BRUSSELS, June 24 (Reuters) – EU leaders on Friday warned that “low cost power is gone” and agreed to spice up preparations for additional cuts in Russian fuel, accusing Moscow of “weaponising” power by way of a provide squeeze which Germany warned may partly shut its business.
A day after celebrations over setting Kyiv on the street to membership of the bloc, Friday’s summit in Brussels was a sober reflection on the financial affect of Russia’s invasion of Ukraine, with rising worries over hovering costs and warnings of a “robust winter”.
“Inflation is a serious concern for all of us,” European Council chief Charles Michel instructed a information convention because the two-day summit ended.
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“Russia’s warfare of aggression is pushing up the worth of meals, power and commodities,” he stated, including that leaders had agreed to carefully coordinate their financial coverage responses.
The summit agreed few concrete steps however the leaders tasked the European Fee with discovering extra methods to safe “provide at reasonably priced costs” due to “the weaponisation of fuel by Russia.”
European Fee chief Ursula von der Leyen stated the seek for different provides was already in progress, with U.S. LNG deliveries up 75% this yr from final yr, and Norway pipeline fuel deliveries up 15%.
In addition to, the EU government will current a plan on preparedness for extra fuel cuts from Russia to leaders in July she stated, including: “Hope for the perfect, put together for the worst. That is what we’re doing proper now.”
The European Fee will provide you with proposals and choices to debate at a subsequent EU summit in October, together with contemplating different market designs that might doubtlessly embody decoupling fuel from the formation of the market worth for electrical energy, von der Leyen stated.
“We’re engaged on totally different fashions, not solely to look into easy methods to curb the power costs or electrical energy costs but additionally to have a look at the market design, with the query: is the market design we’ve got at present nonetheless match for function?”, she stated.
One contentious difficulty is whether or not governments ought to step in to cap costs.
Spain and Portugal capped fuel costs of their native electrical energy market this month, however different states warn worth caps would disrupt power markets and drain state coffers additional, if governments needed to pay the distinction between the capped worth and the worth in worldwide fuel markets.
“TOUGH WINTER”
Leaders of the 27 EU nations positioned the blame for an enormous spike in costs and sagging international progress on the warfare that started precisely 4 months in the past.
“The notion of low cost power is gone and the notion of Russian power is actually gone and we’re all within the means of securing alternate sources,” Latvian Prime Minister Krisjanis Karins stated, including governments should “help these parts of society that undergo probably the most”.
Following unprecedented Western sanctions imposed over the invasion, a dozen European nations have to this point been thumped by cuts in fuel flows from Russia.
“It’s only a matter of time earlier than the Russians shut down all fuel shipments,” stated one EU official forward of Friday’s talks.
German Financial system Minister Robert Habeck warned his nation was heading for a fuel scarcity if Russian provides remained as little as now, and a few industries must shut come winter.
“Firms must cease manufacturing, lay off their staff, provide chains would collapse, individuals would go into debt to pay their heating payments,” he instructed Der Spiegel journal. learn extra
The EU relied on Russia for as a lot as 40% of its fuel wants earlier than the warfare – rising to 55% for Germany – leaving an enormous hole to fill in an already tight international fuel market.
Inflation within the 19 nations sharing the euro foreign money has shot to all-time highs above 8% and the EU’s government expects progress to dip to 2.7% this yr.
Eurogroup chief Paschal Donohoe warned that the bloc should “acknowledge the chance we may face if inflation turns into embedded in our economies”.
“If we do not concentrate then the entire EU financial system will go right into a recession with all its penalties,” Belgian Prime Minister Alexander De Croo warning of a possible “robust winter” forward.
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Reporting by Jan Strupczewski, Phil Blenkinsop, Marine Strauss, Bart Meijer, Francesco Guarascio, Kate Abnett, Charlotte Van Campenhout, Benoit Van Overstraeten, Gabriela Baczynska; writing by Ingrid Melander and Jan Strupczewski; enhancing by John Chalmers, Alex Richardson and Nick Macfie
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