Last Friday, on the sidelines of the Ecofin meeting in Luxembourg, Finance Minister Makis Keravnos declared that the EU’s energy crisis had reached its peak and that further measures, signed off by the Commission, were needed to protect consumers.
Several EU countries, he said, see a structural problem at the heart of the energy crisis, “and I won’t disagree”. Then he went further: “At some point the European Commission must take a hard look at the structural problem and its roots, and money must be made available, over and above [emergency] household income support, so that we have the infrastructure needed to deal with energy once and for all.”
Keravnos was spot on. Plenty of senior figures in European governments are saying the same thing, demanding structural change from the Commission across the board: how energy is produced, imported, supplied, distributed and priced. The Commission keeps kicking the decisions down the road. It graciously deigns to let national budgets hand out the stopgap painkillers of emergency relief, complete with stern lectures that any support must be targeted and temporary. What it will not dare do is fix the structural flaws that leave households, businesses and the economy as a whole exposed every time a crisis blows up, big or small.
Many other EU finance ministers share Keravnos’s views. Some go further still, and a few face angry backlash at home more and more often. Yet neither the last Eurogroup nor Friday’s Ecofin came anywhere near loosening the fiscal rules to allow real curbs on windfall profits and real relief for low and middle earners, let alone decisions that would head off the next energy crisis.
After the disappointing Eurogroup and Ecofin, it was Meloni’s turn yesterday to vent once again, in terms not far from Keravnos’s. “If we don’t develop structural, long-term solutions, we risk being left at the mercy of emergencies,” Italy’s prime minister told a gathering of industrialists in Milan.
She, too, sees structural problems in energy. Leave them unsolved, fail to find a way to stop all energy being sold at the price of expensive natural gas (never mind having to burn heavy fuel oil and diesel, as we do), and the crises will simply come and go. Governments will keep pouring billions into temporarily propping up living standards, such as they are, and draining the fiscal room that could fund other social policy, investment, digitalisation, competitiveness and the rest.
“We want new priorities to be funded,” Meloni said, “but not by cutting cohesion policy and agricultural policy” (as the EU’s ‘frugal’ minority demands). “We cannot build strategic autonomy if we cut the only autonomy we have, which is what we eat.”
She also took aim at the carbon market. The Emissions Trading System, she said, inflates prices, creates imbalances between member states and hurts Italy’s companies, whose competitors face no such constraints.
Expect blood on the carpet at Thursday and Friday’s summit of EU leaders, over this and over the wider budget and fiscal framework. A large majority of countries will line up against the five frugals, powerful ones at that, who cling to the fiscal austerity that is slowly turning the EU into the poor relation of the global political and economic order. But the outcome will have little to do with the headcount in each camp. At Council summits, clout often counts for more.
