That those vaccine purchases are now under investigation by EU Public Prosecutors doesn’t seem to matter. The Commission wants a direct role in EU Member States’ purchases of gas and, if possible, weapons.
As winter fast approaches in the northern hemisphere, the European Commission is looking for a way to cushion the blow of the brutally self-destructive sanctions regime it itself played a large part in imposing on Europe’s largest energy provider, Russia. The Commission’s new plan will have the added bonus of further expanding its influence and power over economic policy and decision making in the EU.
This is one of the perverse paradoxes of Europe’s current predicament: the weaker the EU becomes, the stronger the Commission’s role grows within it, and the more centralized and unaccountable the bloc’s decision making becomes. As Politico notes in its recent article, Europe’s American President: The Paradox of Ursula von der Leyen, this process has accelerated under current Commission President Ursula von der Leyen — “with the Commission taking a lead role in big changes of direction, such as the issuance of common EU debt, the joint procurement of COVID vaccines and the introduction of Russia sanctions.”
Pooling Energy Demand
Now the Commission is trying to strong-arm EU Member States to accept joint purchases of gas for future gas storage. The ostensible goal of the plan is to secure better terms from energy suppliers as well as reduce the risk of EU countries outbidding each other for energy contracts. But it also represents yet another encroachment on member state sovereignty. As the German daily Süddeutsche Zeitung reported on Monday, if the plan is implemented, energy demand will be pooled through an EU energy platform operated by the Commission itself (machine translated):
The Brussels authority is likely to present a corresponding draft law as early as Tuesday, together with other initiatives aimed at lowering the high [gas] prices. These include, for example, a price cap on an important gas trading center… The 27 heads of state and government are to discuss the proposals at a summit at the end of the week. The EU energy ministers could adopt the new laws as early as November.
The energy platform is intended to bundle the purchasing power of the EU Member States when they buy [natural gas] in 2023 and 2024 in order to refill the storage facilities before the heating season. The states should secure better prices in negotiations with producing countries instead of outbidding each other. Large amounts are needed: the complete cessation of Russian supplies would mean that a gap of up to 100 billion cubic meters of gas would have to be plugged every year, the commission estimates.
Germany and the Netherlands are apparently already on board with the plan, though Germany has expressed reservations about the idea of capping gas prices. Berlin is concerned, quite rightly, that trying to cap the price of gas across the EU may leave the bloc struggling to attract sufficient supply from global markets, which is a problem they already face to the nth degree.
A Plan Long in Gestation
Of course, the frantic fiddling of the European politicians and bureaucrats who set this crisis in motion and have steadfastly refused to reverse course even as the crippling economic costs have mounted, is unlikely to make much of a difference at this stage. As Yves noted yesterday in her preamble to the post, “Is the UK About to Hit the Wall?”, the European Commission is dithering with the fantasy of technocratic fixes, which is likely to result in disruptive, unplanned rationing in the form of blackouts.
One of those technocratic fixes — the creation of a joint gas purchasing platform operated by the Commission — has been in gestation since at least shortly after Russia’s invasion of Ukraine. In April, the Commission launched a purchasing platform for voluntary joint orders, but it doesn’t seem to have caught on among most member states. So, Brussels now wants to make the purchasing platform mandatory for all member states.
According to the article in Süddeutsche Zeitung, the Commission wants to compel member states by EU law to use the platform to fill at least 15% of the volume of their gas storage facilities:
The fact that only around 15% of the demand will bundled is because there are already long-term contracts in place for a large share of the gas storage volumes. It is all about filling the remaining gaps and securing good deals along the way. There are a total of 160 underground storage facilities in the EU in 18 member states. Germany accounts for more than a fifth of the total capacity. Berlin had long expressed doubts as to whether joint purchases would work, but recently changed tack and called for the platform to be strengthened. This is happening now.
And the Commission already has a model of sorts to fall back on — its €71 billion vaccine procurement program:
As with the procurement of the COVID-19 vaccines, the commission would negotiate contracts with suppliers. The final decision as to whether to accept the offer or not would then be made by the individual governments.
This is where the flaws of the plan become glaringly apparent. As I have reported for NC since December 2021 (here, here, here and here), the European Commission’s purchase of 4.6 billion COVID-19 vaccines has been beset by a litany of procedural irregularities and alleged misconduct. Last Friday (October 14), the European Public Prosecutor’s Office (EPPO) announced it had launched an investigation into the purchases, citing the “extremely high public interest” in the matter as justification for taking the “exceptional” step of confirming the investigation on its website.
The #EPPO confirms that it has an ongoing investigation into the acquisition of COVID-19 vaccines in the European Union. This exceptional confirmation comes after the extremely high public interest. No further details will be made public at this stage. pic.twitter.com/4001sNZREN
— European Public Prosecutor’s Office (EPPO) (@EUProsecutor) October 14, 2022
Set up in 2021, the EPPO is an independent EU body whose mission is to investigate and prosecute financial crimes, including fraud, money laundering and corruption. Though the EPPO did not name who or which particular vaccine contracts are under investigation, two other EU watchdog agencies have already shone a light on one particular vaccine deal involving direct negotiations between Pfizer’s CEO Albert Bourla and Commission President Ursula von der Leyen.
