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What Does Europe Do Now? 

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Writing about the state of the EU anymore feels a bit like beating a dead horse. The seeking out of more expensive fossil fuel energy options, deindustrialization, and militarized neoliberalism has been on autopilot for years and with it the steady decline in European citizens’ standard of living.

We’ve covered it at some length, and historians will likely look back with puzzlement at how the European publics didn’t stage a revolt.

Yet every so often the bubble of that slow and steady decline is punctured by outside events that accelerate the economic deterioration and plop a great big fork down in the road. Does the EU continue with the anti-Russia suicide mission or does head for the off ramp under the cover of major crisis elsewhere?

Ansar Allah’s Red Sea blockade of shipping from nations supporting Israel’s genocide of Palestinians was one such instance, and we know which path European rulers chose.

Will they make the same mistake again now that Iran has closed the Strait of Hormuz for countries backing the US-Israel war of aggression—and Ansar Allah is threatening to do the same at Bab el Mandeb?

It’s hard to see how they can. An EU that refuses affordable Russian energy options (countries still pay a premium for LNG and rerouted oil) and without access to hydrocarbons from the Persian Gulf might be one that will no longer puzzle the historians as societal upheaval could be swift.

The strategy, for now, appears to be to bury their heads in the sand.

Compounding Crises

EU economy chief Valdis Dombrovskis reportedly informed finance ministers last week that the bloc could be looking at a 0.4 percentage point drop (down from predicted 1.4%) in economic growth this year due to Brent oil prices lingering around $100 per barrel and elevated gas prices, which could push inflation above 3% this year.

That sounds more like a wildly unrealistic best-case scenario, and Dombrovskis isn’t the only one engaged in magical thinking:

They might want to start thinking more about other shortages rather than just oil and a hit to growth. On the LNG front with QatarEnergy offline for the foreseeable future, the EU is locked in a bidding war with Asian markets, and European gas prices are already at 70 euro per MWh, which is twice as high as the price of gas before the war began. Here’s OilPrice:

As usually happens when a shortage emerges in a market, buyers sought alternatives, which resulted in LNG cargos originating from the U.S. Gulf Coast and headed for Europe getting diverted to Asia. Bloomberg reported this week that at least nine U.S. LNG cargoes have been diverted so far, but there will probably be more. Asian gas prices are more enticing for U.S. LNG producers until the European market catches up, meaning the price of gas rises enough to motivate selling more liquefied gas to the Europeans…The question, however, is whether there is enough LNG to go around…

Yet there is a twist this time around. Europeans are not in a real rush to buy all the LNG they can get their hands off, which has improved availability for Asian buyers. The reasons, per analysts cited by the Financial Times, have to do with greater availability of U.S. LNG on the spot market and EU methane regulations.

The availability of U.S. LNG on the spot market seems to have made some buyers in Europe sort of complacent in the belief that they could start buying more later in the year, after the Middle East disruption is over. This may sound like a pretty dangerous assumption, but it is an assumption some in Europe appear to have made.

Goldman Sachs, on the other hand, is saying euro-area inflation could reach 4.4% by the end of 2026 in a “very-adverse” scenario.

Unsurprisingly, Dombrovskis isn’t overly concerned. This is the same guy who back in 2022 waved off Europeans’ anxiety with its Atlantic ally’s Inflation Reduction Act (IRA) and its billions in subsidies for electric cars, batteries, renewable energy products and consumers who buy such American-made products.

The IRA passed as Europeans’ sacrificed Russia energy for the Project Ukraine cause—and their industry became even less competitive as a result—but Dombrovskis cautioned that there is “the danger of conflating the Inflation Reduction Act with our broader relationship with the United States.”

And so European officials quickly blamed China and Russia instead as the US poached its industry.

Dombrovskis also doesn’t mention other supply chain body blows like pharmaceutical shortages,  fertilizer shortages, or fuel oil shortages:

More Nightmare Scenarios

The scary news for Europeans is that the situation could get a lot worse than just a Strait of Hormuz closure.

