Home Finance Spanish PM urges EU to chop vitality prices or be Putin’s ‘hostage’

Spanish PM urges EU to chop vitality prices or be Putin’s ‘hostage’

Spanish PM urges EU to chop vitality prices or be Putin’s ‘hostage’

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Spain’s prime minister has stated EU leaders should act to convey down vitality costs to cease Europe changing into the “hostage” of Vladimir Putin and restrict the financial injury attributable to the warfare in Ukraine.

In an interview with the Monetary Instances, Pedro Sánchez stated a summit beginning on Thursday had to assist Spain and different international locations struggling to deal with huge will increase in gas and electrical energy costs, in addition to people who sought to reduce their dependence on Russian gas.

“If the EU doesn’t give us instruments to answer this vitality emergency, it will likely be troublesome for not simply Spain however for all member states to bear the big financial price,” Sánchez stated, referring to Madrid’s name for electrical energy and gasoline costs to be decoupled — which might considerably cut back payments in Spain.

Moscow had sought to maintain European vitality costs excessive by keeping gas reserves low final 12 months as a part of a prewar technique, Sánchez argued. “We now have to defend our fellow residents; Europe can’t be an vitality hostage of Putin,” he stated. “We now have to extend our vitality independence on the identical time that we adapt our worth system to a brand new actuality.” 

“If industries are slowing their manufacturing, it’s not as a result of they’ve an issue with demand, it’s as a result of they’ve vitality prices which might be completely insufferable,” stated Sánchez, highlighting issues in Spain that vary from heavy business — the place steelmakers have idled operations — to “fishing fleets that can’t fish”.

The Spanish prime minister should overcome vital opposition from northern EU states to his plans for adjustments to the union’s electrical energy market.

Pedro Sánchez: “Europe can not permit the summit to finish with out an settlement; we want measures and we want them now” © Nacho Hernandez/FT

At current, European Fee proposals on account of be launched on Wednesday deal virtually completely with gas storage — which Brussels sees because the lowest widespread denominator that may command assist among the many EU’s 27 member states.

Sánchez was talking on Monday earlier than flying to Paris and Brussels to see French president Emmanuel Macron, Belgium’s prime minister Alexander De Croo, European Fee president Ursula von der Leyen and Charles Michel, president of the European Council, to attempt to win spherical EU opinion forward of the summit.

He faces mounting strain at residence. Tens of hundreds of farmers protested towards excessive vitality costs in Madrid on Sunday whereas an unofficial truckers’ strike is in its second week.

Spain is especially delicate to electrical energy worth shifts as a result of round a 3rd of all households pay tariffs linked to identify market charges, which implies payments have been excessive for months.

The Ukraine warfare has vastly sophisticated Spain’s efforts to get better from the financial injury wrought by the pandemic, regardless that Sánchez insisted the nation would quickly really feel the benefit of the EU’s recovery fund, with an “unprecedented” complete of €24.6bn in initiatives on account of be put out to tender within the first half of this 12 months.

The Socialist chief is betting {that a} deal on vitality at this week’s summit will present the premise for his authorities’s personal response to the vitality disaster subsequent week, in negotiation with enterprise, unions and different political events.

“Europe can not permit the summit to finish with out an settlement; we want measures and we want them now,” he stated. “The [economic] influence [of the war] will probably be better or smaller relying on Europe’s response to the disaster.”

Spain needs to decouple electrical energy from gasoline costs by pausing or scrapping the EU’s marginal pricing scheme, which units charges based mostly on the final unit auctioned to permit the market to be absolutely equipped. This implies the hovering price of gasoline has pushed electrical energy costs since final 12 months.

Some 45 per cent of Spain’s electrical energy final 12 months got here from renewable vitality in contrast with only a third as a lot from gasoline, Sánchez stated. “It’s not logical in any respect that it’s this 10-15 per cent of gasoline that units the electrical energy worth for the entire market.”

At current conferences of EU ambassadors international locations together with Germany, the Netherlands and Austria have performed down expectations of a deal on the summit. Critics argue that the adjustments Spain seeks may undermine incentives for investing in renewable vitality and injury the drive for vitality independence from Russia in the long run.

Criticising what he known as “market fundamentalists”, Sánchez argued the EU ought to separate the necessity for short-term aid from long run reforms.

Spain has already introduced €10bn-€12bn of vitality subsidies however Sánchez characterised this as neither ample nor sustainable with out EU motion to curb costs.

The prime minister argued that Spain, which accounts for just below a 3rd of the EU’s liquefied pure gasoline storage capability, may assist the remainder of the continent bolster its vitality independence if connections to France had been improved. He stated this was a part of Spain’s “nice alternative after the UK’s exit from the EU to place itself as one of many principal actors” within the bloc.

However Spain’s relationship with its greatest gasoline provider, Algeria, was strained when he implicitly backed the claims of Algiers’ regional rival, Morocco, to the disputed western Sahara area late final week. Algeria has now withdrawn its ambassador to Madrid.

Sánchez’s transfer has been criticised not simply by Spain’s opposition however by the radical-left Podemos grouping, the junior associate in his authorities. Podemos politicians have additionally been at odds with Sánchez over Spain’s determination to arm Ukraine towards Russia.

The prime minister acknowledged what he described as a “discrepancy” with Podemos on defence however added that “most Spanish residents perceive . . . that peace must be defended”.

He added: “Putin has tried all through all these years to weaken the European venture . . . And now, in Spain and in Europe, a brand new European identification, a brand new European patriotism, is being constructed . . . That is what Putin needs to place in danger.”

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