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<\/figure><\/div>\n\n\n\nThe issue of energy<\/strong><\/p>\n\n\n\n The biggest challenge facing Western economies is energy. Increasingly dependent energy countries have a tradition of economic crises associated with the fact that they have been, for half a century, energy vulnerable.<\/p>\n\n\n\n At the time of writing (March 27, 2022), the international price of crude oil is around $ 113.90 a barrel (March 25, 2022) and natural gas is much more expensive.<\/p>\n\n\n\n Western economies and energy-dependent economies in general must take immediate action to prevent the situation from spiraling out of control. As prices do not appear to be declining in the near future, on the contrary there may be a new rise, we are obliged to take measures to limit consumption in accordance with the proposals of the International Energy Agency (IEA).<\/p>\n\n\n\n One of the interesting proposals of the international organization is the free public transport with simultaneous exclusion of private cars. from some areas of urban centers, thus reducing fuel consumption.<\/p>\n\n\n\n Another is to reduce the speed limit on highways and major highways by 10 km to reduce fuel consumption. No matter which proposals are chosen, it is clear that economies need to move fast to reduce fuel consumption.<\/p>\n\n\n\n Interventions are needed in the whole energy circuit, because otherwise the economies and especially their production will be blown up. There is a strong possibility that most economies will return to twin budget deficits that will lead to a crisis with the help of the record of wholesale energy prices and the large increase in the prices of imported fuels.<\/p>\n\n\n\n Governments need to change the way the Energy Exchange operates and take action against the big interests of households and the real economy.<\/p>\n\n\n\n Mario Draghi set a good example in Italy, stating: “We will tax part of the extra profits made by energy companies and redistribute the money to businesses and families in difficulty.” The aim of the Prime Minister of Italy and former President of the ECB is to collect 4.4 billion euros from the Italian State in this way.<\/p>\n\n\n\n A fairer distribution of the burden of the energy crisis is one of the initiatives that governments must take. They must also enforce consumer respect for abusive commercial practices.<\/p>\n\n\n\n Governments do not have time to lose in the energy sector, because it has been chosen as a battleground by the warring parties. The United States and the United Kingdom have already imposed an embargo on Russian oil imports, while the EU is considering following suit. Within a year, the EU wants to reduce gas imports from Russia by two thirds.<\/p>\n\n\n\n Gradual energy independence from Russia is an extremely difficult and costly affair, given that the EU supplies 40% of its gas and coal imports from Russia and 25% of its oil imports.<\/p>\n\n\n\n Despite the state of war between Russia and Ukraine, the EU continues to pay Vladimir Putin’s system 700-800 million euros a day for fuel imports. It is also estimated that the international rise in fuel prices will add another 100 billion euros to Russia’s war fund in the near future.<\/p>\n\n\n\n And the Russians are thinking of leveraging energy weapons by limiting oil and gas exports to the EU. to test its financial strength and coherence. So the situation is difficult and can become critical in the energy sector.<\/p>\n\n\n\n The issue of the green transition<\/strong><\/p>\n\n\n\n The energy crisis is changing the calculations regarding the green transition. The EU and Member States formally maintain their ambitious goals while taking action to address the energy crisis.<\/p>\n\n\n\n For example, the European Commission, under pressure from the European Council, has begun to consider investment in nuclear and gas “green” so that it can be financed in the future on very favorable terms. The European Parliament is currently rejecting the European Commission’s proposals by adopting a more consistent approach to the green transition.<\/p>\n\n\n\n The adjustment attempted by the EU offers the opportunity to its member countries to get out of the economic trap of natural gas and seek the solution to its energy with a combination of full utilization of lignite and nuclear energy, but also the spectacular growth and acceleration of investment in RES.<\/p>\n\n\n\n In 2021 Germany increased energy production and consumption compared to 2020. The mixture on which German energy production was based last year was: 40.9% RES of which 20.1% wind and 8, 8% solar, 27.9% of electricity from carbon with 18.6% from lignite and 9.3% from hard carbon. It is worth noting that electricity generation from lignite plants in Germany increased by 18% in 2021 compared to 2020, but also by 11.9% from nuclear power plants and 15.3% from natural gas.<\/p>\n\n\n\n Germany remains committed to the extremely ambitious goal of reducing gas emissions by 65% \u200b\u200bby 2030, calculated in 1990, and to increase RES electricity generation to 80% of the total.<\/p>\n\n\n\n For now, however, it is focusing on lignite and coal to overcome the difficulties. There is, therefore, no European rule that leads to an economic and energy impasse through natural gas.<\/p>\n\n\n\n Another typical example of a national adaptation of national policy to the new conditions is the decision of the seven-party Belgian government to extend the operation of two major nuclear power plants, which were to be closed in 2025, until 2035. Instead, Germany will proceed with the planned closure of nuclear power plants covering the energy deficit by increasing the production of lignite, carbonate units.<\/p>\n\n\n\n The issue of the food crisis<\/strong><\/p>\n\n\n\n EU member states will also be affected by the ongoing international food crisis over Russia’s invasion of Ukraine and its support for Belarus.<\/p>\n\n\n\n Huge arable lands of Ukraine are being destroyed, while the embargo on exports of Russia and Belarus deprives the international market of cereals, food and fertilizers.<\/p>\n\n\n\n Over the past five years, Russia and Ukraine have been responsible for 30% of world wheat exports, 17% of world corn exports, 32% of world barley exports – mainly used for animal feed – and 75% of world sunflower exports.<\/p>\n\n\n\n At the same time, Russia is the largest exporter of fertilizers in the world, supplying 15% of world exports, while Belarus is a leader in exports of potash, which is also used to produce fertilizers.