The implications of disagreement – EUCO reverberations

At a time when the Russian threat to Ukraine has become ever more imminent, with world leaders involved in a guessing game, all the EU could have done was to emerge united, but it was not meant to be.

The European Council has become the occasion where divergences emerge in the open instead of the opposite. In the absence of weighty politicians such as Angela Merkel and Jean Claude Juncker, European division is set to become more pronounced and overt.

Such scenarios are becoming useful hints as to where Europe’s enemies / competitors can inflict the most damage. Energy is fast becoming such a scenario.

Russia has completed the construction of the Nord Stream 2 pipeline. While the official aim seemed to have been to increase capacity to Europe, unofficially, its aim is to bypass Ukraine, by routing the pipeline through the Baltic Sea, from Russia, to Germany, away from Ukraine.

Bypassing Ukraine effectively reduces Ukraine’s territorial value to nil, vis-à-vis Russian politics, as Ukraine would lose its leverage.

Talk of an impending invasion of Ukraine is quite a possibility and should Russia invade Ukraine, the invasion would be brutal and swift. It would undermine the international rule-based order and such an event would be unprecedented since World War II on European soil.

Yet, such a prospect, in the current circumstances, and in view that the Nord Stream 2 has been delayed for a couple of months, invading Ukraine can disrupt gas supplies to Europe, something that the Russian economy cannot afford.

The European Council has become the occasion where divergences emerge in the open instead of the opposite.

European leaders met in Brussels last week to iron out the way forward on the energy crises that is plaguing European economies, and which could affect the fragile European recovery. The scenario of volatile and sky-high energy prices, coupled with the emergence of the Omicron variant, and the looming lockdowns, may be a recipe for economic disaster.

However, leaders failed toagree on the European Council conclusions on energy as the two sides are diametrically opposed. Consequently, the EUCO Council Conclusions did not include energy as originally planned.

The crux of the problem is which energy sources should be classified as transition sources. The EU has made it its mission to become carbon neutral by 2050. Yet, this objective requires huge investments to transform the current energy sources, namely coal and fossil fuels, into cleaner energy sources such as hydrogen gas, solar, wind and other sources of energy.

The EU is divided right across the middle. In the East, where Member States are still trying to catch up with the West, the primary energy source iscoal. Coal is cheap, but it powered the economic re-emergence of the East after the fall of the Berlin Wall. Then, the West is quite advanced in terms of alternative energy sources, with varied energy supply sources.

The EU is divided right across the middle.

The East wanted to retain the status of gas and nuclear energy as transition sources that will enable these countries to weather the current storm and continue their path to carbon neutrality.

At the core of the issue was the green taxonomy delegated act which is expected to be issued by the European Commission before the end of year.

According to the European Commission, the EU taxonomy “is a classification system, establishing a list of environmentally sustainable economic activities. It could play an important role, helping the EU scale up sustainable investment and implement the European green deal.

The EU taxonomy would provide companies, investors and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable. In this way, it should create security for investors, protect private investors from greenwashing, help companies to become more climate-friendly, mitigate market fragmentation and help shift investments where they are most needed”.

Under these regulations, gas and nuclear energy risk being classified as unsustainable thereby hindering Eastern Member States to catch up with the West and in the long-term threaten their ability to reach carbon neutrality by 2050. Eastern Member States are calling for gas and nuclear energy to be classified as transition energy sources, something Western countries are objecting to.

During the October EUCO meeting, Malta has successfully negotiated that small-Member States specificities are to be considered in any EU policy as it had become the norm that energy proposals were fit for the EU25 and not for the EU27, [excluding Malta and Cyprus].

Moreover, the recent agreement in the EU Parliament to allow Malta and Cyprus the ability to apply for funding for interconnection projects, stem from this very insistence that all EU territory should be interconnected.

Energy, like migration, risks becoming the Achille’s heel of the EU – the weakest point. It has become more apparent, especially by the recent spat between the EU and Belarus that if migration is instrumentalised, the EU would be plunged into crisis. And similarly, if energy prices are manipulated by Russia, as many are thinking, then Russia has hit the nail on its head, and knows perfectly well where the EU’s weak points are.

In short, the EU has to either address its internal divisions and focus on common interests or it risks becoming irrelevant or worst still, external forces can wreak havoc. It’s only a matter of whether history will repeat itself.

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