That’s because there is a very real possibility that Azerbaijan becomes a target of the Iranian response. Israel is a close ally with Baku, and it is strongly suspected that drone attacks on both Russia and Iran have originated from Azerbaijan territory. The most recent European Commission Quarterly Report on Europe’s Gas Markets, which covers Q2 2025, has Azerbaijan providing five percent of the EU’s total gas imports (eight percent of its pipeline imports).

Russia, via the TurkStream pipeline, is still providing 10 percent. And yet NATO-backed Ukraine continues its efforts to knock TurkStream offline. Gazprom reported on March 11, that there were 12 attacks on its pipeline infrastructure to Turkey in the past two weeks.

Europe’s benchmark gas prices still have a ways to go before reaching 2022 levels:

But should Azerbaijan and/or Russia via Turkey routes go offline, the EU would suddenly be even more desperate for American LNG and be forced to pay a premium to secure it. And that has cascading effects:

So one might think it’s time to start rethinking the bias against Russian energy and the whole bottomless money pit in Ukraine.

Many no doubt are, and some are even saying so publicly. Belgium’s Prime Minister Bart De Wever called for a “normalization” of relations with Russia. Although he was already persona non grata for his role as road block in the Russian stolen funds fiasco, and his foreign minister quickly walked back his statement, it’s a sign the dam might be about to break.

Others might be hesitant to voice similar views, what with Queen Ursula wielding her “tools” and Ukrainian Banderites threatening to off Hungarian Prime Minister Viktor Orban and his family. Von der Leyen announced yesterday that the EU will provide “technical support and funding” to help repair the damaged Druzbha pipeline, which sends Russian oil to Hungary and Slovakia. In return, she expects Orbán to back a €90 billion loan to fund Ukraine’s war effort. Notice that Ursula’s offer does not guarantee that oil will flow through Druzbha—just that the EU will provide assistance in repairs. Orban has been clear that he wants the oil to arrive before backing any loan deal:

Even if the oil arrives and Kiev gets its loan, it wouldn’t be surprising if the Ukrainians shut it down again afterwards.

The whole obsession with Hungary (and Slovakia) and their pipeline imports of Russian gas shows just what a theater of absurdity the EU is nowadays.

The problem is apparently that the gas comes via pipeline at a more affordable rate. That’s the logical conclusion to draw considering that countries like France and Italy, which have upped their Russian LNG imports, draw hardly any criticism from the Project Ukraine fanatics.

Speaking of Italy, it provides a fine example of the multi-year failure of the bloc’s ruling elite.

Let us recall that it was former Goldman Sachs bigwig, European Central Bank president, and unelected prime minister of Italy Mario Draghi who was a chief architect of the sanctions policy against Russia, as well as Rome’s energy policy in its wake. Italy was among the leaders in scaling up LNG storage facilities and filling them with Qatari gas. Despite running into problems with that strategy during the height of the Red Sea crisis, the country is in no better shape today. Qatar accounts accounted for roughly 30% of Italy’s LNG imports, far and away the EU leader. So what’s to be done now without Qatari gas?

Oh. And when, pray tell, could that be of assistance?

Meanwhile, Draghi who now chairs something called the Bloomberg New Economy Advisory Board, is still treated as an economic wizard and periodically pops up to issue warnings on European competitiveness—sage advice that always demands more neoliberalism and ignores the elephant in the room: the EU decision to forego Russian gas.

The fact that his warnings are treated seriously despite his role in causing the crisis is a condemnation of the entire European media.

