Full Russian gas cut looms as EU leaders meet – National

EU leaders will discuss on Friday how to respond to rising energy prices and the threat of a total Russian gas cut, accusing Moscow of “arming” energy through a supply squeeze that Germany has warned could partially close its industry this winter.

A day after celebrations for putting Kyiv on the bloc’s path to membership, Friday’s summit in Brussels was set to be a sober reflection on the economic impact of Russia’s invasion of Ukraine.

The leaders of the European Union’s 27 countries will, according to a draft summit communiqué seen by Reuters, blame the war that began exactly four months ago for a huge rise in prices and a slump in global growth.

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After unprecedented Western sanctions imposed by the invasion, a dozen European countries have so far been hit by cuts to gas flows from Russia.

“It’s just a matter of time before the Russians shut down all gas shipments,” an EU official said ahead of Friday’s talks.

Click to play video: 'Trudeau pledges $250 million in food aid, says Russia is to blame for sky-high prices'

Trudeau pledges $250 million in food aid, says Russia is to blame for skyrocketing prices

Trudeau pledges $250 million in food aid, says Russia is to blame for skyrocketing prices

German Economy Minister Robert Habeck has warned that his country is heading for a gas shortage if Russian supplies remain as low as they currently are, and some industries will have to be closed for the winter.

“Companies would have to stop production, lay off their workers, supply chains would collapse, people would go into debt to pay their heating bills,” he told Der Spiegel magazine, adding that this is part of the Russian president’s strategy. , Vladimir Putin, of dividing the country. .

The EU relied on Russia for up to 40% of its pre-war gas needs – rising to 55% for Germany – leaving a huge gap to fill an already tight global gas market.

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‘Gas weapon’

According to a draft statement seen by Reuters, EU leaders will say that “in the face of Russia’s gas weaponry”, the European Commission must find ways to ensure “affordable supply”.

EU countries have already invested billions of euros in tax cuts and subsidies to fight rising energy prices.

But that adds hefty bills to already strained coffers, leaving many struggling to find a solution, and EU countries disagree on a bloc-wide solution to deal with rising prices.

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Spain and Portugal capped gas prices in their local electricity market this month, but other states warn that price caps would disrupt energy markets and further drain state coffers if governments had to pay the difference between the price. limited and the price in international gas markets.

“We need to start buying energy collectively, we need to implement price caps and we need to make plans together to get through the winter,” Belgian Prime Minister Alexander De Croo said on Friday as he arrived at the EU summit.

“If we don’t pay attention, the entire EU economy will go into recession with all its consequences.”

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Click to play video: 'Russia warns of 'serious' consequences of new sanctions'

Russia warns of ‘serious’ consequences of new sanctions

Russia warns of ‘serious’ consequences of new sanctions

The bloc responded to the war with uncharacteristic speed and unity, but some sanctions, such as a planned embargo on Russian oil imports, have repercussions on their economies.

Inflation in the 19 countries sharing the euro has soared to all-time highs above 8% and the EU executive expects economic growth to drop to 2.7% this year.

Eurogroup chief Paschal Donohoe warned that the bloc must “recognise the risk we may face if inflation is built into our economies”.

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“If inflation becomes a real and durable part of our economies over the next few years, the challenge we face with the standard of living and the cost of living will only increase in the years to come. It is a very difficult challenge.”

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Rome has asked EU leaders to meet for an exceptional meeting in mid-July to discuss ways to deal with rising gas prices, but there are no plans to do so at the moment, an EU official said.

Another EU official, however, said some EU leaders are considering the option of holding an extra summit in July to talk about broader economic issues.

(Reporting by Phil Blenkinsop, Marine Strauss, Bart Meijer, Francesco Guarascio, Kate Abnett, Jan Strupczewski; additional reporting by Miranda Murray in Berlin, Gianluca Semeraro in Rome; writing by Jan Strupczewski, Phil Blenkinsop and Ingrid Melander; editing by John Chalmers, Sam Holmes and Alex Richardson)

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