gas consumption cuts from August to May. The cuts could "be triggered at any moment" if it appears that gas supplies will not be available to see the bloc through winter.

Countries will also have to update their national emergency plans with voluntary measures to cut gas use by the end of September, under the proposal.

There's no set figure yet for the size of the cuts to gas consumption that could be imposed. But according to two diplomats, a reduction of between 5 and 20 percent is being floated, with the expectation of a final agreement in the range of 10 to 15 percent.

Aerial view of the receiving station for the Nord Stream 1 natural gas pipeline set near Lubmin, Germany


By July 26, when EU energy ministers are expected to rubber-stamp the new rules, Europeans could wake up to find themselves forbidden from indiscriminately blasting the air conditioning or, as temperatures drop in the coming months, turning up the heating too high.

Businesses deemed “nonessential” — which Commission documents suggest could mean the ceramics, glass and chemicals industries, but in some municipalities like Munich include local bakeries — could be paid to power down voluntarily, or find themselves first in line for a gas cut in extremis.

All this is being proposed in the name of the EU's campaign of solidarity with Ukraine.

Five months into Russian President Vladimir Putin’s full-scale invasion of his eastern neighbor, a war economy — with all its consequences — is finally set to descend upon Europe.


Don't touch the gas


In a bid to stymie the advance of Putin's armies, Brussels sought to deprive the Kremlin of billions in revenue from natural gas sales by voluntarily slashing Russian gas consumption in the EU by two-thirds this year.

That didn’t work, and EU countries made clear that they weren't willing to sanction gas, even as an oil embargo is set to kick in this December.

It's likely too late now: Data from the International Energy Agency (IEA) released Monday show that since the invasion, Moscow has already earned triple what it normally does from oil and gas sales in a single winter, meaning it can afford to keep cutting deliveries westward to Europe.

Putin has enthusiastically embraced Europe's weakness for Russian energy, turning gas into his most potent economic weapon. So far, 12 countries have had their gas supplies reduced or cut off by Russia's Gazprom. Brussels is now scrambling to regain control by slowing down consumption of Europe’s gas storage stocks while it can.

With leaders' efforts to seek alternative supplies from the Middle East largely failing, coal stations are firing up again across the EU, factories are switching to burning fuel oil, and a suspension of climate policy on emissions control is in the works.

The clock is ticking: On Thursday, the Russia-to-Germany gas pipeline Nord Stream is set to partially resume deliveries after a 10-day hiatus. National leaders in France, Germany and Spain say the most likely scenario is that Nord Stream stays offline — with Russian gas flows through other routes into Europe also expected to be halted imminently.

"We’re working on the assumption that it doesn’t return to operation,” European Budget Commissioner Johannes Hahn told reporters in Singapore Tuesday, according to the Wall Street Journal.

European Commissioner for Budget and Administration Johannes Hahn delivers a speech during a debate on General budget of the European Union for the financial year 2022 at the European Parliament in Strasbourg, eastern France in 2021 Pool


If Hahn is right, the long-term outlook will be dire. Commission estimates indicate a 1.5 percent drop in GDP across the bloc if Moscow stops delivering natural gas.

To weather such a hit once temperatures drop, "the extra gas that needs to be saved over the next three months is [on] the order of 12 billion cubic meters — enough to fill about 130 [liquefied natural gas] tankers,” said IEA Director Fatih Birol.


Bailing out Germany?


Yet already, some of the loudest voices who called for punishing Russia with sanctions are now gnashing their teeth at the Commission's latest plan. Belt-tightening at home to bail out gas-guzzling neighbors such as Germany is not popular in parts of Eastern Europe.

Berlin is one of the few capitals that has signed so-called solidarity agreements, in which neighboring countries promise to share extra gas in crises. The Commission has urged countries to sign more — but some are wary of these voluntary arrangements being enforced with binding cuts at home if there’s not enough to go around.

"We are against imposing mandatory reduction targets," said Polish Climate Minister Anna Moskwa, whose country is now facing the looming possibility of a domestic coal shortage in the wake of sanctions on Russian imports. Poland does not have solidarity arrangements with any of its neighbors, according to Commission records, but Moskwa was nonetheless adamant that “the solidarity mechanism must not lead to a reduction in the energy security of any member state.”

Hungary has gone further already. Viktor Orbán's government has announced that its new energy emergency plans will forbid gas from leaving its borders beginning in August — provoking a sharp rebuke from European Energy Commissioner Kadri Simson.

"Individual national restrictions affecting gas cross-border flows are unwarranted and can only exacerbate problems in the current gas market situation," Simson warned.

In Spain and Portugal, governments are already partially subsidizing the cost of gas used in electricity — and watching France import all the cheap power it can. Spanish skeptics point out that saving gas at home won't help their French neighbors much, given limited gas interconnections between the two countries.

“We are in a situation where one needs to decide in the best possible way how to allocate resources,” said Georg Riekeles, associate director at the European Policy Centre, a think tank. “It’s very difficult to completely socialize or mutualize the cost of the crisis when the choices that are conditioning [the current situation] have been national.”

One EU diplomat acknowledged that imposing fuel rationing on EU countries would be unthinkable in normal times, but given the winter risks, “we cannot exclude any option.”

Another diplomat was more direct: "We don't like it at all."

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
German Finance Minister Criticizes Trump’s Attacks on Institutions
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
OpenAI’s Bold Bet: Teaching AI to Think, Not Just Chat
U.S. Tariffs Surge to Highest Levels in Nearly a Century Under Second Trump Term
Ong Beng Seng Pleads Guilty in Corruption Case Linked to Former Singapore Transport Minister
BP’s Largest Oil and Gas Find in 25 Years Uncovered Offshore Brazil
Italy Fines Shein One Million Euros for Misleading Sustainability Claims
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
Declassified Annex Links Soros‑Affiliated Officials and Clinton Campaign to ‘Russiagate’ Narrative
UK's Online Safety Law: A Front for Censorship
Parents Abandon Child at Barcelona Airport Over Passport Issue
Bus Driver Discovers Toddler Hidden in Suitcase in New Zealand
Switzerland Celebrates 734 Years of Independence Amid Global Changes
China Enforces Comprehensive Ban on Cryptocurrency Activities
Grok 4 Video plus Voice, can identify wildlife!
George Soros tells the World Economic Forum: "President Trump is a con man and the ultimate narcissist, who wants the world to revolve around him."
Hamas are STARVING the hostages.
The UK Does Not Have a ‘Far-Right’ Problem
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
WhatsApp Users Targeted in New Scam Involving Account Takeovers
JD Vance Warns Europe Faces “Civilizational Suicide” Over Open Borders and Speech Limits
Germany Enters Fiscal Crisis as Cabinet Approves €174 Billion in New Debt
Trump Administration Finalizes Broad Tariff Increases on Global Trade Partners
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
×