Eduardo González
The President of the Government, Pedro Sánchez, yesterday took advantage of his participation in the Annual Meeting of the World Economic Forum, held in the Swiss city of Davos, to call on the European Union to be “more ambitious” in energy matters and to have the “political will” to establish a new regulatory framework in an electricity market “subject to financial speculation”.
Sánchez’s intense day in Davos began with an address to the forum’s plenary in which he reiterated his government’s support for Ukraine and Spain’s “determination” to help ensure that Vladimir Putin’s Russian regime “does not achieve its objectives.” “Putin’s brutal aggression against Ukraine is also a direct attack on the European Union and everything it stands for,” the chief executive warned.
“Russia’s aggression is disrupting the global economic outlook,” he said. “We were emerging stronger from the COVID crisis, but our economies have been severely affected: from high energy prices fueling inflation to worsening consumer confidence and bottlenecks in the supply chain,” he said.
“Obviously, Spain is not immune to this shock,” but “there are inherent strengths in the Spanish economy that give us reason to be optimistic,” Pedro Sánchez assured. “The Spanish economy grew 6.4% year-on-year in the first quarter of 2022, and we estimate that growth will reach 4.3% for the year, one of the highest rates among advanced economies,” he continued. Apart from that, “employment is increasing, the fiscal deficit is decreasing and two core sectors of our economy, the export sector and tourism, are recovering to their pre-crisis levels and are acting as drivers of this growth,” he added. “In other words, we are containing the damage much better than other economies,” he assured.
During question time, the President of the Government assured that Finland and Sweden, two countries that have just presented their candidacy to join NATO, will be invited, “of course”, to participate in the next NATO Summit, to be held in Madrid from June 28 to 30 this year. Regarding the possibilities of both countries -whose candidacy has been vetoed, for the moment, by Turkey- to join NATO, Pedro Sánchez explained that “the political will of the allies is to welcome them”. “Of course, in Spain we are going to accelerate the whole parliamentary process to fulfill our commitment and with these two countries that are, of course, very important, not only for NATO, but also for the stability of the European Union,” he added.
Round table with Timmermans
Earlier in the afternoon, the President of the Government participated in a round table on Energy, Security and the European Green Pact, in which he coincided with the Vice-President of the European Commission for the Green Deal, Frans Timmermans, and in which he called for a “more ambitious” EU with more “political will” to intervene in the electricity market.
“When the financial market does not work, politicians and economists advocate intervention,” said Sánchez. Therefore, he continued, “I fail to understand why in Europe we are willing to intervene in the financial system if something does not work, but we are unable to intervene in the energy market when it is clear that there are problems”. “We must modernize our European regulatory framework for electricity because otherwise we will jeopardize the whole green transition,” he warned. “It makes no sense that we are paying gas prices when we have energies as competitive as renewables,” he added.
In this regard, Timmermans denounced that energy companies “are pocketing huge extraordinary profits while citizens suffer because they cannot pay electricity bills” and admitted the need to increase the weight of renewables in the market design. “Spain has a good proportion of renewables and pays for clean electricity at gas prices,” he reminded. However, he warned, “we must go step by step” when it comes to regulating this market. “It is clear that there are possible improvements in the pricing system, but it cannot be changed overnight and it must be done very carefully so as not to cause serious damage to a market that has taken 30 years to build,” he declared.
In his response, Pedro Sánchez assured that “it is not so much a question of financing as of political will”. “We have to talk about this now, because it makes no sense to pay these prices that in the end reach industries and families. We have to be more ambitious at the European level, it is clear that it is always difficult to move the status quo, but we are at a definitive moment and we run the risk of using the pandemic and the war in Ukraine as excuses for not modernizing a market subject to financial speculation,” he warned.
Sánchez also took the opportunity to recall the scope of renewables in the Spanish mix and assured that southern Europe, especially Spain, has the necessary capacities to respond to the shortage of gas supply from Russia. “Spain represents 37% of the total regasification capacity of the European Union and, together with Portugal, hosts about half of the EU’s liquefied natural gas storage,” he continued. “We have the capacity, what is missing are interconnections and in this sense the EU must think about how to establish them,” he warned.
Bilateral meetings
Throughout the day, Pedro Sánchez held yesterday an intense agenda of bilateral meetings with the President of the Swiss Confederation, Ignazio Cassis; the President of the World Economic Forum, Klaus Schwab; the President of the Republic of Rwanda, Paul Kagame; the CEOs of large multinationals (Intel Corporation, Qualcomm, Micron Technology, Cisco, Tamasek and ArcelorMittal) and representatives of Spanish companies. The day concluded with his participation in the dinner on The Global Role of Europe, which closed the Annual Meeting of the World Economic Forum.
For his part, the Minister of Foreign Affairs, José Manuel Albares, participated in the panel The geopolitical panorama, in which he warned that Europe not only has threats from the eastern flank, but also has them “from our southern flank, the political and unacceptable use of energy and irregular migration to threaten our sovereignty”. “Unity is our best defense against any threat, whether it comes from the south or the east,” said the minister, who recalled that the Sahel has become an “epicenter of terrorism.”
