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Europe's gas troubles

2022-07-30 | EU
Europe's gas troubles

The current situation

NordStream flow in July

The German government has sent everyone it can into telework starting in October, slashed government consumption as much as possible and finally tightened its gas-saving plan as a whole.

Scholz says the costs of the gas surcharges will be just over three hundred euros a year per German household. He needs them to pay for the bailout of the main importer, bankrupted by sanctions imposed on Russia by the German government. But the truth is that if taxes are computed and the foreseeable price increases are added, the total impact on the bill will most likely exceed one thousand euros per family.

And yet this is a really watered down version for the leading economists of big German capital, who share a single objective: to save as much gas as possible in order to keep industries such as chemicals and pharmaceuticals going, which are already feeling the price shock. One can already see the coming trend in their declarations. In the words of Veronika Grimm, one of the country's most influential economists:

The government is doing wrong by trying to protect citizens from price increases. (...) If we don't pass on prices to consumers now, many may be under the illusion that they will end up getting off lightly. As long as the state can be expected to limit prices, less will be saved. This is not a valley like the corona crisis where you can help people.

Because in spite of everything, the accounts do not add up. Hence the significance that Berlin, which was already preparing "austerity for all" in Brussels, has given to the European plan of forced "solidarity" designed to ration gas according to German industrial needs.

The Economist saw the EU on the way to collapse. But there was apparently little resistance. The Hungarian government poked the sore point of the coalition government in Berlin by suggesting not to close nuclear plants before demanding scarce gas from the others. And the Spanish government, which made boasts of its opposition in the first instance, moved without transition to parade in orderly fashion through Unter den Linden. This time there was no need for long nights of negotiations or strategic bargaining. Why?

Because everything is "voluntary". In reality, no country is bound to anything unless it declares an energy emergency. It is as if in a shipwreck the only one required to share lifejackets is the one that falls into the water without one. What's more, even in that case the way in which the obligation is decided is not clear: the Polish government demanded after the summit that the principle of unanimity be maintained when imposing mandatory rationing... i.e. giving each member country the opportunity to block.

  1. Because in order for what has been signed to be of any use to Germany, all countries should sign, at least with each of their neighbors, bilateral solidarity agreements. Something like a pipeline of mutual support contracts that would eventually force the more distant countries to share reserves as Europe's "industrial crescent moon" industry drains the gas reserves that are closest at hand. But those contracts are not there. And few expect them.

Does that mean that restrictions and rationing will not be forthcoming in the countries furthest away from Russia? No, not at all. Only that each national capital has held its cards to play them to the hilt against Germany when the going gets tougher.

Towards a global recession

US GDP quarterly changes

Quarterly GDP variations in the USA

In France the press is discussing how to best spread energy austerity, whether through equal prices for all or through tiered prices with less impact on low incomes. Bets are accepted.

In Spain, Pedro Sánchez came out just yesterday to announce as if it were a great thing the arrangements for future rationing. He allowed himself to throw out the ridiculous lure of the end of the necktie while announcing that in September he would take his umpteenth proposal for reform of the electricity market to Brussels.

All on the same day that Spanish inflation data reached its maximum in 38 years. Unfazed by a stubborn reality, none of the governmental media realized that the increase in consumption that was also published today was misleading to say the least: as the basic basket is more expensive, we buy more even though we are poorer, simply because we have to spend more on the most basic items and what is left of our salary afterwards is less and less. Put in their language: rising inflation and frozen wages, oh surprise, increase the marginal propensity to consume.

Doesn't sound like anything to be celebrated but.... it saved GDP from the negatives by the skin of its teeth. A great success, they said. It isn't. Nor is the 0.5% quarterly growth in France even though exports were the driving force there. And this is so because it is not going to be sustainable in any case. The US quarterly result is already negative and the new interest rate hike will only aggravate the shrinking of investment and job offers.

It is now more than evident that sanctions have not only torn apart the economic fabric of Europe with Russia and Central Asia, turning Russia towards China and India, destabilizing Asia and projecting famine on half of Africa. It has rendered the German model of accumulation obsolete and profoundly destabilizes the U.S. and British model of accumulation.

Didn't they see this coming?

