in the Europe the yes save who can is triggered. And anyone who can do it for sure is there Germany. In exchange for expensive gas, Berlin has decided to allocate the stratospheric sum of 200 billion euros to protect its businesses and families from the perfect storm to hit their bills. Berlin can do that, it was said, because it has low debt and orderly public finances. It can be financed on the markets at very favorable conditions. But the decision to go his own way, as he did at the beginning of the financial crisis in 2008, which began with the bankruptcy of Lehman Brothers, breaks the unity of action of the countries of the old continent that had been painstakingly built up during Covid.
MORE INFORMATION
The irritation in the European capitals is great. Mario Draghi made it clear, as did Giorgia Meloni.
Brussels also struck. “We cannot believe that in the face of a crisis of this kind that affects everyone,” said Economy Commissioner Paolo Gentiloni, “everyone will answer for themselves, perhaps their own budgetary space measured by their own fiscal space.” That’s the logic we’ve avoided during the pandemic.”
The concern is that the ‘community method’, in which the Commission proposes joint action and then governments negotiate, will end up in the trash. And you already had an idea yesterday. Although 15 countries had sent a letter to the (German) President of the Commission, Ursula von der Leyento persuade them to put forward a proposal for a cap on the price of gas, nothing has happened. The reasons are no secret. In addition to Germany, which fears supply shortages, other countries such as the USA are on the vergeHolland, which is reaping huge profits in the wake of sanctions on Russia and the energy war by hosting Ttf, the European methane exchange. even there Norway it got in the way of the administered methane price. She is not a member of the Union, but the founder of the Atlantic Alliance, which Secretary General Jens Stoltenberg also commented on. Since the start of the war, the Scandinavian country has become the EU’s top gas supplier, overtaking Russia, whose pipeline supplies have risen from 40% to 9% of imports from the old continent in just a few months.
In 2022, Oslo increased production and sent nearly 80% of its total methane exports to the EU. A notable increase that has boosted energy sector profits thanks to record gas prices in Europe: according to the national statistics office, methane exports reached around 77 billion euros in the first eight months of the year, 315% more than in same period last year. So the roof to Norway is simply not worth it. And peace when inflation dies down and the families of much of the old continent have unsustainable bills to pay.
The same applies to yourself Spain and Portugal. The two countries got an important concession from the European Commission in the spring: since their gas distribution network has very little connection to the rest of the continent, they – long before the possibility for all of Europe was discussed – what has only been the case for a few days – the possibility of developing a national cap for retail gas prices, with the state of course covering the difference between administered costs and the “cap” set by it of 50 euros per megawatt hour Madrid and Lisbon. There are also arguments about sanctions and loopholes are sought, since unanimity is required for their approval. Even with the last package, the negotiation could be insidious: On the one hand, the draft concerns everyday products (from toilet paper to detergent), on the other hand, it saves one that seems to be rather dispensable, namely the diamonds.
Despite the pressure these days, indeed Belgium it’s already in the way: Before the war, it imported Russian diamonds worth around 2 billion euros. Brilliant diamonds ending up in Antwerp, the European capital of the industry, from which it is estimated that 9 out of 10 precious commodities come off.
Whoever risks being left without a life jacket is the oneItaly. To deal with the high bills, the Draghi government had to allocate over 60 billion this year. Thanks to the good development of public budgets, it was able to do this without running a deficit. But now the tide has turned. Frost is expected next year. The economy will slow down to 0.6 percent. If Moscow cuts the gas altogether, there will be stagnation. Financing on the markets is becoming more and more expensive for Rome. Already this year she has to pay almost 12 billion more in interest. Without budget variances, there is no fiscal space for family and business relief efforts. Not only. If Rome tried to “break” the deficit and shake hands, it would risk a crisis similar to the one England is going through after announcing a maxi plan of $45 billion worth of tax cuts on the exchange rate. Except that for Italy the penalty would risk reaching the debt. As if that wasn’t enough, the governor of the central bank Christine LagardeHe has already made it clear that without the accounts in order, he would not open the anti-spread screen. In short, Rome risks ending up on the corner, where families struggle with very expensive bills and companies disappear from the market compared to Germany’s, which are “subsidized” with 200 billion in aid.