Europe in 2022: Internal Disputes and Suffocating Crises

The year 2022 ended, through which the European continent witnessed a list of tragedies that it had to go through.

At the beginning of the year, Europeans woke up to escalating tensions on their eastern border between Russia and Ukraine, which continued to turn into a bloody war, presenting severe security challenges unknown to the continent in decades, a massive arms race, and an imminent nuclear threat.

All these challenges necessitated the EU countries to take a stand against them, which was also reflected economically by a stifling energy crisis and consequently high levels of inflation, threatening the European economy with a wide recession.

 

A Year in the Dark

With the outbreak of war in Ukraine, Europeans found themselves face to face with their main supplier of natural gas, Russia, which supplies Europe with about 40% of its energy resource, which put the countries of the Union in a critical predicament, and they must look for alternatives to fill this deep gap left by Russian gas.

Six European countries rely entirely on Russian gas for their needs, including three countries that rely on it for more than a quarter of their energy needs, according to the European Commission. Russia exports an estimated 230 million cubic meters of gas to Europe daily, about a third of which passes west through Ukraine.

In return, Russia decided to respond to European sanctions against it and the Europeans’ support for Kyiv to price the sale of gas to those countries in their local currency, the ruble. In April, Russian energy giant Gazprom cut off gas supplies to Poland and Bulgaria because the two countries refused to pay for it in rubles.

To solve this problem, Europeans have looked for new suppliers from the Middle East, “Israel,” and Azerbaijan. They have also asked their usual suppliers, Algeria and Norway, to increase the volume of those imports, which is offset by logistical difficulties and significant challenges in increasing their production.

Countries such as Germany, France, Austria, the Netherlands, and Italy have also returned to coal for electricity generation. But coal is also facing shortages after the EU announced a ban on imports from Russia in August, which account for 45 percent of the bloc’s needs.

All this has led to the explosion of the European energy bill, which exceeded the threshold of $700 billion, according to estimates in November, despite the adoption of the Union energy austerity plan last August, under which members agreed to reduce their energy consumption by 15%.

In late July, Germany’s Hanover was the first city to announce measures that included restricting heating of public buildings, as well as stopping hot water in public baths and bathrooms in city-run public buildings and entertainment centers. In France, similar measures have also been adopted, in addition to turning off public lighting and lighting public buildings and edifices.

According to a report by the Washington Post, many in Europe resorted to returning to coal and wood stoves as alternative means of heating in winter, and thus the demand for them increased, leading to their loss from the market, while several cases of wood theft were recorded.

 

Economic Recession

The energy crisis has pushed European countries into another economic predicament: record-high inflation rates. According to Eurostat, inflation in the Union reached its highest level last October, approaching the threshold of 20% on an annual basis, the highest rate seen on the continent in a quarter of a century.

According to the same statistics, food, alcohol, and tobacco prices joined energy prices as the main reason for the rise in inflation, reaching 13.1%, and energy prices rising by 41.9%.

Europe’s industrial energy demand accounts for 30% of total continental demand. According to 2019 statistics, the chemical and petrochemical industries come at the top of the ranking of industrial energy consumption, followed by the metal industries and then the steel and iron industries, which together consume 20% of energy imports in the old continent.

According to a recent survey by the German IFO Institute for Business Climate, more than 68% of German manufacturers complained of supply chain bottlenecks, and retail sales expectations fell to a new record low, making the institute predict that the country will experience a recession by winter.

Accordingly, German companies’ bankruptcy threat is expanding, which is confirmed by a study by the Allianz Trade institution, which monitored an increase in the number of companies expected to declare bankruptcy during 2023 to 16,100, approximately 40% of all German companies.

Official data also showed German exports fell more than expected in December, as rising inflation, weaker external demand, and weak supply chains increased the risk of recession in Europe’s largest economy this winter.

In France, according to Insee, economic growth could “fade” to zero during the fourth quarter of this year. The French central bank believes that the expansion of French industrial activity may be halted due to increasing “uncertainty” and rising energy prices, and the country’s economic recession may continue into 2023.

A recession is expected to accompany Europe into 2023, with the bloc’s overall growth slowing to 0.3%. Germany’s GDP could shrink by 0.6%, the economies of Latvia and Sweden are set to contract, and Ireland is expected to be the bloc’s fastest-growing economy, expanding by just 3.2%.

 

Massive Protests

These economic conditions threaten the European Union countries with a wave of strikes and widespread protests. The first of which are known during the year we are bidding farewell.

In October, the aviation sector in a number of European countries witnessed labor strikes, disrupting many international flights to and from the continent.

In France, rail and transport workers, secondary school teachers, and public hospital employees led a general strike that disrupted most of those interests. With them, French oil workers’ unions were also protesting for higher salaries and rejection of government interference in winning their protest movement.

In Prague in September, about 70,000 people took to the streets to protest rising prices, demanding the resignation of the center-right government, accusing it of failing the aspirations of the Czech people since it took power, and blaming it for the current economic situation.

Days later, thousands of Romanians joined a march in Bucharest to protest the cost of energy, food, and other necessities that organizers said were making millions of workers poor.

In Germany, too, thousands have taken to the streets more than once last autumn. The German demonstrators, like their counterparts in other European countries, denounced the high prices of energy bills and demanded that the federal government, led by Olaf Scholz, reopen the Nord Stream 2 pipeline and resume receiving Russian gas exports through it.

According to a previous YouGov poll, public dissatisfaction with economic conditions has risen rapidly in a number of European countries.

According to the report, Poland is at the top of the ranking as the country most threatened by social unrest, with 75% of its citizens ready to protest against living conditions and 63% ready to go on strikes.

This prompted a number of countries to take unilateral decisions to allocate budgets to ease the burden of economic conditions, one of which was Germany, whose government had announced a 200-billion-euro energy price subsidy package.

This measure drew the indignation of its European neighbors, led by France, and according to the American website Politico, France “considered that Berlin should have consulted its allies about such huge expenditures that could distort the internal economy.”

President Emmanuel Macron attacked his counterpart, German Chancellor Olaf Scholz, in remarks on the sidelines of a summit of EU leaders in Brussels in October, saying: “I think it is not good for Germany, or Europe, for Germany to isolate itself,” adding that “we certainly must maintain our unity,” implicitly accusing Berlin of destabilizing this unity.