The fall of the euro against the dollar, which has left it for the first time at par with the value of the North American currency, has exposed the economic crisis that the bloc made up of 27 European countries has been facing for at least a decade.
The growing fiscal deficit of the smaller economies, the slowdown in growth of the entire bloc, the departure of the United Kingdom (Brexit) and now the Russian-Ukrainian conflict, where the European Union has opted to "punish" Russia, despite Because this strategy has been described by economists and politicians as economic suicide, they are part of the main causes of Europe facing its worst crisis in decades.
structural crisis
Among the first difficulties faced by the European Union and which set off alarms about the bloc's economic model, were the banking crises in Spain and Ireland (2008). Subsequently came the economic crises in Portugal and Greece as a result of the inability to meet their fiscal and debt obligations. In both scenarios, the EU resorted to “financial assistance” programs whose main condition was the subordination of these countries to the fiscal, monetary and budgetary mandates of the European Central Bank (ECB).
Added to this is the delay in the development of new technologies and advanced engineering for industrial production that most of its members register, with Germany being the only country in the bloc that has directed its policy towards this field in the last 20 years.
As a third factor that has been reducing the growth possibilities of the European bloc, it is the demographic change that in this region is characterized by the drop in the birth rate, resulting in the aging of the population and the decrease in the active workforce. with technical and scientific capacity for productive development.
Regarding the latter, aging entails the sustained growth of the inactive working population that imposes a great weight on the budget of the States that must guarantee the payment of pensions in a high-cost social welfare system, bringing with it fiscal imbalances that are difficult to alleviate. due to the absence of national monetary and fiscal policies, since these are dictated by the ECB.
energy dependency
One of the great weaknesses of the European bloc is the energy dependency that they have developed as a result of the absence of large deposits of hydrocarbons necessary for industry and consumption by the population.
Currently, the countries that make up the European Union only manage to guarantee just over 41% of the gas and oil they require, while they import more than 24% of these resources from Russia and another 33% from various producing countries, according to published data. for him Almería European Documentation Center.
This energy dependence becomes much more pronounced when it is pointed out in gas, the main fuel for the block's heating and electricity industry, where European countries reach 83,6% of external dependence, with Russia being the largest supplier with 41%.
This subjection increases the economic vulnerability of these countries that, in conjunction with the United States, have undertaken the task of promoting a diversification of energy markets in search of shedding the heavy dependence on Russian oil and gas, betting on the isolation of the Eurasian giant. and negotiations with Middle Eastern producers including Iran and South Americans like Venezuela.
"Our dependence on Russian gas and oil has undoubtedly gone too far (…) This latest decision by Russia will only accelerate Europe's conversion to green energies that do not create dependencies and do not harm the climate," said the High Representative of the European Union for Foreign Affairs and Security Policy, Josep Borrell.
Boomerang sanctions
The European bloc decided to join the strategy of sanctions promoted by the United States against Russia, under the argument of "punishing" the Russian government for promoting the special military operation in Ukraine in order to liberate the Donbas region, which was under constant siege by the kyiv regime.
These sanctions have meant for the European Union several “sacrifices”, with greater emphasis on energy due to its high dependence on gas in Russian, as well as in food, as Russia and Ukraine are the main suppliers of cereals and fertilizers to the European bloc.
"Cut off the gas in your homes, reduce your dependence on those who attack Ukraine," Borrell said on 9 March during his speech to the European Parliament.
This attack against Russia has caused the price of gas in Europe to increase by 60%, reaching historical levels that affect the consumer who has seen the rise in bills. It also impacts the rest of the economy in the same way due to the rise in fuels and electricity that companies will finally reflect in the cost of their products.
The greatest evidence of the increase in the cost of living in the old continent is inflation, which for the first time, since the creation of the euro, exceeded 8 percentage points, standing at 8.6% year-on-year at the end of June.
This economic crisis has shaken European governments that have seen a growing wave of protests as in the case of France, the Netherlands, Germany, Italy, Spain, as well as strikes in the agricultural and transport sectors.
Likewise, this economic earthquake, added to internal scandals, has been a determining factor for the resignations of some rulers such as Boris Johnson in the United Kingdom and Mario Draghni in Italy.
No immediate solutions
In the midst of this scenario, the greatest fear that invades Europe is the arrival of winter where, as usual, the demand for energy increases, this without the governments having found a short-term solution to alleviate the effects that the sanctions they imposed on Russia have against their countries.
At present, the US-EU duo are carrying out maneuvers with the aim of promoting countries in the Middle East and Latin America with high potential for gas and oil production, to maximize their capacity to replace the Russian supply of both hydrocarbons, a situation that It looks complex, as French President Emmanuel Macron desperately explained to his American counterpart Joe Biden moments before entering the venue where the Summit of the G7 in the United Kingdom.
“I had a conversation with MbZ (Sheikh Mohammed bin Zayed al-Nahyan of the United Arab Emirates) and he told me two things. That I am at the maximum, at the maximum (of production capacity). This is what he claims. And then he said that the Saudis can increase by 150 (thousand barrels per day). Maybe a little more, but they don't have great capabilities," Macron is heard saying.
Subsequently, the French presidency, on the sidelines of this summit, declared the need to diversify the sources of oil supply”, where they ask to include Venezuela and Iran, for which they advocate that the United States lift all the restrictions that the White House has imposed against these countries limiting their production and marketing capacity.
"We need producing countries to pump more on an exceptional basis (…). Venezuelan oil must also be able to return to the market," they insist.
Macron's words to Biden, added to the call for the United States to loosen the ties imposed on Venezuela and Iran, show the race against the clock that the European Union is waging in search of solving the energy crisis that is already beginning to wreak havoc and putting in evidence of the deep economic crisis that these countries have been facing for at least a decade.
The solution lies in the awareness of European citizens that their Ukrainian countrymen are fighting for the freedom that they enjoy, now it is time to make the sacrifice for democracy in the world, it seems that Europeans do not know the sacrifices that their parents made in the second World War.