Europe is under greater pressure than at any time since World War II. An energy crisis precipitated by Russia’s war on Ukraine has morphed into a broader economic calamity with implications for decades to come. The grand experiment of European solidarity is being tested.
The most immediate threat is the energy crisis. The bold and brave European Union sanctions on Russia, following its invasion of Ukraine in February, have become ever more punishing within the EU. Europe has banned imports of coal and announced a phaseout of Russian oil imports. In response Russia has closed its main gas pipeline, with its flows to Europe now at one-fifth of the prewar levels. To be sure, the sanctions are working. After recording a record budget surplus, due to energy prices spiking, Russian revenues have collapsed along with the virtual closure of its main export market.
The cost to Europe is nevertheless immense. Gas prices have increased tenfold, propelling inflation to 40-year highs, pushing European economies to the brink of recession, and dragging consumer and business confidence to record lows. Germany, which is the economic engine of Europe, has seen its massive heavy industrial industries threatened as they have been built on an umbilical dependence on cheap Russian gas.
