European Union officials and diplomats have accused Washington of profiteering off the Ukraine crisis via energy and weapons sales, and warned that the mood is shifting against the US among its allies on the other side of the Atlantic.
“The fact is, if you look at it soberly, the country that is most profiting from this war is the US because they are selling more gas and at higher prices, and because they are selling more weapons,” one senior European official told a German-owned media group on condition.
“We are really at a historic juncture…America needs to realize that public opinion is shifting in many EU countries,” the official added, warning that skyrocketing energy costs and transatlantic tensions over trade risk fracturing the Western bloc.
An unnamed US official dismissed these concerns, assuring that American energy companies “have been transparent and reliable suppliers of natural gas to Europe,” that prices are set by market considerations, and that resellers, not US exporters, skim much of the profits off energy deliveries destined for Europe.
European officials expressed similar concerns regarding America’s profiteering from arms sales, with one EU diplomat saying “the money they are making on weapons” should help Washington realize that the profits they’re making from gas deliveries may be “a bit too much,” and that a discount for fuel to Europe could “keep united our public opinions.”
“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,” the anonymous diplomat complained, citing concerns in Brussels that building up depleted weapons stocks could take “years” to achieve.
Another official complained about the Inflation Reduction Act (IRA), a controversial law passed in August designed to curb inflation and ramp up domestic energy production and clean energy, but which Brussels has condemned for its discrimination of European goods in violation of World Trade Organization rules.
The IRA “changed everything” and has prompted questions in Europe to the effect of “is Washington still our ally or not?” the EU official said.
One French Foreign Ministry official complained that the law amounts to “discriminatory subsidies that will distort competition.”
A US official assured that the IRA was not aimed at undermining European industry or competitiveness. “This is not a zero-sum game,” the official said. “The IRA will grow the pie for clean energy investments, not split it.”
8 November 2022, 21:45 GMT
Open Acrimony
The exchange of anonymous comments by officials and diplomats to media comes against the backdrop of harsh back-and-forth remarks by officials on both sides of the Atlantic in public regarding the IRA and energy, with French President Emmanuel Macron leading the charge of the spiteful rhetoric.
“Their costs of energy are so much lower as they are producers. They sell their gas for 3-4 times less than we have to pay, and they have also great subsidies from the state in some areas, up to 90 percent. That is unfair. These are double standards,” Macron complained in October.
“The United States produces cheap gas that they sell to us at a high price, and on top of that, they have taken massive state aid measures in certain sectors that are completely outside our market projects,” Macron expanded earlier this month. Paris estimates that the IRA could cost France alone up to eight billion euros in investments if companies shift operations to the US to take advantage of the subsidies.
Hundreds of European companies, including steel and chemical manufacturers, carmakers, pharmaceutical companies, and food producers have already shifted operations to the US to take advantage of lower energy costs and state incentives, threatening the European Union with deindustrialization and widespread job loss.
European officials appeared to have been cognizant of the threat the Ukraine crisis posed to their economic well-being as far back as the spring, with Boris Johnson revealing this week that there were “sound economic reasons” for Germany to seek a swift Russia-Ukraine peace agreement to prevent the crisis from turning into a long, drawn-out conflict.
“I’ll tell you a terrible thing, the German view was at one stage that if it were going to happen, which would be a disaster, it would be better for the whole thing to be over quickly and for Ukraine to fold,” Johnson said. “I couldn’t support that, I thought that was a disastrous way of looking at it. But I can understand why they thought and felt as they did,” he added.
The former prime minister said Italian officials felt the same way, and that France had hoped to see a diplomatic resolution to the looming crisis before it exploded into open conflict in February.
Johnson’s comments serve as apparent confirmation of reports this summer that he flew to Kiev in the spring to personally persuade Ukrainian President Volodymyr Zelensky to break off peace talks with Russia in late March, when Kiev and Moscow seemed poised on the verge of an agreement.
Russian President Vladimir Putin has repeatedly warned French, German, and other European leaders of the folly of their anti-Russia policy, characterizing EU sanctions on Russian energy as “suicidal” and stressing that the loss of cheap and dependable Russian oil and gas would strip the bloc of its global economic competitiveness.