The EU expects Russia to shut off gas supplies to them at any moment, a dramatic escalation of hostilities that would hit the bloc’s economy by up to 1.5% of GDP.
The EU expects Russia to shut off gas supplies to them at any moment, a dramatic escalation of hostilities that would hit the bloc’s economy by up to 1.5% of GDP. The European Commission’s warning is part of a plan to preemptively reduce gas consumption starting this summer, so as to avoid supply shortages in the winter.
Russia has stopped or reduced gas supplies to 12 EU countries as well as halted flows through the Nord Stream 1 pipeline during a planned maintenance set to end on Thursday. EU governments and officials are skeptical that Moscow will restart those flows: “We’re working on the assumption that it doesn’t return to operation,” Budget Commissioner Johannes Hahn told reporters yesterday.
“The EU has already started to anticipate such a risk and has prepared for a protracted and possibly full cut of gas from Russia at any moment,” the European Commission wrote in an updated draft communication.
Early action would limit economic damage in case of a complete shut-off from Russian gas to 0.4% of GDP on average in the EU, according to the Commission. Delaying action would increase costs by one-third, to between 0.6 and 1% of GDP. A severe winter would contract the bloc’s economy further, the Commission warned.
“The cost of delaying action in a cold winter environment would multiply significantly the costs for the EU, with a GDP impact between 0.9 [to] 1.5 percent on average, and in particular for the most affected Member States,” it wrote.
According to the draft, the Commission will propose that EU countries adopt voluntary reduction measures by updating their national contingency plans by the end of September. It will also propose rules allowing the EU executive to trigger an “EU alert” level and demand binding gas reduction “if the situation and the outlook evolve negatively in terms of balance between supply and demand and is likely to lead to emergencies and if at least two Member States ask for it,” the Commission wrote.
The Commission says it will base such proposals on Article 122, a legal provision that allows it to pass legislation by qualified majority in the Council. That means no country would have a veto, and that Parliament would be bypassed.
The gas reduction targets are still bracketed in the draft, meaning it hasn’t been decided yet.
