The world woke up on February 24, 2022, with the start of a war in Europe and with no idea of the impact it would have on everyone’s life.
If dependence on Russian energy were a well-known fact, few would have realized that Ukraine is one of the breadbaskets of the world for its agricultural production.
Condemnation of the Russian invasion of Ukraine by most world leaders was followed by sanctions lists against Moscow.
In response, Russian President Vladimir Putin drastically reduced gas shipments to Europe and in August shut down the Nord Stream 1 gas pipeline to Germany.
Before the invasion of Ukraine, Russia was Germany’s biggest supplier, supplying Europe’s largest economy with just under a third of its gas.
European heads of state and government have tried to take joint action, but the resistance has been proportionate to Russia’s energy dependence.
Ministers rushed to secure alternative supplies, painfully aware that heavy reliance on Russian gas had left most nations terribly exposed.
In the first half of 2022, average electricity prices for households in the EU rose sharply compared to the same period in 2021, from €22.0 per 100 kWh to €25.3 per 100 kWh. Average gas prices also increased compared to the same period in 2021, from €6.4 per 100 kWh to €8.6 per 100 kWh in the first half of 2022.
Compared to a year ago, the weight of taxes and levies in the final electricity and gas bills billed to EU households in the first half of 2022 has fallen considerably, as Member States have introduced allowances and government subsidies to mitigate high energy costs.
On the brink of winter, European Union countries have been unable to overcome bitter disagreements as they struggle to effectively protect 450 million citizens from massive increases in their natural gas bills as cold weather sets in.
Most of the emergency meetings only showed how the energy crisis linked to Russia’s war in Ukraine has split the 27-nation bloc into almost irreconcilable groups.
After several delays, energy ministers are again trying to break the deadlock between countries demanding cheaper gas to ease household bills – including Greece, Spain, Belgium, France and Poland – and those like Germany and the Netherlands that insist on a price cap could cut off supplies.
Ukraine is the world’s fifth-largest exporter of wheat, the fourth-largest exporter of corn and the largest exporter of sunflower oil and meal, according to the United Nations.
The country’s grain exports have fallen since February as the war closed Ukraine’s Black Sea ports, pushing up global food prices and raising fears of shortages in Africa and the Middle East.
However, three Black Sea ports were unblocked at the end of July under an agreement between Moscow and Kyiv, brokered by the United Nations and Turkey.
The deal was due to expire in early November, but Russia and Ukraine have agreed to extend a deal to allow grain exports from Ukrainian ports through a safe Black Sea corridor.
These latest measures make it possible to control the rise in food prices, but this is not enough.
The euro zone’s annual inflation rate rose to 10.7% and exceeds 20% in the three Baltic states – Estonia, Latvia and Lithuania.
The EU executive has revised its inflation forecast from July, expecting prices to peak at the end of the year and remain high in 2023. Inflation will average 9.3% in the EU. EU and 8.5% in the euro zone for 2022, according to Brussels.
In late October, the European Central Bank announced another interest rate hike and said further hikes would follow to tackle soaring inflation, even as its president, Christine Lagarde, warned that a recession in the euro area was looming. The ECB is under pressure to contain record inflation, mainly due to soaring food and especially energy prices following Russia’s war in Ukraine.
Protest and strikes
Protests and strikes erupted across Europe as inflation soared, and the cost of living crisis led to a “winter of discontent”.
With increasingly tight family budgets, thousands of European citizens have taken to the streets to protest against the rising cost of living and demand urgent economic measures from national governments and the European Union to combat against increasing poverty.
We reached the end of the year in a climate of tension and austerity.
With the prospect of blackouts and energy rationing looming, officials in cities like Helsinki, Lisbon and London are unplugging some decorative lighting in main streets and squares, to save on energy bills.