Von der Leyen maps out Europe’s risk management strategy for energy, defence and food

The European Union has stepped up its efforts to secure resilience in the face of Russia’s invasion of the Ukraine and the resulting trade war, by announcing further measures to reduce dependence on Russian oil and seek alternative sources of energy on a collective basis, step up investment in renewables, deepen investment and co-operation in defence, and secure wheat and wider food supplies. The package also reportedly proposes a ban on insurance cover for shipping oil to third countries. But apparently this will not take effect until six months after the adoption of the measures, from the previously proposed three-month transition. After a period of tense negotiations that seemed to be questioning the ability of the EU to deliver a united and strong response to Russia’s continued aggression, EU President Von der Leyen unveiled Europe’s scaled-up risk management strategy at a joint press conference with Charles Michel, president of the European Council and former Prime Minister of Belgium, following a meeting of the European Council. Von der Leyen announced that finally “in the middle of the night”, the council decided to introduce a ban right away on de facto 90% of Russian oil imports to the European Union by the end of the year. This follows a similar ban on Russian coal agreed back in April. The EU action follows Russia’s decision to disrupt supplies to five member states so far: Finland, Bulgaria, Poland and most recently two key gas distributors in Denmark (Ørsted) and the Netherlands (GasTerra). The move forbids the purchase of crude oil and petroleum products from Russia delivered to member states by sea but includes a temporary exemption for pipeline crude, Michel said late on Monday during a summit in Brussels. This would appear to be a compromise for eastern European states such as Hungary that are heavily reliant on Russian oil. Hungary has reportedly been assured that if supplies are disrupted, the EU would ensure alternatives are made available. The bulk of the current pipeline deliveries are to Germany and Poland, which have said they will wean themselves off Russian supplies regardless of any EU action anyway. Berlin reportedly committed in writing to stick to that pledge on Monday. If both countries follow through, the total effect, along with seaborne embargo, would be to cut 90% of Russian crude oil sales to the EU by year’s end. “So, our answer has to be very clear on how we are going to manage and what is the roadmap to really get rid of the dependency on Russian fossil fuels, and here with a view to gas,” said Von der Leyen. The basis of Europe’s answer is REPowerEU, which is based on three key pillars. The first is the diversification away from Russian fossil fuels, specifically on gas. To carry this out, the EU has set up a joint taskforce for common purchases, and joint purchases of gas, to maximise buying power. Von der Leyen said that a more collective buying approach is already paying off. LNG deliveries from other parts of the world, other than Russia, have doubled in Q1 2022 compared to the same period in 2021. The second element is to deliver security of supply through better interconnections, so the gas can flow wherever it is needed, and higher strategic gas storage across the European Union. “Here, we have good news: our gas storage is already filled at 41% of the capacity. This is five percentage points higher than was the case last year at the same date,” said Von der Leyen. The EU President said the third and most important pillar is the massive investment in renewables, which improves energy security, helps tackle climate change and creates jobs. The council has agreed to support this programme with €300bn of EU funding. “Basically, it is solidarity and cooperation that are at the heart of any successful strategy to deal with Russia no longer being a reliable supplier,” added Von der Leyen, pointing to the announcement a couple of days ago by Denmark, Germany, the Netherlands and Belgium of a huge joint investment in offshore wind projects in the North Sea. “The war, again, was and is a stark reminder for our member states of the need to strengthen our defence capacities,” continued Von der Leyen on the key matter of strengthening Europe’s defensive capabilities. Finland and Sweden have applied to join NATO, which is a positive for all of Europe, she said. But also, Von der Leyen pointed to the fact that, since the beginning of the war, leaders and the member states have announced €200bn in extra military spending. Von der Leyen said this investment needs to be used wisely, ensure that duplication of weapons systems and fragmentation does not occur, and help rebuild the resources sent over to Ukraine. “We all know the challenges that exist within the European model. On one hand, it is the lag in investments over the last [few] years, so the gaps have to be filled. But the bigger challenge is the fragmentation we have within the European defence industry and the duplication of weapons systems. Here, we see that this leads to increased costs, to reduced interoperability,” she said. “Now, when we replenish the military material that has been sent to Ukraine, for example, it is important that this is coordinated. And for that, we are setting up a taskforce to coordinate, also to de-conflict the replenishment of the national stockpiles. And the European Commission will propose, before the end of June, to mobilise €500m over the next two years from the EU budget, to incentivise joint procurement by at least three member states. This is, let us say, a pilot for a longer-term proposal that will come in the course of this year for a European Defence Investment Programme,” continued Von der Leyen, strongly suggesting the need for a much more joined-up European defence system. Food security was the third big topic on the agenda at the European Council meeting. “We are facing one overriding urgency. And that is: 20 million tons of wheat are stuck in Ukraine, and they have to get out. And therefore, we have created and we are working hard on the solidarity lanes that will enable us to bring out parts of this wheat through land routes and trains towards our parts. It is not trivial and it is, of course, more tedious and expensive, but it is necessary to get this wheat out,” she said. Von der Leyen said it is important to now give relief to vulnerable populations. To help with this, the EU has pledged €2.5bn and proposes to mobilise reserves from the European Development Fund to support, for example, sub-Saharan Africa. Europe also has to step up its own food production and this is happening, but trade barriers need to be relaxed to help in this effort, said the EU President. “We expect a record export of cereals of 40 million tons in 2022 and 2023. And, within this scenario, we call on all partners not to restrict global trade of agricultural products. So, any kind of trade restrictions have absolutely no place in our member states, or globally,” urged Von der Leyen. Deepening and strengthening relations and ties to north and sub-Saharan Africa will be a key element of Europe’s effort to secure both food and energy security. Von der Leyen recognises this. “We really have to develop better strategies, for example in north Africa and sub-Saharan Africa, to increase the production and the resilience, with new technologies, precision farming, the nanotechnologies that are out there. To feed into this work, I will travel to Cairo in mid-June to discuss all these issues with Egypt’s President Abdel Fattah El-Sisi. Because we have to look at them, not only from a European and Ukraine perspective, but also from a regional and bilateral perspective,” she concluded.

Von der Leyen maps out Europe’s risk management strategy for energy, defence and food

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