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CWA # 566
The World this Week
Europe's Energy Crisis

  GP Team
10 October 2021

The World This Week #140, Vol. 3, No. 41

Vaishnavi Iyer

Europe: The impending energy crisis 
What happened?
On 6 October, European gas prices saw a record increase. The Spanish Prime Minister Sanchez said: "We are facing an unprecedented crisis that requires extraordinary, innovative, serious measures from the EU in order to control this price hike." Addressing the EU Slovenia Summit, he called for the European Council and the European Commission to help resolve the crisis. 

The EU Energy Commissioner Kadri Simson said: "the bloc should provide targeted support to citizens and small businesses that were hardest hit." She called for a shift in taxation which is facilitated under EU directives. With the economic nature of the crisis, Simson notes no quick fixes could help the situation. 

An energy expert, Theirry Bros said: "You're finding yourself in an area where demand has rebounded and on the other side, supply is more constrained. On 7 October, Russia pledged to increase its gas supplies to Europe. Dmitry Peskov said: "existing gas transit routes allow for bolstering supplies before the new Nord Stream 2 pipeline that is intended to bring Russian gas to Germany begins operating. It all depends on demand, contractual obligations and commercial agreements." Russia's deputy Prime Minister Novak promoted launching Nord Stream 2 to facilitate easier gas transit.

What is the background?
First, an unplanned clean fuel transition. In an attempt to attain carbon neutrality, the large-scale transition from coal to cleaner fuel has already begun impacting Europe negatively. Europe began decreasing its coal dependency by phasing out its renewables sector. The Netherlands, Europe's largest producer of natural gas, phased out its Groningen gas field in 2018. The current working gas storage remains at 75 per cent as compared to 94 per cent last year. Wind power produced menial outputs this year owing to a dry weather spell. The consequent dependency of Europe on natural gas rich counterparts like Norway and Russia worsened the crisis when Russia terminated its gas exports.

Second, consumer behaviour. In a colder winter last year, citizens used more coal to heat their homes, leading to a hike in prices. Moreover, the UK's fuel crisis worsened with lower availability of truck drivers owing to Brexit. In an event of delayed gas supplies, consumers emptied most gas stations in the UK. 

Third, gas "peakers". The pandemic led to a surge in the demand of electricity across Europe. As a system dependent on renewables, European girds experienced surges owing to weather changes. In a normal scenario, companies would fill such surges using gas peakers. However, the pandemic promoted a mismanaged use of these gas peakers by companies to generate more profits. Gas producers like Equinor and Gazprom hold the market tight till 2025, creating increasing price hikes. 

What does this mean?
First, the global hike in gas prices. This not limited to Europe. A primary reason for the supply shortage has been the pandemic along with colder winters this year. Industrialists and suppliers have profited from limiting gas supplies causing a consequent hike in prices. Government intervention seems to be the most favourable solution. France and other few countries began price capping and scheduled a planned increase in electricity tariffs for its consumers. The EU has also begun the process of changing its taxation mechanisms to facilitate a smoother winter.

Second, promotion of Nord Stream 2. Russia has intervened in the EU natural gas crisis. It has assured the EU of a consistent supply of natural gas, but there remains an undercurrent of pressure to start formal preparations for Nord Stream 2. The EU may have to hasten the approval of Nord Stream 2 for continued cooperation. Given the economic nature of the problem, there is no quick fix.


Also, in the news …
By Sukanya Bali and Avishka Ashok 

East and Southeast Asia This Week 
Taiwan: Defence Minister says military tension worst in last 40 years
On 6 October, Reuters reported: Taiwan's Defence Minister Chui Kuo-cheng said: "military tensions with China are at the worst in 40 years." He also added, "there was a risk of a misfire across the sensitive Taiwan Strait." Since 01 October, more than 150 Chinese air force planes were involved in incursions in Taiwan's air defence identification zone. 