NATO Summit in 2018

NATO Summit in 2018

Let's go back to 2018 for a moment. The time is July and a NATO summit is taking place. Merkel and Trump are on the cusp of their political careers. In the EU the Green Deal is still setting its course according to German industrial interests, with gas as the main transitional energy. Russia is finishing the construction of Nord Stream 2... and Trump is charging directly against Germany: he demands the participation of US companies in the exploitation of Russian gas and in Nord Stream 2 itself... or its closure.

Nord Stream is the mother of all geopolitical conflicts between Russia on the one hand and Visegrad and the USA on the other. Nord Stream, in reality, is just a pipeline - owned by the Russian oil company GazProm through a Swiss company - which allows direct gas supply to the German market.

Nord Stream 2 is a second pipeline on practically the same route. Gazprom shares the investment there with a group of five European oil companies (Engie, OMV, Shell, Uniper and Wintershal).

Poland, the Czech Republic and the Baltic countries have been trying to prevent its implementation for years because they understand that it increases Russia's bargaining power in Europe. Last March, with the trade war taking shape, Germany finally authorized the new branch line and one did not need to be a genius to realize that Merkel and Putin were laying the groundwork for a realignment of Russia-EU interests... with Poland and especially Ukraine, as "potential victims".

Poland's - one of the countries with the largest coal reserves in Europe - Baltic and Central European anguish is due to the fact that combined cycle power plants are forcibly replacing coal with the anti-climate change emissions agreements. [...]

The US opens the battle for Nord Stream and access to Russian energy production at a time of escalation when the trade war with China is becoming increasingly violent and is already veering into a currency war. On the European front, Trump increasingly targets Germany, openly posits its isolation and seeks to whip up the exhaustion of "German Europe". It is showing the German bourgeoisie that defending the status quo will not suffice in the new context. Merkel seemed to understand this in Quebec. She also realized what that meant. We can't help but see it: this NATO summit leaves us one step closer to war.

NATO summit: US opens the battle for Russian gas, 12/7/2018.

Within the EU, the battle for control of gas will become explosive, blowing up a few months later the Franco-German axis that Macron was trying to revive.

The Nord-Stream 2 is today the touchstone of the German-US relationship. It is the foundation of the dream of a German imperialism capable of single-handedly dominating Europe and the great strategic divide within the EU. Today a Commission initiative is being voted on which would put an end to the project. France has already announced that it will vote in favor, sinking the Russian-German plans and breaking, perhaps definitively, the Franco-German axis and with it the "Maastricht" era of undisputed domination of German capital over the continent.

More than a mere gas pipeline, Nord Stream 2 is an umbilical cord between Russia and Germany... which the Americans see as a direct danger against which they cannot but shamelessly press.

The German bourgeoisie itself is divided, it fears depending too much on Russia and losing influence over Poland and Ukraine which the pipeline literally " bypasses". Not a minor consideration, the countries of the Visegrad group, which include Poland and Slovakia, two direct "victims" of Nord Stream, are by far the biggest buyers of German exports: 256 billion euros compared to 170 billion from China, 167 billion from France and 165 billion from the USA.

But the majority position, championed by Merkel and the CDU, is that the pipeline cements Germany's imperialist dreams: to further increase its domination over Europe, isolating and suffocating the countries of the East while gaining total energy independence from the Mediterranean energy axis which reaches it through Italy and France. (...)

The pressing need to export into the German market and further reduce its trade surplus, i.e. the strictly imperialistic needs of the Americans, Poles and French are showing Germany that its extractive position over Europe, based on the euro mechanism, cannot be taken for granted so easily.

With Merkel's decline, the era in which Germany could be a "greedy empire" and openly confront its main export destinations also comes to an end. The subjugation of the European bourgeoisies through the euro is beginning to be insufficient to maintain German power.

The day the Franco-German axis broke down, 13/02/2021

Finally France and Germany reached a last minute agreement... which gave way to the most tense period between Berlin and Paris since the birth of the EU. Tension and mutual blockades that lasted until the Covid forced them to choose between accommodating their imperialist urges again or letting the EU blow up.

