There were 70,000 on the streets of Prague yesterday. Against the expensive-bills. Against government policies. Against the EU. It is against a war that is not ours. And beware, beyond the numerical data, the fact that the executive of the Czech Republic has been one of the toughest and most extremist against Moscow since the beginning of the Ukrainian conflict, so much so that it unilaterally started immediately the suspension of visas to Russian citizens.
Signals. Of tiredness. Of anger. Flaking of the support. Something that was predicted would happen in Russia hit by sanctions and with the ruble in free fall that triggered bank-runs and queues at the money changers. The opposite begins to happen. And while the citizens paraded through Prague, Confirmation came from Vienna of the 2 billion euro bailout of the country’s main energy utility, Wien Energie. According to what reported by AFPthe chancellor, Karl Nehammer, would have confirmed how the one authorized in favor of the company would be an extraordinary rescue measure to ensure that the two million users – almost all concentrated in the capital area – continue to receive electricity in their homes and businesses. A support line that will last until next April. That is, when the cold season emergency is over.
Because in Austria there is a shortage of wood and pellets, literally raided and raised at stellar prices. So much so that someone fancied the possibility of a stop or a Postal Code on exports, exactly as already decided in Hungary. And if there are also suspicions of embezzlement on Wien Energie, shadows on which Karl Nehammer asked for total clarity in the face of the taxpayer money received, the reason that led to the crisis is the same that forced the German Unioer to ask for the bail-out of the government. That is, gas prices skyrocket on the spot market, after Moscow has reduced (and now completely suspended) flows. On which Wien Energie almost totally depends. The risk? A financial contagion, in the event of the insolvency of the operator of the capital.
In short, emergency. Also because to exacerbate the situation was also the choice of Wien Energie not to download the increases to users so far, a policy that will disappear after the opening of government credit lines. Translated, in the coming months the purchasing power of Austrian citizens will suffer a shock. Effects Prague in sight beyond the Brenner? Because in Austria the cold is noticeable in winter. And even more so in Sweden, where yesterday morning the executive announced a package of aid to electricity producers in response to the Russian decision to completely block flows to Europe through Nord Stream 1.
Also in this case, the fear is that of a financial contagion due to the degree of energy leverage that underlies the Scandinavian production system. And the evaluations at Nasdaq Clearing in Stockholm seem to confirm these fears already today. As if that weren’t enough, then, Magdalena Andersson’s government seems to be under further pressure, since general elections will be held in the country on Sunday 11 September and, to date, the Eurosceptic far right of the Swedish Democrats appears to have an advantage in the polls.
A financial crisis linked to the sanctions against Moscow could therefore be fatal in the polls. And open the way to an ‘impasse dangerous policy. Speaking to the press, Magdalena Andersson pointed out how the decision taken yesterday by Gazprom not only risks leading us towards a “winter campaign” but also jeopardizes our financial stability. And the gravity of the situation seems to be testified by the prime minister’s choice to be joined for the occasion by the president of the national financial regulation body, the finance minister and the governor of Riksbank, the central bank.
And the provision promises to be vast and enormous. Billions of crowns in a support program that will apply to all actors in the sector, both Scandinavian and Balticafter the Finnish Fortum, majority shareholder of the German (and just saved) Uniper, in turn asked for help from its government to cover requests for collateral coverage emerged last week for an amount between 1 and 5 billion euros. According to the Finnish management, a series of defaults linked to small producers could result in severe service interruptions throughout the Northern European energy system.
And this graph
Exposure scheme of the German industrial system to the leverage of energy prices
Source: Credit Suisse
speaks clearly about the immediate risks that a broad-spectrum and long-term energy crisis such as the one envisaged by Gazprom’s stop at Nord Stream 1 could trigger in the German production and financial system. In fact, in Germany approximately 2 trillion euros of added value of the economy depend on 20 billion of Russian gas equivalent: we are talking about a leverage of 100 to 1, something much bigger and more worrying than Lehman Brothers itself. When yesterday the Ukrainian president, Volodymir Zelensky, was talking about Moscow intent on launching the decisive attack against Europe through energyreferred to the risk of a Minsky moment EU triggered by financial chain reactions for expensive gas? At the Amsterdam futures market, the first ruling.
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