Things are not looking good!

Last Updated on Thursday, 8 February, 2024 at 11:54 am by Andre Camilleri

Last week, European farmers took the streets to protest against the EU rules, which rules are leaving them without a proper living. I am told that the European Commission is being pressured to lax some of the rules that are hampering the farmers’ produce on the market.

The lifting of quotas of Ukrainian agricultural products in the EU, as well as the removal of trade tariffs previously applied to third countries, is making it difficult for the European farmers to earn a living. Besides, the rules to account for the CO2 and nitrogen emissions in The Netherlands, the increase in the prices of potash, as well as the cut in subsidies for diesel machinery in Germany, is making those within the industry fume. This is the first time in so many years that I saw a truly angry protest with EU governments reversing rules in such a short period of time. Apparently, Belgian farmers blocked border crossings with the Netherlands, which caused several delays. On the other hand, in France, farmers blocked major highways leading to the capital city, as well as other cities.

By now, everyone must have realised that the war with Russia is leaving its long-term mark also on the European economy. Those within the European Commission are racing against time to sign bilateral trade agreements with third countries. The reason to accelerate such trade deals are not in the interest of European markets. However, they are in the interest of those who want to protect their seats. The reason relates to the problem of trying to tap into critical raw materials to expediate the green transition. They need these countries not for Europeans to sell to their markets, but to exploit their critical raw materials, including rare earths. When in 2022 I spoke of shifting economic patterns this is what I meant. We needed at least two years to adjust for inflation, because the EU required new markets to replace Russia. However, the way it is being designed is not in the interest of the collective.

Indeed, I burst out laughing when I listened to the speeches delivered at the ItaliAfricaSummit in Rome.  The patronising tone is quite nauseating. At least they admitted that Europe has an energy supply challenge. They are not hiding it anymore. Yes, Africa is a great partner but not to be exploited. Africa has been exploited for centuries. France left a mess in the Sahel Region and the Central African Republic. For instance, the EU is rushing because they require potential suppliers, besides China, to tap into critical raw materials required for the renewable and green energy, including rare earths. The problem is that the European Commission is completely detached from reality. European farmers cannot compete because there is no level playing field relative to farmers hailing from third countries. European farmers must internalise the costs emanating from strict rules. Hence, it is not easy for them to compete with third countries. This means that the costs for European farmers to follow EU rules are shooting up, and their products are not competitive on the market anymore. European farmers are slashing prices to compete, while in tandem they have to account for higher costs, leaving them with a wafer-thin margin of profit.

Meanwhile, NATO is preparing for its largest military drill since 1988. Around 90,000 troops will participate in the Steadfast Defender 2024 drills that will run through May and June, ahead of the European Parliament Elections. The scenario will be rehearsing how US troops could reinforce European allies in the event of a conflict with a bordering adversary. Coincidentally, the European allies that will be reinforced, happen to be the countries bordering Russia, as well as those situated on the alliance’s eastern line. Frankly, I have no idea what they have in mind. However, when Russia launched a joint Russian-Belarussian military exercise named Zapad, back in 2021, a few months later they invaded Ukraine. It involved around 200,000 troops from Russia, Belarus and other countries that form part of the Russian Collective Security Treaty Organisation.

Frankly, I have a feeling that something bigger is brewing, which goes beyond the military drill. It does not make sense to have Manfred Weber calling for the proliferation of nuclear weapons and NATO to hold its biggest drill since the Cold War just before the European elections. I truly hope that I am wrong. In a nutshell, if the EU is not going to untangle itself from the energy challenges that it will face in the coming years to accelerate the green transition, then the writing is on the wall. It is evident that they are calling for a war with Russia. And after 8 June we might get to know more. They are only keeping things under wraps because of the European elections. Ursula von der Leyen once stated that Europe will never appease Vladimir Putin. OK, granted. However, with the same reasoning, von der Leyen and the EU did appease Ilham Aliyev. They allowed him to sweep Armenians out of Nagorno-Karabakh. For the EU, Ukraine has become more important than its member states. The distortions created within the EU markets, as well as the chaos that Europe had to deal with because of the war in Ukraine, simply does not tally. Surely, there is more to it.

Also, last week the EU approved a €50bn aid package for Ukraine. The amount is equivalent to a third of an annual EU budget. These are funds eligible within the EU budget, which cannot be channelled towards military, because the Treaty does not allow it. So, when EU farmers realised that they have to fork out additional funds for Ukraine, which funds are coming from the Own Resources we pay to the EU, they lost the plot. The money we pay to the EU comes from our taxes. And European farmers are technically earning less due to Ukraine, and other third countries’ produce available on the European market.

Well, things are not looking good!

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