<\/p>\n\n\n\n During the month following the invasion of Ukraine, grain prices rose by 21%, barley by 33% and some fertilizers by 40%.<\/p>\n\n\n\n The increase in fertilizer prices preceded the war in Ukraine, when according to the fertilizer price index of the World Bank in the period November 2020-November 2021 made a jump of 165%. The production of nitrogen fertilizers is based on natural gas, with the result that price increases are unlimited.<\/p>\n\n\n\n The conditions are being created for an international food crisis. Countries in an extremely difficult position, such as Yemen, Syria, South Sudan and Ethiopia, are facing the spectrum of hunger. Other countries, such as Armenia, Mongolia and Eritrea – which are completely dependent on wheat imports from Russia and Ukraine – will have to find alternative suppliers, despite rising prices and limited economic resources.<\/p>\n\n\n\n Turkey is 75% dependent on wheat imports from Russia and Ukraine, Egypt 73% and Tunisia 53%. These are countries of strategic importance that can be destabilized due to rising bread prices. The biggest risk is for Egypt, where bread is subsidized for 70% of Egyptians in order to make a living.<\/p>\n\n\n\n There must be immediate government intervention in the Member States to control and reduce production costs in the agricultural sector and to create the right conditions for its increase. It is not possible to watch indifferently the increase in the trade deficit and in the agricultural products in which the EU should have had comparative advantages.<\/p>\n\n\n\n The refugee issue<\/strong><\/p>\n\n\n\n Russia’s invasion of Ukraine triggered an unprecedented humanitarian crisis in Europe during the post-war period.<\/p>\n\n\n\n In a matter of weeks, Russian military operations have created more than ten million refugees. Six and a half million of them have moved to safer areas of Ukraine, while about three and a half million have fled abroad.<\/p>\n\n\n\n 2.1 million have already gone to Poland, 250 thousand to Slovakia, 312 thousand to Hungary, 365 thousand to Moldova, 243 thousand to Romania and 232 thousand to Russia. Another 113 thousand fled the Russian-speaking separatist regions of Donetsk and Lugansk shortly before the war, heading for Russia.<\/p>\n\n\n\n Putin applies the method of Erdogan and Lukashenko on a much larger scale. It creates huge flows of refugees to destabilize the EU economically and socially.<\/p>\n\n\n\n His plan seems doomed to failure, as long as the refugees are received with great disposition by the governments and peoples of the host countries. The problem is huge, because 90% of the refugees are women and children, since men aged 18-60 are fighting for their homeland in Ukraine.<\/p>\n\n\n\n Despite the huge economic costs and the great social upheaval, the refugee flows are working together this time. They unite governments and peoples in the face of the brutality of the war and Putin’s barbarism, and create a common European perspective in which Ukraine and Moldova will play a role.<\/p>\n\n\n\n The refugee is moving to other EU countries, while it also affects the political center of gravity of the EU. Poland has already emerged as a protagonist, which is expected to facilitate its super-conservative government reaching out to Brussels on rule of law issues.<\/p>\n\n\n\n The issue of tourism<\/strong><\/p>\n\n\n\n The global crisis that has erupted will also have a negative impact on tourism in the southern EU member states. developments from above are postponed indefinitely.<\/p>\n\n\n\n Russia has stopped sending tourists in recent years and will continue to do so, for political and economic reasons. Ukraine will not send tourists, and a large decrease in Polish tourists is expected, which has increased dramatically in recent years.<\/p>\n\n\n\n Judging by the very low bookings in the Southern EU, the traditional large European markets will not do well, as Germans, French, Italians, Britons, Dutch will be under a lot of income pressure and may not have a good psychology during the tourist months.<\/p>\n\n\n\n Also, tourists from China and Japan will not come to the EU for COVID-19 reasons.<\/p>\n\n\n\n The cycle of recent years – stagnation in winter – rise through tourism in summer – is not economically and socially sustainable, while tourism is threatened by negative international developments.<\/p>\n\n\n\n Another serious issue that overshadows tourism in the EU is its poor performance in tackling the pandemic.<\/p>\n\n\n\n The dual problem of tourism, the international crisis and COVID-19, highlights the problems of competitiveness of the European tourism industry. Unless there is a drastic reduction of costs for production units and no serious initiatives are developed to strengthen competitiveness and make productive investments of a new type.<\/p>\n\n\n\n New funding crisis?<\/strong><\/p>\n\n\n\n In a difficult as dangerous international environment, Western economies are heading for a new financing crisis. The finance ministers of the member countries are now talking openly about the depletion of the so-called fiscal space. Governments have spent tens of billions horizontally and without always the right criteria to address the economic and social consequences of the pandemic.<\/p>\n\n\n\n The invasion of the pandemic turned into a kind of white check, with spending escaping and budget deficits returning to high levels of GDP of member countries, as much as around 2008, before the great crisis of our economy began.<\/p>\n\n\n\n Faced with inflationary pressures, the central banks of the US, the UK and other countries have entered a period of gradual interest rate hikes. The upward trend of international interest rates is also observed in the interest rate on the 10-year government bond of the member countries.<\/p>\n\n\n\n The ECB, in order to mitigate the risks, insists on the policy of quantitative easing in various ways and promotes special arrangements on bonds. At the same time, the Eurozone continues fiscal easing and is likely to extend it to 2023. In this way, the EU thus gains time, but does not solve the problem.<\/p>\n\n\n\n Sooner or later, member states will have to make the necessary fiscal adjustments. At the same time, it will become more difficult for Europe to finance member economies due to specific choices made by their governments.<\/p>\n\n\n\n![\"\"](\"https:\/\/www.liberalglobe.com\/wp-content\/uploads\/2022\/03\/image-49.jpeg\")
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