Biden's accession to the US presidency continued and radicalized Trump's European policy. From the beginning of his term in office the sanctions on Germany as pressure against Nord Stream 2 and the pressure on Russia from Ukraine, threatening the Kremlin with eliminating its strategic depth were the two clear axes of action of the USA.

Yes, gas and the consequences of a Russian supply disruption on Germany never ceased to be present in this game for each and every one of its players. It was for Biden who promised that Germany would not get to start up NordStream 2.... in front of a silent Scholz. It was always the same for France, which never failed to remember that underneath US activism there was a long-standing desire to control the European energy market, against which it was always necessary to be on guard.

It was so for all competitors of German industry inside and outside the EU. Great Britain and the Netherlands, for example. And certainly in Brussels, Warsaw, Budapest and the Baltic capitals. Each with its own interests and its own particular quarrels against Germany, Russia or both, and in the case of the USA with a global strategy. All were aware of the direction in which they were leading the world.

And Germany was the first. In April 2018, Merkel warned CDU parliamentarians that Europe was approaching a new 30 Years' War at full throttle, pointing to the danger of being left out of European history for a century. "The next few years will show whether we have learned from history," he said to close her speech. Two months later, after the clash with Trump at the G7 summit she sentenced:

The world order has collapsed, either Germany effectively leads Europe or it will fall.

Neither France nor Germany expected any relief from the Biden presidency, but the contradictions of their interests prevented them from cohesion and taking command of the European imperialisms in time. Less than a month after taking the oath of office Biden was pressing the militarist throttle against Russia as a way of asserting himself against both.

Biden seems determined to take up and accelerate the anti-Russian game as a way to subdue the EU, both from within, and from without.

First step: deploy bombers in Norway in a move that Russia can only see as a direct threat.

Second step: in the face of an eventual Russian response offer Poland and other countries a Cold War-style rocket deployment.

It's on the agenda of the Biden team, which complains that the Europeans don't want to see it: Biden wants to update the US nuclear commitment, i.e. accelerate the new global race of terror. The START treaty renewal was only a partial containment framework.

Biden steps on the gas, 13/02/2021

Four months later, Biden's European tour made it clear that Russian gas remained at the center of his objectives and that Franco-German resistance to a brutal break with China and Russia would only lead to a radicalization of his strategy with less and less consideration for "European partners". In August, the departure from Kabul made this clear.

The Afghan fiasco is worrying in Europe not because it will mean the "end of the American era", but because it has once again shown that Biden's US has no more regard for the EU than Trump had. In fact, this very week Biden broke the agreement he had reached with Merkel in June and imposed new sanctions on companies linked to Nord Stream 2, the new gas pipeline that will link Russia and Germany in a few weeks.

With the mood strained by evacuation tensions and [EU officials accusing the US military of obstructing the departure of Europeans and their collaborators](https://es.euronews. com/2021/08/22/kabul-the-eu-blames-the-us-of-obstructing-evacuations-while-settling-the-power-such), European media and think tanks began to commission analyses on both sides of the Atlantic wondering if they can really close an era of US unilateralism and take back sovereignty in the design of their own imperialist policies or what had happened, simply, was that [the pivot towards China of US capital had left them even more out of the game](https://es. communia.blog/biden-mapa-de-conflicto-malvinas/). (...)

What Kabul definitely opens is not "the end of the American era", but a stage in which world war is already directly recognized as looming and in which we will see a new string of highly internationalized regional wars, a worsening of the tendencies towards trade war and protectionism - largely developed through the "Green Deal" - will be accompanied by an ideological renewal more and more openly linked to the perspective of the recruitment of workers for the war effort.

Is Kabul the "end of the American era"?, 08/25/2021

In short: everyone saw it coming. The US pushed harder and harder, moving from Trumpist economic blackmail to military pressure and Bidenist war radicalization. And France and Germany proved incapable of articulating their imperialist interests to stop the chariot that was advancing to overrun them from Washington. They were unable to go beyond constraining, at increasing economic cost, the EU member states around Brussels by raising each time, with half-hearted centralization, the contradictions of their own direct imperialist zone of influence.