Italy has always been a tepid supporter of Project Ukraine and would almost certainly welcome back pipeline Russian gas (if Moscow were to cooperate). The situation is far worse up north where Sweden is busy detaining Russian “shadow fleet” captains, the Baltics are eager to get crushed, and how about Germany? There continues to be record levels of dissatisfaction with this government (just like the last) and the traditional major parties, and Chancellor Friedrich Merz is actually criticizing the US for relaxing sanctions on Russian energy while having trouble making up his mind on the war of aggression against Iran:

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European nations, while providing logistical, financial, and other support for the US-Israel war of aggression, are running away from committing troops or other military assets to the conflict theater. They’re responding to Trump’s threats by promising to discuss how to open the Strait of Hormuz. Can’t wait to see what emerges from those talks.

Europeans might be making a show of distancing themselves from the Iran war:

But they’ll have to do more than that if they want passage through Hormuz:

Find the most deluded response possible, and that’s probably the one the EU will settle on. Finnish President Alexander Stubb, a Trump golf buddy and considerer of nukes in Finland (since ruled out in “peacetime”), has worked out the obvious transaction with zero chance of success that will crush the EU on both energy fronts, and get a lot of people killed: European military support to secure the Strait of Hormuz in return for ongoing US military and financial assistance to Ukraine.

It’s unclear what reality Stubb is living in where the EU can offer any effective assistance in militarily opening Hormuz and where the US can sustain combat against Iran while simultaneously upping support for Ukraine, but this almost guarantees this what the EU will do.

Clinging to Atlanticism

Some are making the argument that the US-Israel war against Iran is some sort of master chess move to weaken China. If so, it’s backfiring spectacularly. But one could make the argument that it’s just as much about Europe —and as we can see, it’s more effective there where its Eastern energy connections are systematically cut off until American LNG is the answer, and European companies will continue to relocate to the US where energy prices are lower. More than that, however, it also helps China gain industrial market share as European industry becomes a thing of the past.

Arnaud Bertrand makes the case that the EU—and its member nations—will not survive in the world the US envisions.

He stresses the urgency of the question of who’s looking out for Europe, but one can argue that’s been a five-alarm fire for years now and we have our answer.

The current crop of EU rulers are composed of clueless ideologues or those long ago co-opted by some combination of intelligence-WEF-transnational finance and seemingly all aspire to be the next Tony Blair success story who offer their country up for a US-led bust out in return for personal enrichment.

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19 comments

  1. Frank

    During the 1973 oil embargo the only concession made in USA sports was to shorten the Daytona 500 auto race to the Daytona 450. So with that recollection I wonder just how the escalating cost of fuels needed for travel will affect professional football in 2026.
    The first game will be held in Paris, France and then,

    The NFL has confirmed the following 2026 regular season international games to date.
    • One game in Melbourne, Australia at the Melbourne Cricket Ground, featuring the Los Angeles Rams as one of the participating teams
    • One game in Rio De Janeiro at the Maracanã Stadium
    • One game in Munich at FC Bayern Munich Arena
    • Three games in London
    • One game in Madrid at the Bernabéu Stadium – home to Real Madrid C.F.
    Maybe the NFL will leave off the jet flyovers as a concession to reality.

    1. The Rev Kev

      You should tack on the 2026 FIFA World Cup to be held in North America in June of this year. If this self-created Gulf crisis, you can bet that sports tourist numbers will be way down to either high costs in their home countries or the cost of air travel spiraling out of control.

  2. JohnnyGL

    Good write-up, Conor.

    For all my complaints about how US society is run, at least our elites aren’t making it impossible to heat my home and get to work.

  3. hemeantwell

    Good job, Conor.
    To add to Europe’s woes, in an interview yesterday Stanislav Krapivnik raised the possibility of Europe facing serious food shortages as early as this summer due to Hormuz-related supply chain disruptions. Fertilizer. He tends to turn the brightness knob way up, but the likelihood that food shortages would finally motivate regime change efforts by the population of NATOstan is encouraging to those of us who think elite “circulation” is way overdue.

  4. wetware_antenna

    Well I guess us Europeans will pretty soon have to face a generational reality check and probably witness a soviet-style, end of an era collapse.

