EU leaders fly to Cyprus today for a summit set to confront a raft of challenges and threats to the bloc’s stability, but one crisis stands head and shoulders above the rest: surging energy prices.
Context: The US-Israeli war against Iran, launched almost two months ago, has caused oil and gas prices to soar, created looming shortages of critical products such as jet fuel, and caused long-term damage to the Gulf’s production capacity. Europe relies heavily on imported fossil fuels.
The crisis is the third in six years for the EU’s battered economy, after the Covid-19 pandemic and the 2022 energy crisis caused by the Russian invasion of Ukraine. That means countries have very little fiscal firepower in the tank to mitigate current issues.
It also means that the European Commission knows knee-jerk measures, such as throwing state cash at petrol pump subsidies, or writing cheques to households and businesses, create expensive long-term headaches.
Ahead of the summit, the commission proposed a raft of alternatives, including changes to electricity taxation, collaborative refilling of gas storage facilities, mandatory jet fuel stocks and the possibility of redistributing the fuel across member states.
The ideas are aimed at convincing EU leaders to co-ordinate their response and avoid turning an energy crisis into a fiscal one.
Teresa Ribera, the Commission’s executive vice-president, said the proposals were an attempt “at reinforcing EU co-ordination and protect[ing] the most vulnerable while accelerating deployment of homegrown clean energy and electrification to make a real and lasting difference”.
US President Donald Trump has extended a temporary ceasefire with Iran as he seeks a lasting peace deal, but the critical Strait of Hormuz, through which a fifth of global oil and gas supplies normally flow, remains shut.
EU leaders will discuss the conflict and its ramifications tonight at a dinner in Ayia Napa. They are expected to discuss economic support measures, efforts to diversify energy supplies and potential steps to reduce energy consumption should the war continue and Hormuz remain closed through the summer, officials briefed on the preparations said.
The crisis will also feed into discussions on Friday morning on the bloc’s 2028-34 shared budget. But diplomats warned that the longer the energy and economic crisis rumbles on, the harder it will be to convince capitals to pay into a larger, more ambitious budget as they fear for their domestic fiscal situation.
Chart du jour: Here we go again
Brussels is open to offering Iceland a carve-out on fishing policy, which held back the coastal nation from joining in 2013, as the union seeks to expand its footprint in the strategically important Arctic.
Building block
Faced with a housing crisis, Ireland wants simpler EU environmental and permitting rules to support Europe’s ability to build, writes Ian Johnston.
Context: The EU has brought in a wave of new environmental policy rules but seven countries warn that their impact on permitting procedures is slowing down infrastructure projects.
Ireland, one of several EU countries with a chronic lack of housing, is aiming to build 300,000 homes by 2030 but is running up against a flurry of rules that are holding back construction.
“The permitting process takes a lot longer than it did 20 years [ago],” said Thomas Byrne, Ireland’s Europe minister. “We’ve had particular issues with bureaucratic requirements of some levels of legislation.”
Those concerns are shared by six other member states, including Poland, Austria and Greece.
In a letter sent to the EU’s economy commissioner Valdis Dombrovskis, seen by the FT, the member states said the bloc’s current simplification push on environmental assessments does not go far enough and have called for a “more meaningful and ambitious simplification of EU permitting and environmental rules”.
They are also seeking more “stress-testing” of environmental legislation to ensure it does not clash with permitting requirements.
Consistency is becoming more important as the EU rolls out industrial policies such as the Critical Raw Materials Act and Net-Zero Industry Act, aimed at reviving the EU’s flagging industrial base.
The push also signals priorities ahead of Ireland’s EU presidency, Byrne said. “We have simplification on the agenda at every General Affairs Council.”
https://www.ft.com/content/b1262c19-7b60-4005-9063-0f12bcdf934c?syn-25a6b1a6=1