Outcry Grows as European Billpayers Struggle Amid Historic Energy Crisis

By Xinhua 

September 6, 2022

Tens of thousands of Czechs took to the streets in Prague over the weekend to protest against soaring energy prices and demand state help, in one of the largest demonstrations over the worst-ever utility bills crisis in decades.

Inflation in the eurozone hit a new record of 9.1 percent in August as energy and food prices continued to drift higher, preliminary figures published by Eurostat showed Wednesday.

Insiders feared that the protests may just be the beginning of waves of public discontent and can worsen over time unless the EU leadership brings in something concrete to curb the suffocating cost-of-living crisis while pressing ahead with climate pledges.

PUBLIC DISCONTENT

The rally which gathered an estimated 70,000 people in central Prague came a day after the Czech government survived a no-confidence vote amid discontent and claims of inaction against skyrocketing energy prices and subsequent spiraling inflation, already at levels unseen in three decades.

Protestors told Xinhua that they’ve felt the pinch of soaring prices and are particularly concerned that the soaring energy prices would herald a bitter winter.

Year-on-year inflation in the Czech Republic reached a whopping 17.5 percent in July, showed data published by the Czech Statistical Office. The Czech National Bank predicted that inflation would peak at just above 20 percent in the coming months and slow down only next year.

The cost of living “is much worse than before,” Vaclav, a teacher, told Xinhua at the square. “Everybody feels prices are getting higher.” Vaclav said he was still able to handle the situation, but was worried that some of his friends would have “bigger problems.”

“Now I’m single without children, so I can still afford it,” said the physical education teacher. “But if I have children next year, then it will be very, very hard times for me,” said Wojciech, Vaclav’s colleague, who is concerned that many more Czechs living with lower incomes may not be able to pull through.

Meanwhile, recent months have seen workers in France, Spain and Belgium go out on strike in the public transport, health and aviation sectors, demanding pay rises to tide their families over rocketing inflation.

Many Europeans worry that high inflation triggered by the current energy crisis could fuel social unrest, protests and strikes, according to a recent survey covering France, Germany, Poland and the United Kingdom.

The survey, conducted by pollster YouGov for the non-profit organization More in Common, showed that the cost of living has become the most important issue for Europeans in these four countries.

OVERDUE REMEDIES

As cost-of-living crisis looms large in Europe, countries have been rolling out measures to slam brakes on energy prices. But experts believe the real effect hinges on implementation and policy coordination.

The European Commission has come under fire amid mounting concern and doubts from some member states over its botched leadership as well as overdue and ineffective response.

To rein in soaring prices, the European Union is en route to impose historic interventions in the energy market including gas price caps and emergency credit lines for energy market participants, according to media reports.

French President Emmanuel Macron announced on Monday that France and Germany will help each other through the energy crisis and get by the upcoming winter.

Speaking at a press briefing after a videoconference with German Chancellor Olaf Scholz, Macron said France is ready to deliver more gas to Germany while the latter will offer more electricity to France, if the current energy crisis persists in winter.

“We are going to finalize the gas connections in order to be able to deliver gas to Germany… It (Germany) will be ready to produce more electricity to bring to us in extreme situations,” Macron said, adding that he was in favor of solidarity measures at the European level to deal with the current energy crisis.

Meanwhile in the Nordic region, Sweden and Norway announced on Monday they were ready to launch a joint task force aimed at curbing the soaring power bills in the Nordic region, a decision announced following a meeting between Swedish and Norwegian ministers in Stockholm.

The Finnish government proposed on Sunday to provide the country’s electricity companies with loans and guarantees of up to 10 billion euros (10 billion U.S. dollars) to secure the sufficiency of their cash resources.

Trade union leaders cautioned that despite these measures, a failure to act will hurt disproportionately lower-income families, in particular, and exacerbate deepening social divisions that have been evident for months.

LOSE-LOSE SANCTIONS

The protest on Saturday at Wenceslas Square in the center of the Czech capital unfolded with residents carrying signs calling for a new deal with Russia over gas supplies, a halt to arms sales to Ukraine and opposition to the European Union and NATO.

Organizers demanded that the central European nation stick to military neutrality and ensure direct contracts with critical gas suppliers.

Cuts and suspensions of Russian gas supplies, which have occurred on and off since the start of the Ukraine crisis earlier this year, are widely feared to aggravate Europe’s energy crunch and lead to a restructuring of the demand and supplies on the global market.

The ramifications of the surge in energy prices are seen everywhere in Europe, due to several negative factors, including the fallout of massive sanctions on Russia and the spillover of the United States’ aggressive interest rate hikes.

Sarah Schiffling, senior lecturer in supply chain management at Liverpool John Moores University, told Xinhua recently that sanctions against Russia are part of what is pushing up inflation because they have resulted in higher energy prices on global markets.

“Many European countries used to get a lot of their energy from Russia,” she said. “Countries like Germany have failed to diversify their energy portfolio earlier and are now scrambling to find alternative solutions, while also facing the consequences of the pandemic.”

To make matters worse, Russia’s largest gas producer Gazprom announced Friday it had stopped gas supplies via the Nord Stream I pipeline for an indefinite period due to malfunctions at a compressor unit. Deliveries to France’s leading energy company Engie were already halted Thursday.

While Germany is likely to bear the brunt as the cut-off threatens to halt industries, the overall EU economy will face risks of recession as a consequence. Credit rating agency Fitch Ratings said the eurozone was now set for recession due to the disruption of Russian gas imports and the lack of short-term substitutes.

During a G20 energy transition ministerial meeting on Friday, Russian Energy Minister Nikolai Shulginov said the unilateral restrictions imposed by Western countries against Russia have caused energy supply disruptions and energy price hikes around the world.

Europe is heading towards a harsh winter, said Agathe Demarais, global forecasting director of The Economist Intelligence Unit. She said the continent should expect “two years of a very difficult adjustment with a lot of economic pain.”

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, on Monday announced a small production cut for October to bolster oil prices that have recently slid over recession fears.