In Europe, the democratic risk of the energy crisis

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On November 8th, 2011, a handful of beaming European leaders, including Angela Merkel and Dmitry Medvedev, turned a large valve to symbolically open the flow of natural gas in the Nord Stream pipe, which runs 1200 km under the Baltic Sea from Russia to Germany. A decade later, the smiles have faded, and the gas flow has stopped.

It has been said that Europe is paying the price of its dependence on Russian gas. In 2021, the continent imported 40% of its natural gas from Vladimir Putin’s country. In the last few months, Ukraine’s allies have done everything possible to reduce their imports. Consequently, natural gas and electricity prices have reached unprecedented heights.

This winter, countries will adopt energy sobriety; indeed, Paris will turn off the lights of the Eiffel Tower a little earlier in the evening, while Switzerland is considering banning the recharging of electric vehicles in certain circumstances, and Finland is asking citizens to lower the temperature of saunas. For less affluent households, the crisis takes a darker turn. In the United Kingdom, people have taken to the streets to denounce gas and electricity rates that are “squeezing them.”

The crisis is hitting Europe because energy markets know no borders. “As early as the late 1990s, the European Union [EU] pushed for the liberalization of the electricity market, then the gas market,” recalls Maya Jegen, a political scientist at the University of Quebec in Montreal specializing in energy. After lengthy negotiations on December 18th, 2022, the EU partially backed down: it introduced a price cap mechanism for natural gas and Russian seaborne petroleum products such as diesel and fuel oil.

The war in Ukraine has accelerated the trend for natural gas to become a traded commodity in the global marketplace. International gas pipeline projects are underway in Europe and on its periphery, notably in the North Sea and from Azerbaijan. But above all, this volatile resource is being released from its pipes and, in liquefied form, is crossing continents to be sold to the highest bidders. The fierce competition for liquefied natural gas (LNG) supplies between Europe and Asia will likely result in high purchase prices to win contracts and even shortages. Such scenarios are a threat to European democracies. By weakening industry – and industrial employment –  the energy crisis encourages the rise of extremes, both left and right. This risk is significant because European countries cannot agree on collective responses to lower energy prices.

At a time when consumption is soaring alongside plummeting temperatures,  Europe fears running out of gas for several years because of the difficulty of finding alternatives to Russian gas, or even having to pay a terrible price for it in a structural way. Indeed, the emerging competition for LNG supplies between Europe and Asia could lead at best to  very high purchase prices to win contracts, and at worst a shortage if Asian countries, led by China, win the bid. Indeed, the net import needs of Asia exceed those of Europe.

 When industry backs down, anger rises and so do extremist parties

The threat is considerable. Yet it conceals another, less visible and more dangerous threat, which goes beyond the sole issue of energy sovereignty: the danger of European democratic decline. Indeed, democracy is already weakened by the continued rise of extremist parties, on the left and right in all member countries. But the energy crisis could be the final blow if there is a gas shortage or if current energy prices become permanent. Why should this happen? If realized,  such scenarios could well sweep away European industry and, by extension, industrial employment, which is the best defense against a rise in discontent on which all kinds of extremes rely. When an industry retreats, anger rises, and so do the extremist parties,  evidenced by the rise of the far-right since the 1980s and  marked by the acceleration of globalization and its processes of relocation. But, it has also been illustrated by the prominence of the far-left for over a decade, which has become the majority on the left in France at the expense of the social-democratic current.

Willingness to reindustrialize 

This threat to industry is spreading at the very moment when the reindustrialization movement launched in recent years is beginning to yield results, particularly in France, and Europe is finally becoming aware of the importance of this sector of activity in ensuring its sovereignty.

But will Europe realize its ambition, even as the energy crisis is compounded by the threat of the Inflation Reduction Act (IRA), the colossal U.S. investment plan designed to promote domestic production? The answer can only be collective. While European countries have shown solidarity during the health crisis by borrowing together to finance national recovery plans or by coordinating their vaccine purchasing policies, they have so far consistently torn each other apart over the various measures to be taken to lower energy prices – gas price caps, joint purchasing - or to protect European industry.

While the President of the European Commission, Ursula von der Leyen, defends the idea of a European “sovereignty fund” to develop a common industrial policy and invest more in research and innovation projects on a continental scale (hydrogen, semi-conductors, artificial intelligence, etc.), Germany has already made it clear that joint debts are not the solution.

As for a “Buy European Act,” as advocated by France, it seems complicated to implement. Not only because it is the antithesis of Brussels’ principles to put the interests of consumers before those of workers, but also because the European Union is made up of member countries that, through taxation or labor law, are competitors more than they are partners.

To conclude, only the pursuit of energy efficiency efforts and the rapid development of other energy sources, with renewable and nuclear energy at the forefront, seem capable of halting this disastrous spiral. But considering the steps to be taken in terms of wind and solar power capacity, and the time needed to build nuclear power plants, it remains to be seen whether our democracies and the stability of the EU will be able to hold out until then.