Tag Archives: France

Spain Moves Closer to French Connection

Following long delays thanks to French political critics, Spain has moved closer to the possibility of more access to the European natural gas network with an European Union push this spring.

The natural gas connection between the two countries has long been viewed as insufficient by Spanish energy actors, with pipeline systems across the Pyrenees meager in comparison with the large transport systems connecting Spain with North Africa. This connection expanded still further with the opening of the Medgaz pipeline linking Algeria with Southern Spain. Furthermore, the country’s LNG capacity has continued to expand despite a lack of adequate connections to the European energy grid, keeping supplies high. This environment has left Spain and Portugal isolated, especially when it comes to aiding in the EU push to reduce dependence on Russian exports over the last few years.

Energy actors in Spain have largely blamed the lack of progress on the issue on French companies who do not want to open their lines to the Spanish market. However, regional observers have pointed to France’s imports from countries like Norway and suggested that it is not yet economically viable to pursue expansion projects across their southern border given their current connections.

Spain’s case is expected to receive some support this spring with a planned EU energy strategy report that analysts in the region expect will address the transport deficit with political and possible financial support for expansion. The report is expected to address a larger challenge of European grid connections, including the France-Spain case.

Any such support is likely to be well received in Madrid, where the new government led by Mariano Rajoy now faces the daunting task of addressing a 24 billion euro energy deficit, forcing a broad re-evaluation of the country’s energy sector. So far, the review, led by Industry Minister José Manuel Soria López, has resulted in suspensions and planned reductions in renewable subsidy opportunities, alongside pledges to not add new taxes to gas, nuclear or coal programs.

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The Cost of Inaction – Southern Edition

Returning to a theme of an earlier post, I remain at a loss as to why Euro leaders in France and especially Germany seem so timid about pursuing financial stability programs or what almost seem like inevitable steps towards greater economic integration among EU members states. Merkel has remained firm even though the costs of letting certain members of the community slide into default and/or leaving the Euro to collapse would leave Germany with far more of a burden than even a flat bailout of Greece, Ireland and Portugal – much, much more, it seems.

“One thing UBS notes is that it would be much, much cheaper for Germany to simply bail out Greece, Ireland, and Portugal outright (that would cost about 1,000 euros for every German man, woman and child in one swoop) than it would be for Germany to exit the euro zone (which would cost the average German 8,000 euros the first year and 4,500 euros thereafter).” -Washington Post

The actions called for seem like inevitable steps towards an EU economic integration so why beat around the bush as the markets continue to punish countries already struggling? Furthermore, as the punishing and insecurity spread to normally stable financial situations, what exactly is causing the delay?

Still, the inaction in this equation is hardly one-sided, though I am starting to see a strong narrative emerging to suggest otherwise in Spain, Italy and Greece. ‘Europe wants to shove reforms down our throats’, the story goes. ‘Look how they’ve installed new leadership in Athens and Rome’ or ‘Look how they’ve wiped the slate clear of left of center heads of state in favor of right wing politicians who are sure to be more obedient to the demands of an over-bearing Europe’. Leaving aside the political leanings of the outgoing Berlusconi and likelihood that France’s right of center Sarkozy faces a substantial challenge in next year’s election (my take is that anyone caught holding the bag come election time is sure to face as much), I am not sure I understand the argument here. Countries need funds to stay afloat due to a wider economic slowdown but more so because of irresponsible or outdated borrowing and spending practices. So, the idea that those entities asked to put forth said funds would ask for some behavioral change seems like a logical next step, both because they are the lenders and what responsible lenders in the world would distribute funds without some sense of where the money was going or how it was going to be spent and because its the next logical step in Europe’s planned economic integration. This was the plan, wasn’t it? Getting everyone on the same page economically? That sort of operation requires much from all those taking part, including the richer countries helping to stabilize those less fortunate and those with antiquated or unsustainable systems adjusting their practices to better reflect the system they had chosen to take part in. So if this was the plan and these were the changes needed, why are figures on all sides fighting so hard against it? Is it  theater, pride or are some deciding they’d no longer like to be on board this particular train?

To be clear,despite his obvious and public distaste for the EU,  Silvio Berlusconi was not tossed aside because he ran afoul of Merkel and Sarkozy as he led a noble campaign to rescue his country from an economic collapse. He was tossed out because he did little to spur actual growth or help ready his country for participation in the continental and global community he had chosen to be a part of, made all the worse by the fact that he kept being caught with his attention elsewhere as Rome burned. And to be clear, Merkel’s grandstanding is not for the benefit of the country as I believe deep down that she understands the real costs of letting this European experiment dissolve with her at the helm. Both sides need to put pride and worries about political futures aside and realize the wave is coming whether they act or not – its how they prepare for its arrival that will matter.

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