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ENERGY

How European countries are spending billions on easing energy crisis

European governments are announcing emergency measures on a near-weekly basis to protect households and businesses from the energy crisis stemming from Russia's war in Ukraine.

Published: 22 September 2022 08:50 CEST
How European countries are spending billions on easing energy crisis
Photo by Arthur Lambillotte on Unsplash

Hundreds of billions of euros and counting have been shelled out since Russia invaded its pro-EU neighbour in late February.

Governments have gone all out: from capping gas and electricity prices to rescuing struggling energy companies and providing direct aid to households to fill up their cars.

The public spending has continued, even though European Union countries had accumulated mountains of new debt to save their economies during the Covid pandemic in 2020.

But some leaders have taken pride at their use of the public purse to battle this new crisis, which has sent inflation soaring, raised the cost of living and sparked fears of recession.

After announcing €14billion in new measures last week, Italian Prime Minister Mario Draghi boasted the latest spending put Italy, “among the countries that have spent the most in Europe”.

The Bruegel institute, a Brussels-based think tank that is tracking energy crisis spending by EU governments, ranks Italy as the second-biggest spender in Europe, after Germany.

READ ALSO How EU countries aim to cut energy bills and avoid blackouts this winter

Rome has allocated €59.2billion since September 2021 to shield households and businesses from the rising energy prices, accounting for 3.3 percent of its gross domestic product.

Germany tops the list with €100.2billion, or 2.8 percent of its GDP, as the country was hit hard by its reliance on Russian gas supplies, which have dwindled in suspected retaliation over Western sanctions against Moscow for the war.

On Wednesday, Germany announced the nationalisation of troubled gas giant Uniper.

France, which shielded consumers from gas and electricity price rises early, ranks third with €53.6billion euros allocated so far, representing 2.2 percent of its GDP.

Spending to continue rising
EU countries have now put up €314billion so far since September 2021, according to Bruegel.

“This number is set to increase as energy prices remain elevated,” Simone Tagliapietra, a senior fellow at Bruegel, told AFP.

The energy bills of a typical European family could reach €500 per month early next year, compared to €160 in 2021, according to US investment bank Goldman Sachs.

The measures to help consumers have ranged from a special tax on excess profits in Italy, to the energy price freeze in France, and subsidies public transport in Germany.

But the spending follows a pandemic response that increased public debt, which in the first quarter accounted for 189 percent of Greece’s GDP, 153 percent in Italy, 127 percent in Portugal, 118 percent in Spain and 114 percent in France.

“Initially designed as a temporary response to what was supposed to be a temporary problem, these measures have ballooned and become structural,” Tagliapietra said.

“This is clearly not sustainable from a public finance perspective. It is important that governments make an effort to focus this action on the most vulnerable households and businesses as much as possible.”

Budget reform
The higher spending comes as borrowing costs are rising. The European Central Bank hiked its rate for the first time in more than a decade in July to combat runaway inflation, which has been fuelled by soaring energy prices.

The yield on 10-year French sovereign bonds reached an eight-year high of 2.5 percent on Tuesday, while Germany now pays 1.8 percent interest after boasting a negative rate at the start of the year.

The rate charged to Italy has quadrupled from one percent earlier this year to four percent now, reviving the spectre of the debt crisis that threatened the eurozone a decade ago.

“It is critical to avoid debt crises that could have large destabilising effects and put the EU itself at risk,” the International Monetary Fund warned in a recent blog calling for reforms to budget rules.

The EU has suspended until 2023 rules that limit the public deficit of countries to three percent of GDP and debt to 60 percent.

The European Commission plans to present next month proposals to reform the 27-nation bloc’s budget rules, which have been shattered by the crises.

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SPAIN EXPLAINED

Why does Spain have no nuclear weapons?

Despite a top secret project to build them during the dictatorship, Spaniards have never been keen on the idea of nuclear weapons, especially since the US accidentally dropped four nuclear bombs on Almería.

Published: 15 April 2024 16:36 CEST
Why does Spain have no nuclear weapons?

Spain isn’t part of the reduced group of nations that have nuclear weapons, which includes European neighbours the UK and France.

It has never tested nuclear weapons, does not manufacture them, nor has it bought them from nuclear allies who make them.

Spain is still a NATO member and doesn’t shy away from involving itself in foreign policy debates, often taking positions against the mainstream.

But it has still never joined the nuclear club nor have Spaniards ever really wanted to, even though former dictator Francisco Franco had different ideas (more on that below).

In fact, Spaniards seem to have an indifferent if not abnormally negative view of nukes, largely stemming from an accident by an American air force on Spanish soil in the 1960s.

READ ALSO: How important is nuclear power to Spain?

A 2018 study on state attitudes towards nuclear weapons concluded that Spain had “little to no interest in nuclear weapons.” Yet Spain still benefits from NATO’s so-called ‘nuclear umbrella’ defence and has nearby neighbours, including France and the United Kingdom, that are nuclear powers. It is also home to several American military bases.