    With (almost) no industry to compete globally, a crippled and costly energy system, all that endless warmongering and economic/military support for Ukraine, declined standards of living, the list goes on.

    I come to think that the price of karma to pay will be the impossibility of heating our homes(already been happening here in Greece since the austerity years) and now, the prohibited costs of driving our cars for work or otherwise. Maybe there’s more?

    Oh and add to the fact all the other commodities skyrocketing due to fertilizer costs, shipping & logistics etc.

    So my guess is that we’ll have to pay a lot more than our current pain threshold can withstand as societies.

    My only question at this point is how soon we get to see all this collapse coming in full force.
    When does the political economy catch up with reality ? 3 to 6 months tops?
    Even if the Iran War comes to a halt in the next month or so, which I think not, isn’t the damage already done?

    In a crappified system that the EU already is, how much longer can it hold this theater of utter absurdity and denial in a world where no rules will longer apply?

  5. disc_write

    Italo-Dutch here.

    I am a bit surprised that pundits still talk about Europe, or European countries, as if that was still a thing. We are, for all relevant purposes, a US dominion.

    One should look at European “politics” the same way as the politics of, say, Nevada or Tennessee. No one asks the state governor’s opinion about military matters or international relations: those things are regulated at a different level of government.

    European countries are the same, except that they do not even get a vote in a US election. European elites are not free to decide what course of action they will take, but only in what way they will pursue goals that others have set for them.

    We depend completely on the US in matters of defense, energy, finance, intelligence, and software. A US administration can destroy any EU country in a matter of minutes.

    But that is never necessary. We are culturally dependent on the US. We think of ourselves as American appendages. We will whine, but never revolt.

    My (Dutch) children often ask me (an Italian) for the Dutch translation of words that they only know in (US) English. You can tell that any European expert, when interviewed on TV, is translating in his head words and concepts he only learned in English, before he utters his answers in his national language.

    So what will Europe do now? In any case, it is pointless to ask the Europeans.

  6. AG

    Thanks Conor!

    re: Germany

    This short piece by German regional conservative daily MERKUR raises alarm over breakdown of supply chains, something most likely regional papers will do, while their national legacy media counterparts try to spin the government fairy-tales. Since most of these smaller papers are part of a larger media-house it appears like an odd division of labour where lip service is offered as a fig leaf located in a space where there is less awareness of the huge national public which is however the only force that could create some pressure.

    machin-translation

    First supply chains break down: Key German industry sounds the alarm – China reacts to Iran war
    https://archive.is/Q4tha

    “(…)“There is concern about serious and increasing supply bottlenecks for raw materials – for example, ammonia and phosphate, helium and sulfur,” the German Chemical Industry Association (VCI) reports. Initial signs of disruptions in global supply chains are already apparent. (…) Specifically, half of the world’s maritime trade in sulfur, a key ingredient in fertilizer production, passes through the Strait of Hormuz. As a result, fertilizer prices have already risen significantly. (…) In addition, China is causing concern for the industry (…). The VCI expects the People’s Republic to reduce its exports. Since a significant portion of China’s oil and gas supply also passes through the Strait of Hormuz, the country is currently prioritizing meeting its own needs.”

    When institutions you usually never hear about like above German Chemical Industry Association articulates serious concerns in public you know you have a real problem at hand.

  7. jefemt

    I can’t help but be reminded- as much as we criticize or at least wonder at the Europeans heads in the sand and ditherin’s, my Canadian pals are constantly throwing the legitimate and real barb at me, an American: why the hell aren’t you doing SOMETHING?!

    Not sure when the metaphysical, “moment” will occur. After the mushroom clouds?

    Israel and Iran are in a no holds barred no draw,no concession, no surrender, no peace in a faith-based war of heart-felt resentments. The are each cornered and lashing out.

    You think Trump’s revenge tour, the retribution King, is rugged? Hang tight!

  8. Carolinian

    So Stinky Don and Bibi plunge the entire planet into a crisis and the planet says…….?

