Summary
The European Union summit is being held Dec. 11-12. Climate change, the Lisbon Treaty and the EU response to the global economic crisis are high on the agenda for the meeting. Absent from the agenda are ideas on dealing with a resurgent Russia, the energy crisis that could start after Russia implements higher natural gas prices for most EU member states Jan. 1, and the institutional flaws underlying the economic crisis sweeping through the bloc.
Analysis
EU leaders are meeting for the last time in 2008 on Dec. 11-12. The three main issues on the agenda for the 27 heads of government meeting in Brussels are the EU stimulus package passed in response to the global economic crisis; the Lisbon Treaty, which has languished in limbo since its rejection in an Irish referendum in June; and Europe's climate package. Prior to the summit, German Chancellor Angela Merkel expressed "cautious optimism" that agreement could be reached on the climate package, initially a German proposal that has come under criticism from various quarters.
While a handful on its own, the agenda is more notable for the issues not being discussed -- namely, how to deal with a resurgent Russia; the potential energy crisis stemming from Russian natural gas price increases for most EU member states starting Jan. 1; and the institutional deficiencies underlying the economic crisis sweeping the continent.
Related Special Topic Pages
The issue of the climate change and energy package is notable, and any progress -- particularly in midst of the economic crisis -- would be impressive considering the uphill battle. Referred to as 20-20-20, the initiative aims to reduce the European Union's carbon emissions by 20 percent, increase its use of renewable fuels to 20 percent of total energy demand and reduce total EU energy demand by 20 percent, all by the year 2020. However, with the economic crisis in full swing, the emphasis on climate change is dubious. The Lisbon Treaty is also on the agenda, and the EU member states are expected to approve assurances to Ireland on neutrality, taxation, commissioner assignments among member states and controversial rules like abortion -- all key sticking points during the Irish referendum.
The leaders do plan to address the bloc's 200 billion euro (US$263 billion) stimulus package, but the plan is more of a face-lift than a real solution to the underlying institutional problems within the European Union. As it stands now, the stimulus plan is a patchwork of national stimulus packages that accounts for only 0.6 percent of the total EU gross domestic product (GDP), whereas the European Commission hopes member states will commit 1.5 percent to the plan. Some within the commission are calling for Germany, the most powerful European economy and one of the few with a balanced budget, to pick up the slack amounting to 0.9 percent of the bloc's GDP (which would be around $170 billion). That is most definitely not on Berlin's agenda.
The EU member states are discussing this plan mainly because the broader, institutional issues are impossible to agree on. Such questions include how to protect the exposed EU member states outside the eurozone (for example, the Baltics, Hungary, Romania and Bulgaria) against currency devaluation, or whether to create some sort of unified tax regime that would give the European Union an actual fund from which to draw large amounts of cash during a financial crisis. There are also issues of a continent-wide banking regulatory regime, and of expanding the European Central Bank's powers. These questions seem prescient in light of the lack of a coherent, unified EU response to the economic crisis.
The main obstacles to answering these questions are the historical lack of willingness to devolve powers to the bloc from the nation-state level, and Germany's resistance to any "economic government" plan that would rely on German economic might for financial backing. Germany therefore is comfortable with the current plan as long as it does not ask Berlin for any financing beyond its current commitment.
Next is the issue of Europe's relationship with Russia. EU member states are divided on how to talk to Russia about security. France and Germany lead the relatively appeasing line, while Poland, the Czech Republic, Sweden and the United Kingdom lead the group stressing a firm stance. The issue is clear for Poland and the Czech Republic: As they are likely targets of further Russian maneuvers, they believe the Russian resurgence must be countered. But France is much more interested in leaving all its diplomatic avenues open, while Germany does not want to antagonize its main source of energy imports and is historically open to independent accommodations with Russia.
Which brings us to the elephant that will be in the room with the 27 European heads of state at the summit: Russia's planned Jan. 1 natural gas price increases. EU member states depend on Russian imports for a quarter of their total natural gas needs. Russian natural gas behemoth Gazprom announced in July that it would raise the natural gas prices it charges EU member states from $420 per thousand cubic meters (tcm) to $720 per tcm. But many European countries have already notified Gazprom that they will not be able to pay the new price. The current financial crisis obviously makes such a drastic increase problematic, particularly for Central European economies that both depend on Russian natural gas for most of their energy supply and already are running huge trade deficits because of energy imports.
Gazprom announced Nov. 12 that it might consider scrapping its planned price increases, but any such move most likely will be used as a tool for political manipulation. The Kremlin has been known to use energy as a political tool in the past, and without a coherent, unified effort, the Europeans will be easy to pick off one by one.
No comments:
Post a Comment