When the milk ran out in Madrid, Pedro Sánchez put it all on the same card in Brussels. It must have been clear to him that he shouldn’t go home from this EU summit empty-handed, because the air there was slowly getting thin for him. After months in which families in Spain, but also more and more businesses, groaned under rising electricity prices, two weeks ago truck drivers also went on strike over high gasoline prices.
In Spain, a movement not unlike the French Yellow Vests has begun to form, even if the protests so far have remained largely peaceful. Dissatisfaction with rising energy prices makes socialist Sánchez find it difficult to explain himself. The war in Ukraine is not enough for many Spaniards to suddenly have to pay much more for electricity, heating and gasoline. Sánchez was running out of time and kept putting people off: he wanted to talk to his European partners first. The EU summit must bring the solution.
Sánchez bet big on Friday in Brussels. It is even said that he dismantled a joint meeting of all heads of government. The newspaper El País has meanwhile published a meticulous reconstruction of the events of last Friday. “I can’t go on like this,” Sánchez reportedly said. And in the end, they may have made it clear that it was all about Spain and Portugal. In any case, the two countries have given up a historic exception: in the future, they will be the only member countries to temporarily limit their electricity prices.
Chancellor Olaf Scholz seemed almost grateful when he told Spanish journalists after the summit that Pedro Sánchez had “successfully defended the interests of his country”. But the chancellor could not be satisfied with that, he did not hide his “skepticism” about the outcome of the negotiations. Because Sánchez’s triumph in Brussels means a defeat for the German and Dutch negotiating positions. Both countries spoke out vehemently against interventions in the electricity market.
For Spain and Portugal, however, the situation is different from Central Europe: both countries already generate a large part of their electricity with renewable energies. In the case of Spain, they represent 47% of electricity production, while 15% are generated from natural gas. The two countries of the Iberian Peninsula would therefore have preferred that the price of electricity be decoupled from the price of gas. Because every increase in the price of European gas is also immediately reflected in Spain in a massive increase in the price of electricity.
In addition to milk, toilet paper is also becoming scarce – the reasons are more psychological
But a decoupling could not be imposed in Brussels. Hence the Iberian exception, which the president of the Commission Ursula von der Leyen also justified after the summit with the fact that both Spain and Portugal are in a very special situation because they are hardly connected to the European electricity grid. In fact, Spain’s foreign exchange capacity is only three percent. It’s as if the Pyrenees form an impassable barrier – not to strawberries, cucumbers and tomatoes, but to electricity.
After the support of von der Leyen, Sánchez is confident that his plan to cap electricity prices will work. He has to present it to the committee for consideration in a few weeks. Back in Madrid, the head of government is now full of energy: this Monday, Sánchez announced an “emergency plan” in response to the economic consequences of the war in Ukraine. This support totals €16 billion, of which €6 billion goes directly to both individuals and the economy as aid and tax incentives. The price of fuel will be reduced by 20 cents, the short-term work allowance tested during the pandemic will be maintained and rent increases will be temporarily capped at two percent. Sánchez also wants to increase the basic income he introduced, a kind of social assistance, by 15% over the next three months and support up to 1.9 million households with electricity vouchers.
Will this calm the social upheavals in the Spanish middle class? Truckers, who had already been promised relief of 20 cents per liter of fuel and direct aid of 450 million euros on Friday, described it as “crumbs and peanuts”. Sánchez said that with this package, the industry alone will receive €1 billion in aid. But the strike platform, which mainly represents small independent shippers, is demanding a relief of at least 60 cents a liter and has announced that the strikes will continue.
This threatens to exacerbate the supply crisis. In recent days, more and more shelves in Spain’s supermarkets have remained empty. Milk and fruit, in particular, are becoming scarce. Some dairies had to close because they couldn’t get any more milk, and farmers dumped millions of gallons that shippers didn’t pick up. As yet another symptom of the supply crisis, many Spaniards have apparently also started hoarding toilet paper. The reasons for this, according to an expert from El País, are more psychological.