“The crisis in the Middle East should convince Europe to further strengthen its energy autonomy”

2023-10-09 11:00:20

Seen from Israel, the war triggered by the Hamas incursion on Saturday October 7 on its territory is comparable, in its scale and especially its surprise effect, to the shock of the Yom Kippur War, in October 1973, when the troops Egyptians and Syrians had entered the country. The Western world remembers this painfully, because the brutal and coordinated rise in oil prices plunged it into a major economic crisis. Will it be the same today?

Also read the story: Article reserved for our subscribers The day Hamas shook Israel

Monday, October 9, the barrel of oil in any case reacted vigorously, with a surge of almost 5% in the price of a barrel, to 86.50 dollars (82 euros) for North Sea Brent. However, analysts remain cautious and, in the majority, do not anticipate an explosion in prices like that of 1973. At the time, the OPEC cartel had increased its prices by 70%, while reducing its production. Today, the main producing countries in the region are careful not to announce a change in their policy. Investors therefore follow like milk on fire all signs of a possible extension of the conflict.

This crisis should convince Europe to further strengthen its energy autonomy. The situation was to be at the center of conversations on Monday between the French President, Emmanuel Macron, and the German Chancellor, Olaf Scholz. They found themselves in Hamburg, on the banks of the Elbe, with their respective governments. By boat or along the banks, they will try to restart a seriously becalmed Franco-German engine. One of the major subjects of controversy concerns energy, and particularly nuclear power.

Competitiveness differential

France, precisely following the shock of 1973, developed its nuclear fleet and intends to make it the cornerstone of its energy transition strategy towards decarbonization. She therefore wants the new rules of the European electricity market to include nuclear power in the same way as renewable energies. And in particular that the government can regulate its prices with a floor and a ceiling protecting consumers from a sudden increase in prices. Brussels now accepts that new reactors benefit from this type of contract alongside solar and wind power, but not current plants that have already been depreciated. Berlin is inflexible on the subject, because it sees it as a distortion of competition and a diversion of the mechanism supposed to help investment in renewables.

It would be crucial for Europe to bury this quarrel which is harmful to its interests. In a joint note, the French Economic Analysis Council and the German Council of Economist Experts studied what Europe’s response to the challenge of American reindustrialization could be. They concluded that the funds deployed by Washington under the Inflation Reduction Act, its anti-inflation law which subsidizes decarbonization investments, were not far from the sums spent by the European Union.

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