All indicators are flashing red for Europe.
Warnings about a winter recession are growing louder, the single currency is slipping and the energy market is already in crisis mode. But European governments are still running three steps behind — in large part because they spend too much time second-guessing Russia’s next moves. Instead, they should be paying closer attention to what Moscow is pushing for: social unrest.
Last week, Dmitry Medvedev, once a liberal hope for Russia who’s turned into one of the most hawkish voices against Ukraine, wrote a lengthy post on his Telegram channel in which he urged European citizens to protest the “stupid” actions of their governments (i.e., sanctions) and punish them for it (i.e., vote them out). He suggested Europeans want closer ties with Russia but are misguided by silly politics, while Russia wants cooperation with the people of Europe. “Don’t stay silent … Russia can hear it,” he wrote. Medvedev finished by suggesting it’s warm in Russia — a cheap jab at Europe as it enters a winter of energy scarcity caused precisely by the lack of Russian supplies.
The post went viral in Italy, even ending up on the front pages of La Repubblica and Corriere della Sera, the two flagship national newspapers. Both publications accused Medvedev of interfering in the election campaign that’s underway ahead of next month’s vote. The Italian left went further, suggesting Russia wants to stir social tension. The right, which is currently leading polls and is often accused of being soft on the Kremlin, said the election will be decided by Italians, not Russians. However, Matteo Salvini, the head of the far-right League party, has linked sanctions to the cost-of-living crisis, suggesting a diplomatic solution is needed to protect Italian households and moving away from Mario Draghi’s hawkish stance against Russia.
By now it is no secret that Russia wants to force a volte face on sanctions by weaponizing energy. The Kremlin believes that Europeans will eventually throw in the towel, and it’s mounting a two-pronged strategy to achieve this. On one hand, it’s maintaining uncertainty over gas supplies. Russia doesn’t have to cut flows entirely to cause damage — the mere thought of a winter without Russian gas is enough to wreak havoc. Many indicators suggest Putin is winning in energy markets. Meanwhile, the other hand is busy stoking social unrest. That’s what Medvedev’s rant was about. President Vladimir Putin has also talked about the West’s “economic suicide,” and Russian bots have amplified the message through misinformation on social media.
Europe isn’t paying enough attention to Russia’s wartime messaging. Russian-affiliated accounts flood the web with the Kremlin’s narrative on everything from reopening the Nord Stream 2 pipeline to sanctions. Since the start of the war, Russian diplomats and state media have tweeted far more about Europe’s reliance on Russian gas than about their belief that Ukraine sympathizes with Nazis (Russia’s original pretext for invading), according to research by the Alliance for Securing Democracy at the German Marshall Fund which tracks Russian disinformation.
The goal, argues Joseph Bodnar, who conducted the research, is to undermine European sanctions and cool public support for Ukraine by presenting it as a drag on living standards. Replicating France’s yellow vest protests but across Europe would be “the dream scenario for the Kremlin,” he said.
The European Union took steps in February to mute Russian misinformation by shutting down media outlets such as RT — the former Russia Today — and Sputnik. But officials concede it is hard to counter every propaganda effort on the web.
Social unrest is a real possibility this winter — one that European governments should be preparing for instead of sugar-coating.
The numbers speak for themselves: Germany estimates average household bills could rise by between 500 to 1,000 euros this winter — and this could be conservative. The German Federal Network Agency has already warned consumers to set money aside to face extra charges. For lower-income families, that would force an impossible choice between buying food or fuel. German Chancellor Olaf Scholz has downplayed the risks, hinting that Germany has big pockets to cushion any blow.
But while that may be true for the euro area’s largest economy, the fiscal picture varies greatly across the rest of Europe.
For example, the French have opted to cap prices and channel losses through Électricité de France SA, the utility company on its way to becoming fully nationalized. The International Monetary Fund has warned against such broad-based measures, calling instead for targeted relief for lower-income households. But there’s an important political calculus here: Macron wants to avoid the tumult from 2018 that was triggered by a diesel tax, and he wants to neutralize Marine Le Pen as the candidate of the working class. In that sense, he’s buying social peace.
The IMF predicts the Czech Republic, Slovakia and Hungary face recession if Russia cuts gas supplies. Countries such as Bulgaria, one of the first to be shut off by Gazprom back in April after it refused to pay in rubles, says it will have to reinitiate talks with Russia. The concern is Russian gas will come with political influence — and that would undo much of the work the EU has done since the war started.
As previous crises have shown, a multi-speed Europe is a union that doesn’t work. The EU is at its best when it acts jointly and coordinates action. While the European Central Bank focuses on fighting inflation, European leaders must be thinking about political stabilizers. The bloc needs a discussion about short-term burden-sharing to reduce the pain on household bills and long-term funding to gain energy independence. The Czech Republic, which holds the rotating EU presidency for the rest of the year, has already said it will put this issue on the table. Everyone else should waste no more time. Winter is about to hit like a cold shower.
If Europe fails to deliver a comprehensive solution for its citizens facing financial stress, the impact on the continent’s social fabric will be enormous. And it will feed right into the hands of Russian propagandists. Last week, Emmanuel Macron, while paying homage to the liberation of the Bormes-les-Mimosas from Nazi occupation, suggested freedom has a price — and it is a price worth paying. But it must be fair too.
Bloomberg
