Tensions between the United States and European Union countries are rising, with Europeans accusing the Americans of “profit from war”. Between the prices of gas exported to Europe, the American law on the reduction of inflation which provides for historic subsidies or even the arms market… the subjects of contention are multiple. “Fractures” that could fix Russia.
European officials have expressed their “fury” against the Biden administration and accuse Americans of “making a fortune in war while European countries suffer”. “The fact is, if you look at it soberly, the country that benefits the most from this war is the United States because it sells more gas and at higher prices, and because it sells more of weapons”a senior official told US political outlet Politico.
This same senior official believes that “the double blow” of the United States, namely the Inflation Reduction Act and high gas prices, could not only make “change the mind of public opinion” about the war in Ukraine but also “about the transatlantic alliance”. “America needs to realize that public opinion is changing in many EU countries”he said.
The Gas of Discord
Since the outbreak of the Russian military intervention in Ukraine, European countries have been trying to reduce their dependence on Russian energy. Threats of energy shortages loom this winter due to pressure on gas supplies. In order to reduce this dependence, the countries of the European Union request American gas. However, it is sold to them at almost four times more expensive than that practiced on American soil.
“The United States sells us its gas with a fourfold multiplier effect when it crosses the Atlantic”European Commissioner for the Internal Market Thierry Breton declared on French television on Wednesday 23 November. “Of course, the Americans are our allies… but when something is wrong, we must also say it among allies”he added.
President Macron also complained about the high price of US gas exports. He announced his intention to raise this issue with Joe Biden during his state visit to Washington. “The United States produces inexpensive gas that they sell to us at a high price”, he told French industrialists on 8 November. German Economy Minister Robert Habeck also criticized the prices. “excessive” gas practiced by certain suppliers “amis”like the United States, calling on Washington to show more “solidarity” and help reduce energy costs.
American reactions to European complaints were not long in coming. For a spokesman for the American Security Council, quoted again by Politico, “Rising gas prices in Europe are caused by Putin’s Russia’s invasion of Ukraine and its energy war against Europe (…) Increases in natural gas exports from the United States to Europe have increased significantly and have enabled Europe to diversify its energy sources”he added, relayed by the same source.
The American political media also quotes an American official who says that the prices of gas exported “reflect private market decisions and are not the result of any US government policy or action. American companies have been transparent and reliable suppliers of natural gas to Europe,” he said.
The same official explains that “In most cases, US LNG exporters do not fully benefit from the difference between export and import prices. Companies that resell the gas within the EU benefit from this. The largest European holder of long-term American gas contracts is, for example, the French company TotalEnergies”he recalls.
The same spokesman for the American Security Council, whose identity has not been revealed, believes that “The increase in global LNG supply, led by the United States, has helped European allies and partners increase storage levels to an encouraging level ahead of this winter. We will continue to work with the EU, its members, and other European countries to ensure sufficient supplies are available for the winter and beyond.”he said.
The IRA arouses the ire of Europeans
The prices considered high by European countries were raised with Joe Biden at the last G20 meeting, which took place in Bali on November 15 and 16. The American President “just didn’t seem aware of the matter”according to the senior EU official quoted by Politico.
The European countries, which have suffered galloping inflation since the start of the war in Ukraine, fear above all “a collapse of European industries”. Blame it on the US Inflation Reduction Act (IRA), which provides a $369 billion industrial subsidy program to support green industries. These subsidies have heightened the doubts of European countries as to the nature of their relationship with the United States. “The Inflation Reduction Act changed everything.”said a European diplomat: “Is Washington still our ally or not?”.
On November 22, the French Minister of Economy, Bruno Le Maire, accused the United States of going down the path of protectionism. He urged Brussels to take steps to prevent these “discriminatory” measures against European industries producing electric cars: “Europe must not be the last of the Mohicans“, he said, even offering to take the matter to the World Trade Organization (WTO). Dutch Trade Minister Liesje Schreinemacher expressed concern about this US law: “The potential impact on the European economy is very significant”. Tonino Picula, European Parliament leader for transatlantic relations, said that “the United States follows a national program, which is unfortunately protectionist and discriminatory against its allies”.
Brussels, which believes that European companies are already penalized by the rise in energy prices, simply asserts that these subsidies “will destroy European industries”.
“Some large foreign companies that wanted to set up in Europe are now hesitating between European sites and American sites”, explained the French Minister of the Economy, at the beginning of November. According to him, “in France, the first estimates indicate that ten billion investments and thousands of industrial jobs are at stake”.
Accelerate arms sales
Politico explains that companies are planning new investments in the United States or even relocating their existing operations out of Europe to American factories. For example, multinational chemical company Solvay announced this week that “his choice would be the United States rather than Europe for new investments”.
Diplomat Josep Borrell, the EU’s foreign policy chief, called on the United States to “respond to the concerns of Europeans”. “Americans make decisions that have an economic impact on us”he told the same media outlet.
The European Union is preparing its responses, such as subsidies, to prevent European industry from being “annihilated”. Their concern is not just limited to gas prices or even the IRA. The United States is also taking advantage of the war in Ukraine to increase its income through the sale of arms.
Since the start of this war, the United States has been the largest supplier of military aid to Ukraine, supplying more than $15.2 billion in weapons and equipment. The EU has so far provided about eight billion euros worth of military equipment to Ukraine, according to diplomat Josep Borrell.
The United States could also benefit, according to a senior official in Brussels, from the slow resupply of weapons to European countries, due to problems in the production of chips. According to Politico, the Pentagon is already developing a roadmap to accelerate arms sales.
An EU diplomat thus suggests that the United States could be satisfied with “the money they make on guns” to compensate “all that money on gas”. He believes that the “rebate on gas prices could help us keep our public opinion united”. “It’s not good, in terms of optics, to give the impression that your best ally is reaping huge profits from your problems”, he said. A fracture that would suit Russia.