China: Xi Jinping vows peaceful reunification with Taiwan
On 9 October, Chinese President Xi Jinping at a meeting commemorating the 110th anniversary of the Xinhai Revolution vowed to achieve a "peaceful reunification" with Taiwan. According to Reuters, Xi said: "Taiwan independence separatism is the biggest obstacle to achieving the reunification of the motherland, and the most serious hidden danger to national rejuvenation." He added: "The historical task of the complete reunification of the motherland must be fulfilled, and will definitely be fulfilled."

North Korea: Pyongyang continues nuclear programme amid sanctions, says UN report 
On 5 October, a report by the United Nations noted that North Korea had continued its nuclear and ballistic missile programs despite international sanctions. The report highlighted, the North continues to "seek material and technology" for such programs. According to The Korea Herald, the UN report also stated: "the regime staged a new short-range ballistic missile test combining ballistic and guidance technologies."

Japan: Prime Minister held the first talk with the US President Biden; mentions need of dialogue with Chinese President Xi Jinping 
On 6 October, Japan's new Prime Minister Fumio Kishida held his first talk with US President Joe Biden. The Asahi Shimbun reported, Kishida said: Biden provided "a strong statement about US commitment for the defense of Japan, including Senkaku." He added, the two leaders reaffirm to tackle the "challenges facing neighbouring regions such as China and North Korea." Later, Kishida also held online talks with Australian Prime Minister Scott Morrison. Japan's Foreign Ministry stated, both agreed to "strengthen their security and economic ties bilaterally and as part of the Quad alliance …. to promote regional peace and stability."
On 9 October, Japan's Prime Minister held a telephonic conversation with the Chinese President Xi Jinping. The Asahi Shimbun reported, Kishida raised issues on "the disputed islands, as well as Hong Kong and Beijing's treatment of Uighurs in the Xinjiang province." He stated, "Xi and I agreed to work together on various shared issues, including North Korea."

South Asia This Week 
Pakistan: US Deputy Secretary of State at a two-day visit to Islamabad
On 8 October, the US Deputy Secretary of State Wendy Sherman met Pakistan's Foreign Minister Shah Mahmood Qureshi. Dawn reported: Quershi stated, "Pakistan wants broad-ranging, long-term and stable relations with the United States to promote economic cooperation and establish peace in the region." He also called for a regular and structured bilateral dialogue process for promoting common interests and advancing regional objectives. Further, Pakistan General Qamar Javed Bajwa also emphasized on maintaining meaningful bilateral engagement for an enduring multi-domain relationship between Pakistan and the USA.

Afghanistan: Taliban delegation leaves for Doha to hold talks with officials; UK Prime Minister's special envoy meets with Taliban leaders in Kabul
On 8 October, a delegation of the Islamic Emirate led by acting Foreign Minister Amir Khan Muttaqi left for Doha to discuss Afghanistan's political situation with foreign officials. Tolo news reported: Deputy Minister Zabihullah Mujahid, said the delegation will meet with "Qatari officials and the envoys of a number of countries on Afghanistan's situation." 

On 5 October, Deputy Prime Ministers Mullah Abdul Ghani Baradar and Abdul Salam Hanafi met UK's special envoy Simon Gass. According to Tolo news: Baradar and Hanifi in the meeting said, "the Islamic Emirate wants good relations with the world's countries, and they will not allow anyone to threaten any country from Afghanistan." They also added, the Islamic Emirate will "facilitate conditions for international humanitarian organizations to deliver aid to vulnerable Afghans." In response Gass said: "UK will continue its humanitarian aid to Afghanistan via the United Nations and international humanitarian organizations." He reiterated the importance of girls' education as well. 

India: Pandora Papers identify many Indians secretly stashing wealth overseas  
On 5 October, the leak of financial documents dubbed Pandora Papers showed that over 300 Indians have set up offshore structures to stash wealth, launder money and evade tax. The International Consortium of Investigative Journalists uncovered details after accessing over 12 million documents of offshore companies from 14 sources. The leaked documents named many including MPs, film stars and sports stars. The Indian express identified that businessmen who have declared themselves bankrupt hold billions through such overseas entities. On the same day, in response to the findings, India's Central Board of District taxes launched an investigation into these cases. 

