The Heads of State and Government of the European Union (EU) are meeting this Thursday and Friday in Brussels at a decisive summit for the resolution of the energy crisis that has been hitting the economies in recent months, but which has worsened as a result of the Russian invasion of Ukraine. The Spanish Government, which has been demanding for weeks “a common and ambitious response” to the frenetic increase in gas and electricity prices, entrusts everything to the package of measures that comes out of this conclavebecause the shock plan that he will present next March 29 to alleviate the discontent of the street will depend on it.
It will be a marathon conference that will begin with a meeting this Thursday afternoon with the president of the United States, Joe Biden, who will attend the meeting in person. Subsequently, the presidents of the European Council and the European Commission, Ursula von der Leyen and Charles Michel, together with the rest of the European leaders, will address the issue of Ukraine, in a discussion in which Mr. Ukrainian leader Volodymyr Zelensky.
At the last meeting, just two weeks ago, the Twenty-seven cooled down the chances of a rapid accession of Ukraine to the EU. Although on this first day another package of sanctions against Russia is expected to be agreed. As announced by the White House this Wednesday, they would be Russian oligarchs and parliamentarians.
On Friday, the most anticipated debate will arrive, that of energy, although security and defense or other issues such as COVID-19 and its impact on economies will also be discussed. The European heads of state and government start divided in what is the ideal recipe to put a stop to the escalation of gas and electricity: Spain and the southern countries defend imposing price caps, while Germany, the Netherlands and the Nordics maintain their frontal opposition to any intervention in the electricity market.
The Commission proposes to “limit the prices of electricity and gas”
At the moment, the European leaders only agree to promote the joint purchase of gas for next winter, as they agreed at the informal meeting in Versailles (France). Then, they urged the European Commission to present a plan “to guarantee security of supply and affordable energy prices”, although they did not give more details.
The organization directed by Von der Leyen has done its homework and this Wednesday has published a document with five measures to try to reduce energy prices in the EU in the short term and on a temporary basis, while he finalizes a long-term review of the electricity market that he hopes to have ready by April. Among other measures, it proposes putting a cap on the price of gas in the wholesale market, compensating production costs of companies that generate electricity with fossil fuels, redirecting “profits from heaven” to consumers or setting a maximum price for companies operating in the wholesale market.
These will be the proposals that the Member States will analyze this Friday, in what is expected to be a marathon day that could last even into the early hours of Saturday. It should be remembered that the last decisive European Council, held in July 2020 and which ended with the approval of the Recovery Plan, began on a Thursday and lasted until early Monday morning due to the differences between countries.
The Twenty-seven leave divided
On this occasion, nor will it be easy to reach a common position, since there are still deep differences between the countries on the response that the bloc should give to the escalation in energy prices. On the one hand, there are the southern countries, led by Spain and joined by Belgium, who are pressing to put a cap on energy prices and decouple electricity from gas. Opposite this plan are others such as Germany, the Netherlands or Denmark, which prefer to “accelerate energy efficiency measures, the implementation of renewables and interconnections”.
The Spanish Government maintains that setting gas price ceilings would be justified in the extraordinary moment that the market is going through and that it is a formula that would allow an immediate drop in pricesat a time when energy is out of control and has led many industries to stop their activity, following in the wake of the carriers, because it is not worth going out to work.
While diplomatic sources argue that the measures defended by Spain, especially limiting the price of electricity in the wholesale market, are “fantasies” that would not help to solve the problems or reduce the bloc’s dependence on fossil fuels from Russia.
Precisely the President of the Spanish Government, Pedro Sánchez, began a tour of several European capitals last week to intensify the pressure on his partners. In just seven days, he has met the leaders of Romania, Croatia, Italy, Greece, Portugal, Germany and France. And he has conveyed to all of them the need to “adopt at this week’s European Council strong solutions with immediate effect”, as he pointed out this Tuesday to the Irish Prime Minister, Micheál Martin, with whom he closed the round of meetings.
“This afternoon I spoke by videoconference with the PM of Ireland, @MichealMartinTD. Spain continues to promote an ambitious common response to the unsustainable increase in energy prices. It is key to adopt #EUCO of this week forceful solutions and of immediate effect. pic.twitter.com/xW5vmzIpVP“
– Pedro Sánchez (@sanchezcastejon) March 22, 2022
The European solution will lay the foundations for Spain’s package of measures
The Council will also be decisive for Spain. Based on what is decided this weekend in Brussels, the Government will determine the complete package of measures to implement to face the energy challenge left by the Russian invasion of Ukraine and that will be approved on Tuesday 29 in the Council of Ministers.
It will be a package negotiated in turn with the parliamentary groups of the Congress of Deputies and with the main economic actors and sectors involved. In this way, the Executive will try to put a stop to unemployment in the road freight transport sectorwhich accumulates 11 days of unemployment, and at the same time to the shortages that this situation has caused.
The worst outcome would be for the decision to be postponed again, as happened in December, to the next summit scheduled for the month of May. The leaders would thus wait for the Agency for the Cooperation of Energy Regulators (ACER) to present its final report on the reform of the electricity market in April before committing to any step.
In that case, the Government has confirmed that Spain would take the necessary measures in the event that the EU did not. This was defended by the Minister of Finance, María Jesús Montero, in an interview on TVE’s La Hora de la 1. Along the same lines, the President of the Government pointed out that the Executive “will do everything in its power to defend companies and consumers” and that “they are not hostage to this energy blackmail to which Putin is subjecting the EU”.
George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.