On Friday, EU leaders will discuss how to respond to rising energy prices and the threat of a complete shutdown of Russian gas supplies, accusing Moscow of “weaponizing energy” through supply cuts that Germany has warned could partially halt its industry this winter.
A day after the celebrations that Kyiv had embarked on the path of membership in the bloc, Friday’s summit in Brussels was supposed to be a sober reflection on the economic consequences of Russia’s invasion of Ukraine.
The leaders of the 27 countries of the European Union, according to a draft summit statement seen by Reuters, will blame the price spike and global slowdown on a war that began exactly four months ago.
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After unprecedented Western sanctions imposed in connection with the invasion, a dozen European countries have suffered from the reduction of gas supplies from Russia.
“It’s only a matter of time before the Russians cut off all gas supplies,” one EU official said ahead of Friday’s talks.
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German Economics Minister Robert Habeck has warned that his country will face gas shortages if Russian supplies remain as low as they are now and some industries have to shut down over the winter.
“Companies would have to stop production, lay off their workers, supply chains would collapse, people would go into debt to pay their heating bills,” he told Der Spiegel magazine, adding that this is part of Russian President Vladimir Putin’s strategy to divide the country. .
Before the war, the EU depended on Russia for up to 40% of its gas needs, and in the case of Germany this figure rose to 55%, leaving a huge gap to fill an already cramped global gas market.
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“Armament of gas”
According to a draft statement seen by Reuters, EU leaders will say that “in the face of Russian weaponization of gas,” the European Commission must find ways to ensure “affordable supplies.”
EU countries have already invested billions of euros in tax cuts and subsidies to combat rising energy prices.
But this results in huge bills for an already stretched treasury, leaving many scrambling to find a solution and EU countries divided over a bloc-wide solution to the price spike.
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Spain and Portugal capped gas prices on their local electricity markets this month, but other states warn that price caps could disrupt energy markets and further drain public coffers if governments have to pay the difference between the price set and international gas markets. .
“We need to start buying energy collectively, we need to impose price caps, and we need to make plans together to get through the winter,” Belgian Prime Minister Alexandre de Croo said on Friday, arriving for an EU summit.
“If we do not pay attention to this, the entire EU economy will plunge into recession with all the ensuing consequences.”
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The bloc has responded to the war with uncharacteristic swiftness and cohesion, but some sanctions, such as a planned embargo on Russian oil imports, have consequences for its economy.
Inflation in the 19 euro-using countries hit a record high of over 8%, and the EU chief executive expects economic growth to slow to 2.7% this year.
Eurogroup chief Pascal Donoghue warned that the bloc must “recognize the risk we could face if inflation takes root in our economy.”
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“If inflation becomes a real, sustainable part of our economy in the coming years, the challenges we face in terms of living standards and cost of living will only grow in the coming years. It’s a very difficult task.”
Rome has urged EU leaders to reconvene for an exceptional meeting in mid-July to discuss ways to tackle rising gas prices, but there is no plan at the moment, an EU official said.
However, another EU official said some EU leaders are considering holding an additional summit in July to discuss broader economic issues.
(Reporting by Phil Blenkinsop, Marin Strauss, Bart Meyer, Francesco Guaracio, Kate Abnett, Jana Strupczewski; additional reporting by Miranda Murray in Berlin, Gianluca Semeraro in Rome; text by Jan Strupczewski, Phil Blenkinsop and Ingrid Melander; editing by John Chalmers, Sam Holmes and Alex Richardson)