US is accused by Europe of making money from war
Vladimir Putin has been conquering Ukraine for nine months, and now he is causing the West to splinter.
High-ranking European officials are upset with Joe Biden's administration and now charge that Americans are profiting from the war as EU nations suffer while they make a killing.
One senior official stated, "The fact is, if you look at it soberly, the country that is most profiting from this war is the U.S. because they are selling more gas and at higher prices, and because they are selling more weapons."
The comments, which have received support in both public and private from officials, ambassadors, and ministers worldwide, come in the wake of growing resentment in Europe over American subsidies that endanger European industry. The atmosphere poisoning among Western friends is probably something that the Kremlin will appreciate.
The senior EU official declared, "We are really at a historic juncture," warning that the dual blow of trade disruption brought on by U.S. subsidies and rising energy costs runs the risk of alienating the public from both the war effort and the transatlantic relationship. "America needs to realize that public opinion is shifting in many EU countries ."
Josep Borrell, the top diplomat for the EU, urged Washington to address European concerns. In an interview, he added, "Americans — our friends — take decisions which have an economic impact on us."
Biden's green levies and subsidies, which Brussels claims unjustly shift trade away from the EU and jeopardize European sectors, have been the main source of contention in recent weeks. European governments have raised official complaints, but Washington has so far showed no sign of caving in.
Putin's invasion of Ukraine is simultaneously dragging European economies into recession, causing inflation to soar and a terrible squeeze on energy supplies that threatens outages and shortages this winter.
European nations are switching to American gas in an effort to lessen their dependency on Russian energy, but the cost is nearly four times higher for Europeans than it is for Americans. Then there is the potential increase in demand for American-made military equipment when European forces run out of supplies after supplying Ukraine with weaponry.
For top officials in Brussels and other EU capitals, it has all been too much. High U.S. gas prices, according to French President Emmanuel Macron, are not "friendly," while Germany's economy minister has urged Washington to demonstrate greater "solidarity" and assist in bringing down energy prices.
Ministers and diplomats stationed in other parts of the group expressed their displeasure with how Biden's administration simply disregards the effects of its domestic economic policies on European allies.
According to the senior official cited above, when EU leaders confronted Biden about the high gas prices in the US during the G20 summit last week in Bali, the American president merely appeared to be unaware of the situation. Other EU representatives and diplomats concurred that American ignorance of the repercussions for Europe was a significant issue.
David Kleimann of the Bruegel think tank stated that "The Europeans are discernibly frustrated about the lack of prior information and consultation,"
Officials on both sides of the Atlantic are aware of the dangers the Western alliance faces as the environment becomes more hostile. Diplomats from the EU and US concurred that Putin would love for there to be squabbling.
Fears of a transatlantic trade war are once again at the top of the political agenda as a result of the developing controversy over Biden's Inflation Reduction Act (IRA), a significant tax, environment, and health care package. As authorities in Brussels prepare to create an emergency war chest of subsidies to prevent the collapse of European businesses, EU trade ministers are scheduled to discuss their response on Friday.
Liesje Schreinemacher, the Dutch Minister of Trade, warned that the Inflation Reduction Act is extremely concerning. "The potential impact on the European economy is very big."
Tonino Picula, the head of the European Parliament's transatlantic relations committee, claimed that the United States is pursuing a domestic agenda that is regretfully protectionist and prejudices against its partners.
The price of petrol for European consumers is decided by the private market and not by U.S. government policy or action, an American official emphasized. The official stated that "U.S. companies have been transparent and reliable suppliers of natural gas to Europe," Another factor limiting exporting capacity is a June accident that resulted in the closure of a crucial plant.
According to the official, companies who resell gas inside the EU typically receive the difference between the export and import prices instead of U.S. LNG exporters. France's TotalEnergies, for instance, is the largest European owner of long-term gas contracts with the United States.
Although the American argument is not new, the Europeans do not seem to be buying it. In a statement to French television on Wednesday, European Commissioner for the Internal Market Thierry Breton said, "The United States sells us its gas with a multiplier effect of four when it crosses the Atlantic. Of course the Americans are our allies ... but when something goes wrong it is necessary also between allies to say it."
Energy cost savings have rapidly grown to be a major competitive advantage for American businesses as well. Businesses are preparing to make new investments in the United States or even to move their current operations from Europe to American manufacturing. The most recent in a string of comparable pronouncements from significant EU industrial heavyweights came just this week when chemical major Solvay said it would prefer to make fresh investments in the United States over Europe.
Despite the energy disputes, Brussels did not go into full-blown panic mode until Washington proposed a $369 billion industrial subsidy package to assist green businesses under the Inflation Reduction Act.
One EU diplomat observed, "The Inflation Reduction Act has changed everything. Is Washington still our ally or not?"
The law, in Biden's opinion, is a major victory for the environment. The American official declared, "This is not a zero-sum game. The IRA will grow the pie for clean energy investments, not split it."
But the EU has a different perspective. The diagnosis is simple, according to a representative of France's foreign affairs ministry: these are "discriminatory subsidies that will distort competition." This week, French Economy Minister Bruno Le Maire even charged that the United States was adopting China's policy of economic isolationism and urged Brussels to follow suit. He declared, "Europe must not be the last of the Mohicans."
In order to stop American competitors from destroying European industry, the EU is preparing its responses, such as a significant subsidy drive. According to German MEP Reinhard Bütikofer, "We are experiencing a creeping crisis of trust on trade issues in this relationship,"
French MEP Marie-Pierre Vedrenne argued that asserting yourself is necessary at some time. "We are in a world of power struggles. When you arm-wrestle, if you are not muscular, if you are not prepared both physically and mentally, you lose."
There is growing resentment about the funding going into the American defense industry behind the scenes as well.
Since the beginning of the war, the U.S. has provided more than $15.2 billion in weaponry and equipment to Ukraine, making it by far the greatest military aid donor. According to Borrell, the EU has so far given Ukraine military weapons worth around €8 billion.
One senior official from a European capital claimed that issues with the supply chain and chip manufacture might make refilling certain highly advanced weapons take "years." This has increased concerns that the conflict will benefit the American defense industry even more.
As pressure from allies to meet rising requests for weapons and equipment intensifies, the Pentagon is already putting together a plan to quicken arms shipments.
Another EU envoy suggested that Americans may understand that making "all this cash on gas" could be "a bit too much" if they saw "the money they are making on weapons."
The envoy stated that a gas price break would enable us to "keep united our public opinions" and engage in gas supply talks with other nations. "It’s not good, in terms of optics, to give the impression that your best ally is actually making huge profits out of your troubles."
By fLEXI tEAM