Beijing Daily Client | Reporter Bai Bo
"Western sanctions against Russia were a complete failure." Hungary Foreign Minister Sijardo said in an interview on September 25.
It has been more than half a year since the Russian-Ukrainian conflict broke out, and the ceasefire is still far away. Sijaldor said that in the early stages of the conflict, when discussing the first round of sanctions against Russia, the EU predicted that the sanctions would make Russia surrender. But the fact is that sanctions have caused huge damage to Europe.
Inflation soars, prices soar, and the risk of recession increases... With winter approaching, life for European people may be more difficult. The British " Times " even predicts that under "long-term and painful economic pressure", there may be large-scale riots in the UK this winter.
Hannover City Hall in Germany saves electricity at night. Xinhua News Agency issued
Putting aside the price factor, energy has been "wintered"
As of now, the EU has introduced six rounds of sanctions against Russia, and Russia's energy exports to Europe have plummeted. Energy prices in European countries soared and inflation remained high. European Central Bank President Lagarde said on September 20 that the euro zone inflation rate may continue to rise in the short term, and the European Central Bank will continue to raise interest rates in to curb high inflation.
html In early September, Russia announced that the "North Stream-1" natural gas pipeline stopped supplying gas to Europe, causing the Dutch Ownership Transfer Center (TTF) Natural Gas October Futures intraday price to soar by more than 30%. French official data shows that from the second quarter of 2021 to the second quarter of 2022, France's household energy expenditure increased by 28%."Europe has fallen into the worst energy crisis since the 1980s. In addition to Russia's 'drain', high temperature and extreme weather are also an important reason for the shortage of electricity supply." Yang Chengyu, an associate researcher at the Institute of Europe of the Chinese Academy of Social Sciences, told the reporter of the Beijing Daily client that in the current public opinion environment where Europe divides its camps by values and regards "anti-Russia" as "political correctness", it is extremely unlikely that it will lift economic sanctions on Russia .
In the face of the energy crisis, European countries are actively taking measures such as hoarding crude oil and natural gas inventory, diversifying energy sources, and accelerating the transformation of renewable energy. EU Council required member states' natural gas reservoirs to exist at least 80% of their gas storage capacity before this winter. According to data from the European Gas Infrastructure (GIE), EU gas inventory has achieved this goal ahead of schedule in early September.
In Yang Chengyu's view, putting aside the price factor and from the perspective of energy supply and demand alone, Europe has "basically no problem" in dealing with the peak of gas use in winter. With many countries restarting coal-fired power production capacity and France restarting nuclear reactor , Europe's " power shortage " is also expected to be alleviated and it is safe to deal with winter.
The real "cold winter" comes from the pressure of economic recession
"At present, European inflation has been transmitted from high energy prices to higher production costs, which is transferred to the final goods and services, driving the prices of all goods and services in Europe to rise." Yang Chengyu admitted that compared to the intuitive energy crisis, Europe's real "cold winter" comes from economic downturn or even recession pressure.
Germany's World Economic Research Institute predicts that Germany's GDP growth rate will drop to -0.7% in 2023. The Kiel World Economics Institute said the impact of the energy crisis has only "just begun" and will not be fully revealed until next year, and a sharp rise in energy prices is dragging the German economy into recession.
In response to the continued high inflation, the ECB raised key interest rates twice in July and September this year, raising interest rates by a total of 125 basis points. Data released by the European Statistics Office recently showed that the euro zone's inflation rate in August reached 9.1% at an annualized rate, far exceeding the 2% medium-term inflation target of the European Central Bank.
"In the past, the euro mainly benefited from the attractiveness of Europe's interest rates compared to the United States, which has seen a disruptive change. Federal Reserve has raised interest rates rapidly, and the interest rates are far higher than the pre-epidemic level. In Europe, although the euro zone inflation rate has reached a record, the European Central Bank's decision-making process is very complicated, and most countries must go through long discussions to reach an agreement, and the interest rate hike is very slow." Wei Hongxu, a researcher at the Macroeconomic Research Center of Anbang Think Tank, pointed out that the policy differences between the European and American central banks are also one of the reasons for the continued deterioration of the European economy."This difference has caused the interest rate levels in Europe and the United States to change rapidly, causing the euro to plummet against the dollar. The euro has continued to depreciate, making the European economy closer to the recession."
Yang Chengyu said that European energy prices are still rising, so inflation has not yet peaked. Inflation has weakened residents' purchasing power and social welfare in disguise, and has inhibited growth momentum such as consumption and investment. Inflation also inhibits the production of European automobiles, chemicals, machinery and other products, erodes the advantages of European manufacturing, and leads to a decline in export competitiveness. The European economy is at a high risk of downward or even recession.
The road to energy transformation is full of thorns
In order to get rid of its dependence on Russian energy as soon as possible, Europe is vigorously accelerating the pace of energy transformation. BelgiumFormer Ambassador to ChinaNice said in an interview with Chinese media that the current crisis has actually accelerated the energy transformation of Europe and helped Europe introduce more green energy. However, this "painful period" of energy transformation may last for five to seven years, and Europe will eventually "turn crisis into opportunity".
In May this year, the EU announced a plan called REPowerEU, which plans to increase investment by 210 billion euros from now to 2027 to support the development of green energy solutions. According to the plan, the EU plans to get rid of its dependence on Russian fossil fuels as soon as possible by saving energy, diversifying energy supply, accelerating the development of renewable energy, and investment and reform. Germany will also "destroy nuclear and coal", accelerate the construction of LNG receiving station , accelerate the development of renewable energy, and plan to achieve 80% by 2030 and almost 100% renewable energy power generation by 2035.
Yang Chengyu pointed out that although there are challenges, Europe has a clearer established direction of gradually reducing its dependence on Russia's traditional fossil energy, strengthening energy supply security, and accelerating the deployment of renewable energy. In his opinion, Europe will eventually find it difficult to get out of the crisis and take a big step in making up for energy shortcomings.
"The cycle of 5 to 7 years is not long, and Europe may still face a longer energy transformation cycle." Wei Hongxu said that since the Russian-Ukrainian conflict, a series of energy response measures in Europe have not only focused on increasing the share of renewable energy, but are a comprehensive issue. He gave an example that the development of hydrogen energy cannot achieve energy transformation by relying solely on the proportion of hydrogen energy and the improvement of hydrogen energy technology. It also requires adaptive changes in the development of other energy systems such as power systems. The reconstruction of the energy system also requires huge investment in manpower and material resources, and the European fiscal system will be even more difficult to afford under the pressure of inflation and other factors.
Wei Hongxu pointed out that energy transformation is characterized by long-term and complexity, and cannot be achieved in the short term, and it also faces various uncertainties, which may slow down the transformation process. Therefore, the cycle of "5 to 7 years" is not long, and it may even take decades for Europe to completely complete the energy transformation.
