The global economic competitiveness of the European Union has been substantially eroded due to the loss of cheap energy from Russia, former European Central Bank president Mario Draghi said on Monday.
A wide-ranging report presented by Draghi indicated that reducing energy prices, raising competitiveness, and strengthening defense investment are among the top priorities for the bloc’s policymakers.
According to the politician, who served as Italy’s prime minister in 2021-2022, member states have been struggling to cope with higher energy prices and can no longer rely on open foreign markets.
“Europe has abruptly lost its most important supplier of energy, Russia,” Draghi said, emphasising that geopolitical stability was waning, while the region’s “dependencies have turned out to be vulnerabilities.”
The politician and economist acknowledged that energy prices have considerably fallen from their peaks, but stressed that EU companies are still dealing with electricity prices that are 150% higher than those in the US, while paying nearly 350% more for natural gas.
Ukraine-related sanctions imposed on Moscow and the sabotage of the Nord Stream pipeline in 2022 have led to a dramatic drop in Russia’s gas supplies to the EU. The bloc has turned to the US and the Middle East to replace them with costlier liquefied natural gas (LNG).
Russia reportedly accounted for over 16% of the value of natural gas imports into the bloc in the first quarter of this year, down from 40% in 2021. According to estimates by Russia’s Energy Ministry, American LNG is 30-40% more expensive than Russian pipeline gas.
Prior to the Ukraine conflict, Washington had for years been pressuring the EU to cut its dependence on Russian energy. The administration of former President Donald Trump dubbed American LNG “molecules of freedom” when pressuring Brussels to switch supplies.