That those vaccine purchases are now under investigation by EU Public Prosecutors doesn’t seem to matter. The Commission wants a direct role in EU Member States’ purchases of gas and, if possible, weapons.
As winter fast approaches in the northern hemisphere, the European Commission is looking for a way to cushion the blow of the brutally self-destructive sanctions regime it itself played a large part in imposing on Europe’s largest energy provider, Russia. The Commission’s new plan will have the added bonus of further expanding its influence and power over economic policy and decision making in the EU.
This is one of the perverse paradoxes of Europe’s current predicament: the weaker the EU becomes, the stronger the Commission’s role grows within it, and the more centralized and unaccountable the bloc’s decision making becomes. As Politico notes in its recent article, Europe’s American President: The Paradox of Ursula von der Leyen, this process has accelerated under current Commission President Ursula von der Leyen — “with the Commission taking a lead role in big changes of direction, such as the issuance of common EU debt, the joint procurement of COVID vaccines and the introduction of Russia sanctions.”
Pooling Energy Demand
Now the Commission is trying to strong-arm EU Member States to accept joint purchases of gas for future gas storage. The ostensible goal of the plan is to secure better terms from energy suppliers as well as reduce the risk of EU countries outbidding each other for energy contracts. But it also represents yet another encroachment on member state sovereignty. As the German daily Süddeutsche Zeitung reported on Monday, if the plan is implemented, energy demand will be pooled through an EU energy platform operated by the Commission itself (machine translated):
The Brussels authority is likely to present a corresponding draft law as early as Tuesday, together with other initiatives aimed at lowering the high [gas] prices. These include, for example, a price cap on an important gas trading center… The 27 heads of state and government are to discuss the proposals at a summit at the end of the week. The EU energy ministers could adopt the new laws as early as November.
The energy platform is intended to bundle the purchasing power of the EU Member States when they buy [natural gas] in 2023 and 2024 in order to refill the storage facilities before the heating season. The states should secure better prices in negotiations with producing countries instead of outbidding each other. Large amounts are needed: the complete cessation of Russian supplies would mean that a gap of up to 100 billion cubic meters of gas would have to be plugged every year, the commission estimates.
Germany and the Netherlands are apparently already on board with the plan, though Germany has expressed reservations about the idea of capping gas prices. Berlin is concerned, quite rightly, that trying to cap the price of gas across the EU may leave the bloc struggling to attract sufficient supply from global markets, which is a problem they already face to the nth degree.
A Plan Long in Gestation
Of course, the frantic fiddling of the European politicians and bureaucrats who set this crisis in motion and have steadfastly refused to reverse course even as the crippling economic costs have mounted, is unlikely to make much of a difference at this stage. As Yves noted yesterday in her preamble to the post, “Is the UK About to Hit the Wall?”, the European Commission is dithering with the fantasy of technocratic fixes, which is likely to result in disruptive, unplanned rationing in the form of blackouts.
One of those technocratic fixes — the creation of a joint gas purchasing platform operated by the Commission — has been in gestation since at least shortly after Russia’s invasion of Ukraine. In April, the Commission launched a purchasing platform for voluntary joint orders, but it doesn’t seem to have caught on among most member states. So, Brussels now wants to make the purchasing platform mandatory for all member states.
According to the article in Süddeutsche Zeitung, the Commission wants to compel member states by EU law to use the platform to fill at least 15% of the volume of their gas storage facilities:
The fact that only around 15% of the demand will bundled is because there are already long-term contracts in place for a large share of the gas storage volumes. It is all about filling the remaining gaps and securing good deals along the way. There are a total of 160 underground storage facilities in the EU in 18 member states. Germany accounts for more than a fifth of the total capacity. Berlin had long expressed doubts as to whether joint purchases would work, but recently changed tack and called for the platform to be strengthened. This is happening now.
And the Commission already has a model of sorts to fall back on — its €71 billion vaccine procurement program:
As with the procurement of the COVID-19 vaccines, the commission would negotiate contracts with suppliers. The final decision as to whether to accept the offer or not would then be made by the individual governments.
This is where the flaws of the plan become glaringly apparent…
Read the full article on Naked Capitalism