In that sense, Spain balances a somewhat unique position of being pro-nuclear for other countries and as a broader defence deterrence at the global level, but not on Spanish territory because it knows that would not sit well with Spaniards.

But why is this? Why doesn’t Spain have nuclear weapons?

Anti-nuclear sentiment among Spaniards

According to an article for Institut Montaigne by Clara Portela, Professor of Political Science at the University of Valencia, the Spanish people are “sensitised on nuclear weapons, if not negatively disposed towards them.”

Much of it comes down to history and, in particular, an accident involving nuclear weapons on Spanish soil. As part of post-war defence and security agreements Spain made with the U.S, American nuclear weapons were kept on Spanish soil.

Spaniards weren’t keen on the idea. Portela notes that “their presence at the Torrejón base near Madrid was a controversial issue” among the public, but it was an accident in 1966 that really soured Spaniards to nuclear weapons after an American aircraft carrying a hydrogen bomb crashed and dropped the device in the waters near the town of Palomares off the coast of Almería.

READ ALSO: Ten of the best documentaries about Spain

The incident caused “one of the bombs to fall to the seabed and leak radioactivity” into the surrounding area, Portela states, something that would have no doubt hardened many Spaniard’s perceptions towards nuclear weapons, especially as the American bombing of Hiroshima and Nagasaki was still in living memory for many.

A NATO-nuclear referendum

This scepticism towards nuclear arms was solidified twenty years later in a referendum on NATO membership. Though the government of the day campaigned for continued membership of the military alliance, it made it conditional on Spain also continuing as a non-nuclear power. A clause in the referendum consultation outlined this condition: “The prohibition to install, store or introduce nuclear weapons on Spanish soil will be maintained.”

Spaniards backed their continued, non-nuclear NATO membership by 13 percent.

A year later, in 1987, Spain formally signed the Treaty on Non-Proliferation of Nuclear Weapons (NPT), further cementing its non-nuclear stance.

And that was it — with this and the result of the referendum, Portela suggests that “the issue of nuclear weapons was all but archived. It hardly re-surfaced in public debates for decades.”

An atomic bomb of the type nicknamed “Little Boy” that was dropped by a US Army Air Force B-29 bomber in 1945 over Hiroshima, Japan. (Photo by LOS ALAMOS SCIENTIFIC LABORATORY / AFP)

The nuclear dictator?

Despite the Spanish public’s distrust of nuclear weapons, there was one Spaniard in particular who was quite keen on the idea: Franco.

In what may be one of the most terrifying historical ‘what ifs’ ever, the fascist dictator wanted to equip Spain with a nuclear arsenal, started a project to do so, and came very close to achieving it.

The ‘Islero Project’, as it was known, was top secret and lasted for several decades of scientific research until it was finally abandoned in the 1980s after his death.

Firstly, a brief consideration of the geopolitics of the time is worthwhile here, and it concerns the Americans again. When the Second World War ended in 1945, Spain immediately became isolated on the international stage owing to its support for Nazi Germany and fascist Spain. It was excluded from the UN and shunned as a real player in international relations.

As the Cold War and threat of nuclear annihilation grew throughout the 1950s, Franco’s fierce anti-communism combined with the strategic geographical positioning of Spain led the U.S. to form closer ties with the dictatorship, promising financial aid and image rehabilitation in return for allowing American military bases in Spain.

READ ALSO: Where are the US’s military bases in Spain and why are they there?

The Junta de Energía Nuclear was created in 1951, undertaking research and atomic energy development more broadly, and it sent promising researchers to study in the U.S. When they returned, the Islero project continued in secret.

Rather bizarrely, it was the accident at Palomares years later that actually gave the scientists the key to designing an atomic bomb. Unconvinced by the American’s explanations for the debacle, the Spaniards working on plans discovered the Ulam-Teller method, which was fundamental to the development of the thermonuclear bomb or H-bomb.

However, the project was then frozen by Franco himself because he feared the United States would discover that Spain was trying to develop its own atomic bomb and impose economic sanctions.

After Franco’s death in 1975, Spanish scientists secretly restarted the project, but in 1982 the new Socialist government discovered the plans and disbanded the project. By 1987 the González government announced Spain’s accession to the Non-Proliferation Treaty NPT and the issue has rarely even come up as an issue since then.

And despite that, Spain is a NATO member, regularly attends the G20, and often plays a leading role on the global stage. Certain elements of the dictatorship had eyes on building a nuclear arsenal, but it never happened. Franco ultimately worried about the economic repercussions of being discovered, and Spaniards were themselves sceptical about the idea based on the experience in Palomares.

In terms of nuclear weapons, Spain is what Portela describes as a ‘de-proliferation’ state – in other words, a country that aspired to have nuclear bombs but reversed it.

It doesn’t look like changing anytime soon either. A survey in 2021 showed that Spain had the highest level of support for the Treaty on the Prohibition of Nuclear Weapons, with a massive 89 percent majority.

READ ALSO: Why is Spain not in the G20 (but is always invited)?

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