That is why its response to the US pressure in the face of a crisis in Ukraine previously fed from Washington, was organized around sanctions. It was the way to follow the US in order to avoid a total loss of the appearance of intra-European leadership and at the same time to avoid confronting Russia directly. But to gamble on the only bloc mechanisms they had been able to build in the EU, the mutualizations, now in the form of sanctions and economic warfare, was a recipe for disaster.

The EU has finally approved the sanctions package that threatened to be "devastating". It is not so devastating. The European powers have discovered that control of financial mechanisms and access to markets is no longer enough to rule the continent. The ruling class of today's Russia, with the backing of China, does not have the degree of dependence on the EU that Greece's had in 2015.

EU: From sanctions "between friends" to outright militarism, 02/25/2022

So, having ascertained their limited impact on Moscow, not only did they not stop to evaluate the self-inflicted costs of the sanctions, but they celebrated the "success" of having unanimously agreed on them and doubled down on them - this is already the seventh package -, supplementing them more and more with direct military aid.

In order to maintain a minimum position vis-à-vis the US without directly confronting the US strategy, they went from shooting themselves in the foot to shooting themselves seven times and entering into a militarist spiral subordinated to Washington after having been incapable of coordinating themselves to affirm a common imperialist alternative that would keep the US at a minimum distance.

It was not an oblivious spiral. The hammering propaganda about "Russian blackmail" and the hysteria of slogans from Brussels - like Von der Leyen's unforgettable "Russia is guilty", with its inevitable historical echoes- showed that they knew very well where they were going and what they could expect to happen.

But such is the imperialist game: for Berlin and Paris it was a matter of keeping the goose that lays the golden eggs of the EU market at all costs without openly separating from the US. For Russia, it was a matter of flatly raising the contradictions between the two main EU powers and Washington's strategy. For Biden and his team, of tearing the fabric of Eurasian dependencies for good and returning Europe to US dependency.

What's in store for the immediate future?

Meat in a supermarket

Buying meat and other staples is going to become less and less affordable for retirees

The fracture in the global market that is taking place and the new international division of labor that will emerge as a result will in itself impose a dynamic convergent with U.S. interests. It is no longer a matter of years, but of months.

Just this week Renault announced that it was beginning its withdrawal from China. And the families that own VolksWagen ousted Herbert Diess. Diess was the leading voice in favor of maintaining German investments in China within German capital. But the large German automotive industry is beginning to realize that either the EU sets barriers and protects its "natural market" or the electric car market could be taken over by Chinese companies from the outset across the continent.

This conversion of Europe back into a big island in the far east of the US archipelago, once its integration with Russia and China is broken, will accelerate the strategy of absorption of the Western Balkans into the EU, which will most likely revive pockets of imperialist tension with Russia in regions like Bosnia and old battles for power among the ruling class in Serbia or Bulgaria.

But the most important thing about the new "Balkan expansion" is not only its integration into a new map of conflicts in which Africa and some South American enclaves such as the Falklands, which returned to the global front line under Biden at the same time as Ukraine, will be added to the list of new potential hot spots in Asia and Oceania.

The Balkan expansion will further reinforce and homogenize downwards a new situation of workers on the continent. Evidently the erosion of minimum living conditions caused by inflation and the extension of "zero hours" contracts in which the hired worker does not necessarily work or get paid, such as the new "fixed-term" contracts in Spain, will not be reversed, but rather extended and aggravated. The foreseeable result is the same as that produced by the British original: a sustained increase in working poverty.

Especially in the East and Germany, where the inability of the incomes of many workers and pensioners to pay for heating this winter will mark a new impetus to the general precarization of living and working conditions.

That is why it will be more and more common for pensioners all over Europe, as is already happening in Great Britain, to have to look for more or less black jobs, more or less part-time to supplement an income with which they will no longer be able to be even the last family resort... and possibly not even eat meat a couple of times a week in view of the price evolution, which is only going to get worse with the new measures of the Green Deal.

At the turn of August Europe will enter fully into a new epoch as a direct result of the global development of the war as part of the more and more direct game between the first imperialist clashes and the axe-breaking of the fabric of dependencies and trade exchanges between the EU on the one hand and Russia and China on the other.

It will not be easy for the workers. Especially if they are not able to collectively stand up for themselves at the level and in the ways that the historical situation demands. That is what we must organize for. And it is becoming more and more urgent.