Central Asia, Middle East and Africa This Week
Armenia: Azerbaijan Airlines unilaterally begins using sovereign airspace 
On 6 October, flightradar24, a flight-tracking website, revealed that a flight belonging to Azerbaijan had used the Armenian airspace for the first time in seven years. The flight used the airspace to travel from Baku to the Nakhchivan enclave. The move has been questioned by Armenians who believe using their airspace is a unilateral decision of Azerbaijan. The Azerbaijan Airlines also made a statement on Facebook and said: "The change of Baku-Nakhchivan-Baku flight route will also decrease flight time and fuel consumption during flight. So, after this, AZAL can use all existing air corridors including corridors passing through Armenia and Iran while carrying out this flight." 

Uzbekistan: Foreign Ministry engages in direct talks with Taliban regime
On 7 October, the Foreign Ministry of Uzbekistan reported that a delegation led by Foreign Minister Abdulaziz Kamilov was in Kabul to discuss regime viability. The visit by Abdulaziz marks the first time the Uzbek government has engaged in face-to-face dialogue with the new Taliban. The countries discussed energy, trade, transport and humanitarian cooperation. The Foreign Ministry spokesperson said: "Members of the interim government of Afghanistan expressed sincere gratitude to President of Uzbekistan Shavkat Mirziyoyev for the huge attention to the aspirations of the Afghan people and invaluable humanitarian aid [sent] with the aim of preventing a large-scale food crisis."

Iran: The US State Department pushes for re-engagement on nuclear talks
On 7 October, the US State Department spokesperson Ned Price announced the willingness of the US to engage with Iran to resume the negotiations on the nuclear issues. While stressing that the diplomatic communication option was still open, he explained that Iran had to make the decision. He said: "We have made very clear that we are prepared, willing and able to return to Vienna as soon as we have a partner to negotiate with." 

Yemen: UNHRC ends mandate on probing war crimes
On 7 October, the United Nations Human Rights Council decide to end the mandate investigating the war crimes in Yemen. The Group of Eminent International and Regional Experts on Yemen (GEE) had reported in 2018 that all involved parties in the Yemeni war guilty of war crimes. The dissolution of the mandate is a blow to most Western countries that wanted to continue the investigation. However, according to a former Security Council consultant, the vote did not come as a surprise. She said: "A lot of people will be disappointed because it is a failure on the part of the UN. But from a political perspective, finding a real solution to the ongoing crisis in Yemen, pointing fingers may not be the right way to reaching a peaceful resolution to the conflict."

Mali: Prime Minister accuses France of training terrorist groups in Kidal
On 8 October, Russian media quoted the Malian Prime Minister Choguel Kokalla Maiga and stated that the country had no access to Kidal and was being controlled by France. Prime Minister Maiga alerted the Russian media and claimed that France had been training terrorist groups in the region. According to Maiga, a town in the region had been handed over to Ansar al-Din, a group allegedly connected to al-Qaeda. He said: "They have armed groups trained by French officers. We have evidence. We do not understand this situation and do not want to tolerate it." Earlier in the week, the Malian government had also summoned the French Ambassador to protest against President Macron's criticism of the Malian government. 

Ethiopia: Abiy Ahmed wins the second term as Prime Minister
On 4 October, Prime Minister Abiy Ahmed attended the oath-taking ceremony as his party won another term in the parliamentary elections. While taking the oath, he said: "I, Abiy Ahmed Ali, today in the House of People's Representatives, accept the appointment as prime minister, as I pledge to undertake responsibly and with faith to the constitution the responsibility placed upon me by the people." On 6 October, the Parliament approved the new cabinet which was set in place by Abiy Ahmed. The new cabinet replaced the defence and peace ministers in a show of inclusivity. 

