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Gas sharing deal challenges EU solidarity

The EU agreement to reduce gas consumption is intended to help members share the energy burden, but risks causing internal turmoil.

The Energy Ministers of the European Union (EU) member states on July 26 approved a proposal to voluntarily cut gas demand by 15% from August to March 2023, in the context of supply from Russia is increasingly tightened. The agreement could become mandatory in the event of a real energy crisis in the winter.

For the above plan to be effective, the 27 EU member states need to establish more bilateral agreements on gas sharing. However, only six bilateral agreements have been signed so far, leaving others uncertain when or how they will have to share gas or how much compensation will be received or paid.

“Bilateral agreements are the only thing that will work if there is a real supply crisis,” said Christian Egenhofer, a fellow at the Center for European Policy Studies. “They help build legal tools, compensation plans, finance, and address infrastructure constraints.”

Such “side by side” agreements are signed to avoid panic when a real gas supply crisis occurs, reduce the risk of countries hoarding fuel, refusing to help neighbors meet difficult.

However, the implementation of the agreement in practice still depends on each country.

The astora natural gas storage facility, western europe's largest, in rehden, germany, march 16. Photo: reuters.

The Astora natural gas storage facility, Western Europe’s largest, in Rehden, Germany, March 16. Image: Reuters.

EU law makes members responsible for transferring gas to a neighboring country that is experiencing severe shortages, affecting households and hospitals. To do this, governments must establish bilateral agreements.

“The six bilateral agreements that have been signed are not enough,” EU energy policy commissioner Kadri Simson said in June, calling for further discussions.

The German Economy Ministry says it will sign a gas deal with the Czech Republic in the winter and is in discussions with Poland and Italy.

Some countries that are significantly dependent on Russian gas do not yet have bilateral agreements, such as Hungary. The landlocked country is the only member to oppose the EU’s agreement to cut gas consumption.

Italy and France consume the most gas after the economic locomotive of Germany. A senior Italian official said the country was negotiating with Greece on gas storage, while the French Energy Ministry confirmed Paris had no bilateral agreement yet.

Simone Tagliapietra, senior fellow at the policy institute Bruegel, Belgium, thinks the EU should adopt a more inclusive compensation mechanism, in which the country that consumes the most gas will pay other countries to save and share this energy.

“Without such a reimbursement mechanism, it is difficult to maintain solidarity within the bloc,” he said, adding that Germany, Europe’s largest economy, is heavily dependent on Russian gas. is the first contributor. “Without solid terms on gas sharing, we may not see written solidarity turn into reality in Europe.”

The idea of ​​compensation for sharing gas could attract the interest of countries like Greece and Spain. Spain, which is not dependent on Russian gas, once objected to a proposal from the EU to reduce gas consumption to support countries with a higher degree of dependence.

German economy minister robert habeck visits the gas trading company vng ag in bad lauchstaedt, germany july 28, 2022. Reuters/annegret hilse

German Economy Minister Robert Habeck visits the gas trading company VNG AG in Bad Lauchstaedt, Germany, on July 28. Image: Reuters.

EU diplomats say the call for unity from Brussels also evokes discomfort among southern European members who have been sharply criticized by Germany for their economic policies during previous financial crises.

After the EU approved the agreement on July 26, Spanish Energy Minister Teresa Ribera took a more conciliatory stance, expressing her willingness to strengthen Madrid’s liquefied natural gas (LNG) import capacity. for the good of all”.

German Economy Minister Robert Habeck also pledged to keep gas flows to neighboring countries, including Austria and the Czech Republic, “for European solidarity”.

Germany is currently the most active country in seeking solidarity agreements with its neighbours. German gas pipelines also help deliver gas to many Central and Eastern European countries.

Some countries are unwilling to cooperate, like Hungary. Budapest this month announced it would stop exporting fuel to other countries. Poland also has an ambiguous position on gas supply sharing.

Polish Prime Minister Mateusz Morawiecki said on July 28 that the decision to force the reduction of gas consumption in the EU must be adopted by consensus, not accepting the case of a majority. Poland argues that it has significantly reduced its gas consumption, so it is “unnecessary” to discuss mandatory cuts.

An EU diplomat said that it is in each country’s interest that members help each other, because an economic crisis or gas shortage in one country, especially Germany, will eventually spread throughout the country. League.

“If Germany falls, we all fall too,” the diplomat stressed.

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