The Energy Crisis
When I arrived in the Hague, the weather was a balmy 55 degrees. In London, it was 65 degrees. Both are highly unusual for this time of year, where average temperatures across Northern Europe are typically much lower; Europe is enjoying a heatwave. In any other year, this might be viewed negatively as a sign of encroaching climate change, but this year it’s a welcome development, as the continent faces an energy crisis caused by the economic fallout of the war in Ukraine. As part of its sanctions of Russia, the European Union has committed to wean itself off Russian oil and natural gas by the end of the year – with a few limited exceptions – and the result has been an extremely tight gas market, with states rushing to buy other sources of oil on world markets and fill up gas storage tanks before winter.
The result has been a mixed success. Gas storage is full, winter so far is mild, and Europe seems to be weathering the shutoffs without significant shortages or needing to ration fuel. At the same time, however, those in the know point to the already significant pain being felt by European industry due to spiking energy costs. Natural gas is $100 per megawatt hour, more expensive than it was just a year ago. Chemical producers are moving overseas, aluminum smelters are being shut down, and it’s an open question whether many of the facilities that have closed will reopen. New terminals for LNG are likely to come online before next winter, improving the energy situation. In the meantime, however, Europe’s biggest states – most notably Germany – are facing uncertain economic headwinds. This winter will be rough; next winter perhaps more so. And in every store and restaurant, the cost to consumers in inflation is clear.
Almost every person I spoke to still supports measures to help Ukraine, but several of my interlocutors expressed concern that the sanctions may not be hurting Russian revenues as much as they are hurting European economies. And there’s a consistent undertone to these discussions in Europe – almost entirely absent in American discussions of the question – of the fact that the United States and Europe face very different circumstances. Indeed, whether from increased LNG export demands, or from European industrial giants moving facilities, the United States may even benefit from these changes, while Europe feels significant pain. That tension could end up creating friction between US and European policymakers, or in European public opinion, as the economic costs of the war continue to reverberate, and as the United States considers other uses of economic statecraft like its recent export controls on semiconductor technology.
Finally, there’s also major tension in Europe’s response to this crisis between its climate and energy security goals. Steps taken today to find alternative sources of fossil fuels – particularly natural gas – could make it more difficult to implement Europe’s planned transition to renewables and a green future. At the same time, some of the existing climate priorities, such as the European ban on long-term gas contracts, or phasing out nuclear power, make it far harder to source fossil fuels to cover Europe’s immediate energy shortfall. A core dilemma facing Europe going forward is whether it can avoid making similar mistakes to past ones: can it avoid overdependence on any single source of energy? Or will it simply replicate old problems of dependence on new technologies?
European Defense
During my trip, I also helped to lead a group of mid-career fellows working in the defense and national security space in Washington on a study tour to Finland and Estonia. We were hoping to learn more about Finland’s relatively unique history as a neutral state during the Cold War, and about the factors that led to its recent tectonic shift towards NATO membership. We also talked to experts about the ongoing war in Ukraine, possible endgames for the conflict, and the prospects for greater European capacity and integration on defense.
Finland’s geopolitical heritage as a relatively small state on the European periphery makes its history and foreign policy surprisingly relevant for illuminating some of today’s foreign policy discussions. The country experienced half a decade of total war against the Soviet Union, first in the Winter War, then in the Continuation War (a part of World War II). As a result of the vagaries of geography, Finnish leaders faced terrible choices: defending their homeland with no external support; allying with Nazi Germany to retake territory; or choosing the path of neutrality rather than Soviet domination after the war. Neutrality was a mixed blessing; Finland remained free and economically integrated with the West, but its politics were heavily influenced, and its foreign policy choices constrained by Moscow. This history and its dilemmas have clear relevance for today’s policymakers as they contemplate the war in Ukraine, a renewed era of East-West tension in Europe, and the dilemmas faced by states caught in the middle.
Finland’s recent turn towards NATO is a momentous shift from its traditional posture of neutrality. Indeed, public opinion on the question of joining NATO has shifted rapidly in the aftermath of the Russian invasion of Ukraine. Barely a third of Finns favored joining the alliance as recently as last year; today that number is around eighty percent. At the time of our visit, Finland’s NATO membership was being held up by Turkish objections, but we appreciated getting to talk to Finnish defense experts about how they view their potential contribution to a common European defense. And for those who emphasize the importance of burden-sharing within NATO and the need for homegrown European defense, the answers were reassuring.
Finland has a long history of self-reliance and resilience. The nation retains its Cold War emphasis on civil defense, with bomb shelters, civil preparedness, and universal military service. Though this will not resolve some of the more problematic aspects of Swedish and Finnish membership in NATO – notably the question of nuclear deterrence and the expanded border between NATO and Russia – the Finnish emphasis on societal resilience and homegrown military capabilities is both reassuring from the point of view of U.S. military commitments – and something that many other European states could stand to learn from.
As my trip covered both Eastern and Western European states, I found it notable how differently foreign policy specialists in Finland and Estonia spoke about the war in Ukraine, when compared to their western European counterparts. Certainly, everyone I spoke to expressed support for Ukraine, and emphasized that Ukraine’s continued success is in Europe’s best interest. In Eastern Europe, however, there was a much stronger consensus that Ukraine must enjoy an absolute victory against Russia, whereas in Western Europe, these sentiments were often leavened with more discussion of costs and limits. This is perhaps not surprising; as the European Council on Foreign Relations (ECFR) has reported previously, there are widespread popular divisions both within and between European states on how to end the war in Ukraine, even as support for Ukraine in general remains high across the bloc.
In many ways, this mirrors some of the broader divisions in Europe that the war in Ukraine has revealed. As we heard in Estonia, many in Eastern Europe worry about the commitment of the European Union’s biggest states – notably France, Germany, and Italy – to the defense of Eastern Europe. Though the framing presented by our interlocutors suggested that policymakers in these states are perhaps insufficiently committed to an assertive anti-Russia, pro-Ukraine policy, it is perhaps more accurate to say that threat perceptions and interests vary widely across both NATO members and across the European Union, a fact that impedes the development of common security and defense policy. This may suggest that the best approach to building further European defense capability for US policymakers is not necessarily a bloc-wide approach, but rather one that emphasizes so-called “minilateral” defense cooperation between countries with shared threat perceptions and interests.
The conversations and insights from my interactions with European policymakers will be used in the Rethinking US Grand Strategy program going forward. These insights will help to better inform our work on what are desirable and plausible paths for reforming U.S. foreign policy.
