The Deep File: The Political Impacts of Europe's Energy Crisis
In which, the one-two punch of war in Ukraine and draconian energy transition policies set Europe on a path of political upheaval.
Apologies, folks, this was supposed to go out much sooner, but I don’t want to let another month slip by without sharing this (and several other) Deep Files as September and October were significant months in world politics.
September 2: Europe’s emerging energy war
Between crazy weather, an impending energy crisis, and war in Ukraine, Europe has had a very rough summer, and the political effects are being felt as elections appear on the horizon. In Italy and Serbia, conservative movements are mobilizing on multiple fronts, while national governments like Germany and the Czech Republic are under pressure to do something about spiking energy prices.
In Brussels, the European Parliament is being riven by debates and criticism surrounding EU climate policy that poses a major threat to agricultural production in the region and fueled the Dutch farmer protests earlier this summer. While it tries to quiet dissension in its own ranks, the EU is moving forward with a plan to train the Ukrainian military in a significant step forward for the bloc in terms of its Ukraine involvement. However, we’ll see how long that lasts. A winter without Russian energy is likely to put a lot of pressure on individual European countries (especially Germany) to soften their stance.
Some softening may have already begun as an initial plan to ban Russian tourists to EU member countries was significantly narrowed in scope.
Meanwhile, Ireland is the latest country to consider joining NATO.
In Ukraine, the anticipated Ukrainian offensive around Kherson kicked off this week as Russia feverishly works to deploy a new shipment of Iranian drones to the battlefield.
September 9: Europe’s “cap and (don’t) trade” energy nightmare
The impending doom of climate change in the early years of this century gave rise to the proposed policy of “cap and trade” by which regulatory bodies within countries sought to put a “cap” on emissions while allowing businesses to earn credits for reducing emissions that they could “trade” with other businesses who may have exceeded their assigned cap.
The policy has been used both in the US and Europe with some success… until now.
Europe’s cap and trade policy was premised on easy access to cheap natural gas from Russia. Now, with winter coming on and the EU scrambling to disentangle itself from Russian energy exports in an inflationary economy, “cap and don’t trade” seems to be the needle the EU is trying to thread. While still seeking to hit emissions targets, European countries are scrambling to claim as much energy resources as they can. Scarcity, both market generated and policy created, is spiking energy prices, which has governments in Europe looking to impose more caps: caps on energy use and energy bills, that is, which of course requires government debt financing, which contributes to inflation, which is partly why the European Central Bank just raised interest rates to a 20-year high.
Russian realpolitik and European naivety have combined to create an energy nightmare for Europe as winter approaches, and this context of energy shortages, soaring costs, and rising inflation (we saw this dangerous combo of factors in Sri Lanka just a few months ago) forms the context in which anti-EU conservative parties stand to make gains in coming elections and threaten cooperation within the EU bloc as well as European unity against Russia.
Three weeks later…
September 30: Giorgia Meloni
As anticipated, Italians went to the polls last Sunday and swept Giorgia Meloni and her conservative party into power.
Meloni becomes Italy’s first female head of government at a moment of unprecedented political flux and instability in Europe (see below). Were it business as usual in the EU, the election of the eurosceptic populist would raise eyebrows in Brussels, but would probably still be celebrated as a win for advancing women in politics in Italy and Europe.
But it’s not a business as usual year in Europe, and it hasn’t really been a business as usual decade. From the sovereign debt crisis of 2009 to Brexit to Orbanism in Hungary to Covid to Russian military adventurism and related energy crises it is far, far from business as usual (though at this point, maybe we should consider “crisis management” to be “business as usual”). So, EU leaders are spooked at the prospects of yet another conservative, euro skeptical leader, this time in Europe’s third largest economy.
The possible unpredictability of a Meloni government has not made Meloni friends in either Europe or America’s mainstream press where references to Meloni as “fascist” and “extreme far right” abound.
Interesting side note, I asked my students this week if anyone had read anything about Meloni’s political philosophy or her party's platform. No one had and neither had I, but we all knew what label we were supposed to apply to her and her party’s ideology: facsism, extreme, radical, far right. That’s the new power of the press, folks.
Europe’s autumn of discontent
Europe’s energy crisis and the race to winter has been discussed in this space quite a bit, and I’ve noted that between the war in Ukraine and the related energy crisis, Europe could be on the verge of significant political shifts.
The election of Giorgia Meloni in Italy is certainly just such an indicator, but in other countries like the Czech Republic, anti-EU sentiments are now merging with anti-NATO sentiments, which could further destabilize the region.
In France, a general strike is under way as workers get pinched by rising costs and anticipate a still more difficult winter.