    If only there were some international organization with a tall modernist building where an end to the Iran insanity could be demanded.

  9. vao

    “historians will likely look back with puzzlement at how the European publics didn’t stage a revolt.”

    Various explanations can be proposed to explain the apathy of the Europeans with respect to the suicidal policies followed by their elites, but let me put forth a socio-demographic one: Europe is an old, very old continent. Looking at the median age of the population, amongst the 50 oldest ones in the world:

    35 are from Europe (including Ukraine, Belarus, Russia, and some micro-states such as Liechtenstein and Malta);
    8 from America (mainly tiny islands, but also Cuba and Canada);
    6 from the Far East (Japan, Hong Kong, South Korea, Taiwan, Macao, Thailand);
    1 from Africa (St Helena).

    Oldsters do not mount revolts; youngsters do. It is a physiological constraint.

    But in 2018-2019 wasn’t there that Gilets Jaunes movement in France, in which middle-aged people also took part? France is at rank 42; then as now, it was a significantly younger country (but not a young country per se) compared to many of its peers in Europe such as Spain, Poland, Italy, and Germany (but not the UK, or Scandinavian states). The movement was crushed mercilessly anyway, and images of peacefully protesting middle-age persons being whacked by the police have since become common throughout Western countries.

    Paradoxically, the ones who would have the physical condition to mount sustained revolts in Europe are foreigners — all those young Africans, Turks, Nepalese, Indians, etc, who come or are brought in to take over the hard physical work (in agriculture, construction, or hospitals) that Europeans do not want to do or cannot perform.

    1. Kouros

      Depends on how hungry people will get and what pushes them. What is the average age of Ukrainian army by the way?

    2. Ignacio

      I believe age is one thing. Then i believe some kind of leadership is necessary for revolts and there is nothing of this. See for instance Mélenchon. Find me a single politician or anyone who looks able to lead a rebellion.

  10. Conall Francis Boyle

    Europe, or more specifically the EU was founded as a Peace Project. At the fall of the Soviet Union it should have moved immediately to include all the countries up to the Urals.

    Instead it has betrayed its origins and become the war-on-Russia organisation, NATO support group (although several members were not in that defunct outfit) and worst of all, turned themselves into US vassals, exactly the opposite of what was intended

    1. TimH

      I’d argue that NATO was created as US + vassals (politically subservient, and customers for US mil gear).

  11. Glen

    I can remember thinking back in the 00’s that the EU could have become a real economic power (but this assumed the EU would stay partners with Russia which Russia seemed to want, and developed a robust trading alignment with China), and remain surprised at where it all ended up after twenty years. I mean, we’ve definitely had crappy leadership in America for more than twenty years, but at every turn, it’s almost as if the EU is determined to be even worse.

  12. bertl

    At root, the EU is an ornamental garden choking with weeds as nature does as nature will and allows the jungle to take over.

  13. bratphil

    Conor – this all a great analysis, but there needs to be some discussion on Naked Cap re: the supposed Macron/Khameini conversation that you published as a Twitter post by Kathleen Tyson. I can’t find any source for this reported conversation and it seems really unlikely that it could have happened due to security requirements for the new Supreme leader. It fits well with quite a bit of other news regarding various European nations’ public stance on the Gaza/West Bank matters (not to mention the “Ambassador” Kushner imbroglio) but there just don’t seem to be any bones in that specific post. There does appear to be confirmation that Macron and the Iranian “president” had a general discussion on various subjects but nothing as specific as the purported dialog Tyson posted. (Of course we should not doubt that the basic gist of the reported dialog really is the Supreme Iranian stance) but…it was disturbing to find such a link within an otherwise well constructed analysis. Even if it was included as an example of the absurdity you mentioned around EU decision making it doesn’t seem to fit. Please expand on this as it raises the spectre of the dangers of using un-investigated social media posts as news. Please explain. Thanks.

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