When milk ran out in Madrid, Pedro Sánchez put everything on one card in Brussels. It must have been clear to him that he should not return home from this EU summit empty-handed, because the air there was slowly getting thin for him. After months in which private households in Spain, but also more and more companies, were groaning under the soaring electricity prices, two weeks ago truck drivers also went on strike because of the high petrol prices.
In Spain, a movement not dissimilar to the French Yellow Vests began to form, even if the protests have so far remained largely peaceful. The dissatisfaction with the increased energy prices means that the socialist Sánchez has trouble explaining himself. The war in Ukraine is not enough for many Spaniards to suddenly have to pay so much more for electricity, heating and petrol. Sánchez was running out of time, and he kept putting people off: he wanted to talk to his European partners first. The EU summit should bring the solution.
Sánchez gambled high on Friday in Brussels. He is even said to have broken up a joint meeting of all heads of government. The newspaper El País has now published a meticulous reconstruction of the events of last Friday. “I can’t go on like this,” Sánchez reportedly said. And in the end, they may have made it clear that it was really all about the whole thing for Spain and Portugal. In any case, the two countries pushed through a historic exception: In the future, they will be the only member countries to temporarily cap their electricity prices.
Chancellor Olaf Scholz sounded almost appreciative when he told Spanish journalists after the summit that Pedro Sánchez had “successfully defended his country’s interests”. But the Chancellor cannot be satisfied with this, he did not hide his “skepticism” about the outcome of the negotiations. Because Sánchez’ triumph in Brussels means a defeat for the German and Dutch negotiating position. Both countries had spoken out vehemently against interventions in the electricity market.
For Spain and Portugal, however, the situation is different than for Central Europeans: both countries already generate a large part of their electricity with renewable energies. In the case of Spain, they account for 47 percent of electricity production, while 15 percent is generated from natural gas. The two countries on the Iberian peninsula would therefore have preferred the electricity price to be decoupled from the gas price. Because every increase in the European gas price is also immediately reflected in Spain in a massive spike in the price of electricity.
In addition to milk, toilet paper is also becoming scarce – the reasons are more psychological
But a decoupling could not be enforced in Brussels. Hence the Iberian exception, which Commission President Ursula von der Leyen also justified after the summit with the fact that both Spain and Portugal are in a very special situation because they are hardly connected to the European power grid. In fact, Spain’s exchange capacity is just three percent. It’s as if the Pyrenees form an impassable barrier – not for strawberries, cucumbers and tomatoes, but for electricity.
After von der Leyen’s backing, Sánchez is confident that his plan to cap electricity prices will work. He has to present it to the commission for consideration in a few weeks. Back in Madrid, the head of government is now full of energy: This Monday, Sánchez announced a “crash plan” in response to the economic consequences of the war in Ukraine. This provides support totaling 16 billion euros, with six billion going directly to both private individuals and the economy as aid and tax breaks. The fuel price is to be reduced by 20 cents, the short-time work allowance tested during the pandemic will be retained, and rent increases will be temporarily capped at two percent. Sánchez also wants to increase the basic income he introduced, a kind of social assistance, by 15 percent for the next three months and support up to 1.9 million households with electricity vouchers.
Will this calm the social upheavals in the Spanish middle class? The truck drivers, who had already been promised relief of 20 cents per liter of fuel and direct aid of 450 million euros on Friday, described this as “crumbs and peanuts”. Sánchez said that with this package, the industry alone will receive one billion euros in aid. But the strike platform, which mainly represents independent small hauliers, is demanding relief of at least 60 cents per liter and announced that the strikes will continue.
This threatens to exacerbate the supply crisis. In the past few days, more and more shelves in Spain’s supermarkets have remained empty. Milk and fruit in particular are becoming scarce. Some dairies had to close because they couldn’t get any more milk, and farmers dumped millions of liters that the transporters didn’t pick up. As a further symptom of the supply crisis, many Spaniards apparently also began to hoard toilet paper. According to one expert, the reasons for this are El Paísalbeit more psychologically.