Africa: WHO approves Malaria vaccine for infants and children 
On 6 October, the World Health Organization approved the world's first vaccination against Malaria. In a big achievement for the medical sciences, the vaccination for Malaria was approved after almost a century of trials and errors. The vaccine will prove to be beneficial in Africa, where most children are fighting a war against the disease. After Ghana, Kenya and Malawi came back with successful results, the WHO has urged sub-Saharan and other African territories to vaccinate infants and babies against the deadly disease. The Director-General of WHO Tedros Adhanom Ghebreyesus said: "The long-awaited malaria vaccine for children is a breakthrough for science, child health and malaria control. It could save tens of thousands of young lives each year."

Europe and The Americas This Week
Russia: Government labels more journalists as foreign agent after Russian journalist wins Nobel Prize
On 8 October, the Norwegian Nobel Committee awarded Dmitry Muratov of Russia the Nobel Peace Prize for their unfiltered and courageous work in authoritarian situations. The Chair of the Nobel Committee said: "Free, independent and fact-based journalism serves to protect against abuse of power, lies and war propaganda." Although the Russian government congratulated Dmitry and called him "talented and brave", the Justice Ministry added nine more journalists and three media organizations to the list of foreign agents. 

Poland: Prime Minister stresses on differences with the EU
On 7 October, the Constitutional Tribunal of Poland announced that one of the European Union's key articles were unsuited with the Polish law and rejected the idea of EU supremacy over the legislative actions of Poland. The recent judgement has given way to fears of Poland's exit from the European Union. On 8 October, France and Germany cautioned Poland against such ideas and reminded the country that membership in the EU was not simply a moral commitment but also a legal one. 

Germany: Berlin police investigates the Havana Syndrome at the US Embassy 
On 8 October, US President Joe Biden pledged to investigate the cause for the Havana syndrome and the trigger for the incident at the US embassy in Berlin. In August, the police began probing the case of an apparent sonic weapon attack on the US embassy employees who have reported suffering from the illness since 2016. The US is also investigating other embassies around the world and looking for hints that could point to an attack. 

Europe: World leaders come closer to an agreement on Global Corporate Tax 
On 8 October, over 136 countries ratified an agreement on a new global corporate tax which will be put into effect by 2023. On 7 October, Ireland and Estonia agreed to join the initiative, while Hungary chose to gradually reach the agreed tax rate over a period of ten years. The US President Joe Biden referred to the agreement and said: "Establishing, for the first time in history, a strong global minimum tax will finally even the playing field for American workers and taxpayers, along with the rest of the world." Through the global corporate tax, a minimum income tax rate of 15 per cent will be levied to restrict tax competitions to appeal big companies. As of now, Kenya, Nigeria, Pakistan and Sri Lanka are the only countries in the OECD group that have not ratified the agreement. 

Mexico: Asylum system expects an upsurge in Haitian migrants 
On 6 October, Reuters reported that Mexico could witness a 70 per cent jump in asylum seekers as Haitian migrants attempt to crossover into Mexico. Although most Caribbean migrants are ineligible for asylum according to the current Mexican rules, Haitians are the second-most common asylum seekers and have the potential to replace Honduras at the top for the first time in 10 years. The sudden surge is largely caused by the political unrest in Haiti and the economic inefficiencies of the country. 

Argentina: Senate rejects Chile's expansion of continental shelf
On 6 October, the Argentinian Senate declared Chile's decision to expand the continental shelf into Argentina's waters as a violation to the Peace and Friendship Treaty signed by the countries in 1984. The 1984 treaty demarcated the outer limit of the continental shelf based on the United Nations Convention on the Law of the Sea. The Senate also stated: "the attempt of appropriation by Chile of an extensive seabed and ocean floor area, a space that is part of the Common Heritage of Humanity by the Convenor and the Treaty of Peace and Friendship."


About the Authors
Sukanya Bali is a PhD Scholar at OP Jindal University. Vaishnavi Iyer and Avishka Ashok are Research Associates in the School of Conflict and Peace Studies at the National Institute of Advanced Studies. 

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