The terms EU and Europe are hereby used interchangeably.
Europe is bleeding. Head down she tries to gather the strength to get back up. She should, she must. Russia’s heinous invasion of Ukraine inflicted a deep, godawful wound into Europe’s inner workings, laying bare the existence of an illogical economic model over-relying on Russian energy. The glaring contradictions thereby transpired now force the European Union (EU) to reassess her options and confront the outcomes of a flawed energetic paradigm whose negative consequences it long chose to ignore.
Russian energy has always been the much-needed blood the EU has always longed for. Albeit fundamentally fallacious, energetic dependence has worked well for some time, delivering growth and stability through a steady outflow of gas and oil from Moscow’s gates. Such a state of affairs propelled the economy forward, sowing the seeds for buoyant narratives of integration, expansion, and progress. Alas, the downsides of this approach have been largely disregarded, and the EU must now grapple with a disquieting reality: faulty historical choices and political myopias have handed Russia the very means that now pierce Europe’s energy veins.
As global equilibria crumble to pieces and further disruptions pan out in the foreseeable horizon, caught in the middle, seemingly helpless, the Union slides into a state of quiet turmoil. But this is no good reason to bend. The Old Continent must now get her own affairs in order, rise up, and kick back in the midst of uncertainty.
The Future Ahead
From the sudden relational breakdown, the Union emerges as an economically (if not politically) weakened entity, one compelled to deal with an unsettling existential distress. But in spite of the hurdles, as the EU carves out of her past a renovated identity, an array of possibilities opens up. For one thing, Europe should strive to seize the historical moment and turn herself into a more powerful, independent player in the global arena. Proper energy diversification would be a good starting point. Despite shocks, price spikes, and substantial volatility, the single market has demonstrated a consistent capacity to do so. That said, energy diversification shouldn’t be deemed as an end in itself. Rather, it should be seen as a necessary yet non-sufficient step. This is not only because the quest for diversification embodies a pursuit fundamentally entangled with ethical dilemmas (turning the back on Russia most likely means extending a hand to authoritarian, rentier states), but also because such strategy wouldn’t stand the test of time, something the EU should match up to. Her global influence, credibility, and relevance depend on it.
As a matter of fact, above and beyond diversification, the Union should leverage independence and champion the cause of strategic autonomy (SA). And like it or not, Brussels must acknowledge the fact that SA emerges as a clear function of specifically articulated policies, many of them either politically costly or economically demanding. Needless to say, to implement these, common goodwill and a shared political vision are required.
To begin with, the EU should seek and pursue a credible energy transition. Furthermore, single states should strive to phase-in advanced nuclear technologies and, if needed, revamp local gas extraction to stabilise supply and appease prices in the short run. Storage capacity and energy infrastructures should likewise be enhanced. Admittedly, albeit imperative, the energy transition and its corollaries present both trade-offs and financial challenges. On the one hand, structural economic changes could spur inflationary pressures and job losses in traditional occupations, but also increase operational costs for firms while exacerbating distributional issues. On the other hand, these thrusts are bound to face fiscal limitations as single states cope with debt brakes and/or budget deficits that further compound already-troubled debt-to-GDP ratios. This is the reason why political resolve is needed so badly.
Second, over the medium to the long run, Europe should lessen her reliance on antithetical external suppliers, to the extent that energetic dependence is reduced to the minimum level capable of ensuring average expected stability of supply over time (also during periods characterised by asynchronous, unforeseen shocks). Concomitantly, the EU should feed modest economic interdependencies with the suppliers (e.g. by means of increased commercial relations, especially exports), to avoid asymmetric dependence and gain sway over the relationships. Clear targets with reasonable deadlines should be laid down to achieve these aims, for they are instrumental in amplifying the shift towards renewables while minimising the exposure to actors that are prone to energy weaponisation.
Third, the above-mentioned steps should be coupled with a coherent and organic subsidisation program (orchestrated at the European level) focusing on innovation, global competitiveness, and energy diversification; with common EU debt as a possible underlying financing mechanism (i.e. Eurobonds). To operationalise this, excessive national entanglements and unilateral actions should be thwarted, so as to avoid internal fragmentation: SA is achieved in unison. To further dilute unnecessary competition, industrial policy coordination with the transatlantic counterpart, the United States, must be achieved. Within this context, Europe should push for structural investments rather than for energy support measures.
Finally, the Union should seek harmonisation of outputs, not only in terms of policies but also in terms of diplomatic responses (last year’s energy price cap has been a virtuous example). If the EU is called upon to fulfill the dream of integration (which I think she is), then she must express a unique foreign policy. The more aligned the European states’ demands (and the more the EU is capable of channeling these onto the outer international stage at large), the higher the political clout and the stronger the gravitational pull around Europe’s true collective needs. This is no different when energy provision is at stake: by means of coordination and reciprocity, the constellation of states belonging to the single market acquires the capacity to jointly bear the benefits as well as the risks.
For the foreseeable future, external energy supplies remain Europe’s vital blood. But this need not be the case indefinitely. Policymakers should internalise this latter belief and articulate policies instrumental to realise it. Some key threads have been outlined before. What really matters, though, is a holistic, strong-willed EU response to the energy transition, with coordinated industrial policy as an aiding mechanism. Mastering energetic relations with economic and diplomatic acuity will likewise prove fundamental.
The European Union is compelled by a historical necessity: transcending internal challenges and outer disruptions to achieve reinvention, autonomy, and progress. She definitely evinces this latent potential, but change and political resolve must be given a voice. All of this largely depends on the future she ultimately decides to build. The future is now, and Europe must define it.