From France to Italy, while the right to demonstrate remains absolutely sacrosanct in liberal democracies, these demonstrations now involve students, families and workers from a wide range of sectors affected by high energy prices, globalization and a whole series of other factors.
They are the symptom of a social malaise that exists in Europe because Europe is no longer experiencing economic growth. The foundations of its economy are under attack: its manufacturing capacity, its capacity for technological innovation, and its competitiveness are at risk. All this degenerates into forms of violence that seem to have the sole purpose of destabilising the Western democracies we represent. It is therefore legitimate to ask who is fanning the flames.
This is what Ambassador Luigi Mattiolo told Decode39. Mattiolo is the Italian President of Villa Vigoni, the Italian-German Centre for European Dialogue. He previously served as First Counsellor at Italy’s Permanent Mission to the United Nations, Ambassador to Tel Aviv, Ankara and Berlin, and Diplomatic Adviser to the government of Italian Prime Minister Mario Draghi.
Q: High energy prices, black blocs, not only in Paris but unfortunately also in Milan, and elections approaching across half of Europe: is this the perfect storm? And how will the European Union be able to defend itself?
A: First of all, I agree with this definition of a perfect storm, because we are indeed in a phase in which three external factors are hitting Europe directly.
- The first, of course, is the attitude of the current American administration towards Euro-Atlantic defence and its evident attempts to reach an agreement on Ukraine with Russia, over the heads of Ukraine and Europe.
- The second is the Russian threat, whether hybrid, elusive or even rhetorical. In any case, it is certainly a threat, and certainly a profound factor of destabilisation in Europe, given that Russia has brought a conflict into the heart of the continent which it evidently has no intention of ending.
- The third is China, which continues to act quite blatantly on the value chains of critical materials, placing European industry and manufacturing capacity under severe pressure, with what I would describe as massive, if not unrestrained, exports of consumer goods at extremely low prices.
Q: On top of all this comes the Ukrainian crisis…
A: Zelensky’s address to the European Council was particularly worrying, not only because it coincided with a phase in which Ukraine is being struck at its heart, in its energy infrastructure and in targets that no longer have anything military about them, but are simply linked to the evident intention to discourage, demoralise and terrorise the civilian population.
- There is also a Ukraine that complains of American strategic support that is intermittent, to say the least, despite the €90 billion allocated last year by the European Union, which by now, it is worth recalling, is the only one bearing the costs of Ukrainian defence at this stage. Zelensky therefore reported a shortfall of €30–35 billion next year: at present, it is difficult to see where the European Union could find that money, unless it draws on Russian foreign exchange reserves.
Q: With what complications?
A: It would open a veritable Pandora’s box, and I personally understand Belgium’s reservations, since, through the Euroclear mechanism, Belgium would ultimately be the country legally responsible in the first instance for the management and protection of those reserves. There would also be the question of Europe’s credibility as a safe haven and holder of foreign exchange reserves belonging to any country in the world: this could have extremely serious repercussions and would, in some respects, be unprecedented.
- In the past, a country’s foreign exchange reserves have very often been used, but these were defeated countries, following peace agreements that inevitably imposed unfavourable terms on them. But, as we know, this is not yet the situation. Moreover, I was also struck by a remark which I do not want to call a threat, because it is not one, but rather a pointed observation by Zelensky, who clearly stated that, in the event of defeat, the European Union would have to face a wave of refugees.
- Frankly, I do not think it could be otherwise, because after four years of war and suffering, I do not know how prepared Ukrainian citizens would be to fall under the yoke of a victorious Russia. So it is clear that this phenomenon would have to be addressed.
Q: In what condition does Europe find itself?
A: No major progress was made at the last European Council meeting. Europe is dealing, first and foremost, with a polarised situation. One need only look at the violence that has unfortunately characterised the demonstrations. From France to Italy, while the right to demonstrate remains absolutely sacrosanct in liberal democracies, these demonstrations now involve students, families and workers from a wide range of sectors affected by high energy prices, globalisation and a whole series of other factors.
- They are the symptom of a social malaise that exists in Europe because Europe is no longer experiencing economic growth. Its very foundations are under attack, namely its manufacturing capacity and its capacity for technological innovation, while its competitiveness is at risk. All this degenerates into forms of violence that seem to have the sole purpose of destabilising the Western democracies we represent. It is therefore legitimate to ask who is fanning the flames. But that is not all.
Q: What else?
A: If the third factor of crisis, the budget for the next seven years, is not resolved, I believe things will continue to get worse. Depending on whether a compromise can be found among these major countries, it could become even more difficult to reach an agreement, make concessions and “sell” the agreement reached to their respective public opinions.
- If there were changes in governing coalitions in major European countries such as France and Spain, political forces could come to power that, on the contrary, have every interest in further undermining the EU budget, putting absolutely at risk all the objectives we have been discussing for years, such as innovation, the transition, defence and everything else.
Q: Do you believe that precisely at a moment like this, characterised by polycrises, as the Italian Prime Minister described them the other day, there is an opportunity for the EU to grow, perhaps by remedying its own shortcomings? And how can it do so, given that its back is against the wall?
A: This time, yes, the EU really does have its back against the wall. But having your back against the wall can mean either succumbing or finding a way out of the corner and therefore making choices that, until just a moment earlier, seemed unthinkable. How? I am thinking of high energy prices, which weigh most heavily and are at the root of the social malaise that, beyond the terrible violence and the exploitation of demonstrations, is a fact.
- Having read the European Council conclusions, I hope that the issue will be tackled head-on by bringing prices under control and returning to what has been one of Italy’s longstanding priorities for many years, namely decoupling the price of electricity from the price of gas. Because at this stage, the first kilowatt of electricity produced from renewables — in our case, from hydropower, wind and above all solar power — is paid for at the price of the last kilowatt produced using gas.
- The European Council conclusions insist that the Commission propose solutions on this front. In reality, it is not that the Commission does not have solutions; rather, what is missing is the political will of all member states, because not all of them are in the same situation. Some have a much higher share of renewables than we do and therefore do not have such a strong interest in decoupling. But the time has come to study common mechanisms.
- One could be to return to national budgets the windfall profits made on the first kilowatts, since they were all sold at the price of the last kilowatt. However, it is also necessary to work on demand, that is, to aggregate demand among member states, as the European Union was able to do in the case of vaccines during the pandemic. That remains a unique example, I must say, one that has not yet been repeated, but which could certainly be replicated in the energy sector. Finally, storage capacity must not be forgotten.
Q: How should Europe proceed?
A: With batteries ten or twenty times larger than those that currently exist on the European continent, we would finally be able to store surplus electricity produced from renewable sources and simply use it during the hours when, instead, we produce electricity using gas.