Signed in 2021, it was the biggest vaccine procurement deal the Commission has signed — for up to 1.8 billion doses of BioNTech/Pfizer vaccine, worth up to €35 billion, according to leaked vaccine prices. Pfizer is far and away the largest provider of the EU’s COVID-19 vaccines, accounting for just over half of the 4.6 billion doses (enough for more than 10 doses for all EU citizens, including children) procured from global pharmaceutical companies.
One bizarre aspect of the 1.8 billion-dose deal is the extremely high price paid by the Commission. Normally, when a customer buys in much greater bulk, the price tends to go down. But in this case the price of the Pfizer BioNTech vacinnes went up by over 25% to €19.50, from the €15.50 the EU had paid for the initial vaccines delivered in late December 2020. The price of the Moderna vaccine went up by just under 15%.
Zero Transparency
A recent report by the Court of Auditors into the EU’s vaccine procurement strategy found that von der Leyen had directly participated in preliminary negotiations for the €35 billion vaccine contract. This deviated sharply from the negotiating procedure followed with other contracts, in which a joint negotiating team comprising officials from the Commission and member countries conducted exploratory talks.
The auditors asked the Commission to provide basic information on the preliminary negotiations (scientific experts consulted and advice received, timing of the talks, records of the discussions, and details of the agreed terms and conditions), but “none was forthcoming.”
Much the same happened with the furtive text communications between vdL and Bourla. In April 2021, as the preliminary negotiations were taking place and vdL was facing flak for failing to make the Commission’s advance purchase agreements with AstraZeneca legally airtight, the New York Times reported that much of the negotiations to seal a deal were conducted via phone and text messages between vdL and Bourla.
None of those communications have been made public. In fact, they appear to have been destroyed. When MEPs and the EU’s ombudsman Emily O’Reilly asked VdL to disclose the content of those messages, she straight up refused. When O’Reilly asked the Commission to undertake a thorough search for the text messages in question, the Commission responded by saying that it cannot and does not need to find the text messages.
To compound matters, when Pfizer CEO Albert Bourla was recently invited to clarify matters in front of a special European Parliament hearing, he refused to attend. In her final report, O’Reilly described the Commission’s handling of the matter as a “wake-up call for all EU institutions about ensuring accountability in an era of instant messaging”, underlining that it “leaves the regrettable impression of an EU institution that is not forthcoming on matters of significant public interest.”
Yet that institution now wants a direct role in procuring not only vaccines for all EU Member States, but also energy and possibly even arms. In July, the Commission presented plans for EU nations to jointly purchase weapons, once again arguing that pooling demand through a commission-run platform will allow EU Members to secure better terms from suppliers.
“By contributing with the European budget, we are creating an incentive for member states — many of which have announced a significant increase in defense spending — to buy together,” said the Commission’s Internal Market Commissioner Thierry Breton. “This will make it possible to spend public money better, and to boost our European industrial base.”
Of course, energy and arms — particularly arms, as US readers well know — are two industries where huge sums of money change hands, and often not in the most transparent of ways. Large sums of money can get lost in the process. Whatever the outcome of the EPPO’s investigation, the Commission’s handling of the COVID-19 vaccine purchases for the entire 27-nation bloc has amply demonstrated that it cannot be trusted to abide by even the most basic standards of transparency or accountability in its dealings with large corporations.
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I think such a scheme would be something Stalinistic, wouldn’t it be? Central planning here. No free markets any more only for energy supplies. If, let’s say, Siemens or VW are no longer interested in free markets at least regarding energy supplies, for Spanish or Portugal companies, in another instance, not wanting to be the usual idiots in the negotiating room they would have to ask for compensations to counterbalance the immense losses they would incur by agreeing to such central planning and losing their small voices in a central (German) planning scheme. From a legal point of view, i think this goes well beyond the scope of the Union and its competences (the Union does not have competence on energy supplies).
Such a voluntary cession of sovereignty to central planning couldn’t be done without consulting not only the parliaments, but the public in general in all EU countries plus a discussion on how to proceed, what are the numbers at stake, how much and who might be loosing after having invested for many years in a different energy supply system and diversification while others have been betting in other systems that now go rotten and the losses have to be shared by all. Compensations? Profits were never democratised but losses have to? Is this some kind of inverted solidarity scheme? I have many not family blog compliant words for this scheme.
If I remember correctly the so-called PIIGS had to make public their debts and losses state by state and pay with their own taxes plus massive unemployment rates. Not that the foreign investors should have to stand any of the losses and pay for the apparent malfeasance of their neighbours. Now, suddenly, this changes! War is the excuse, a bad one IMO. I am not at war in Ukraine. Ask those who wanted it. [insert here several not family blog complying insults]
Ignacio, we live in dystopian times where the ritualized use of doublespeak and spin has so weaponized language that good things are called bad and bad things are called good. De-escalating nuclear brinksmanship is called “weakness and appeasing Putin” (the best way to avoid nuclear war is apparently to escalate and race towards towards one) so the dismantling of sovereignty and the subversion of national agency in energy matters you lament in your comment won’t be called undemocratic, it will be given the standard treatment by spin masters and called “solidarity in the face of a threat”. The EU is a zombified version of itself, a dream that has become a nightmare.
Unelected bureaucrats don’t have the shackles of accountability to constrain their destructive, wanton disregard for the welfare of the people. Von der Leyen and her ilk are possessed by a combustible mix of power, hubris and incompetence that sees them coming up with these fantastical schemes on a disturbingly frequent basis, and it now seems obvious they won’t stop until they’ve pauperized every last EU citizen, to say nothing of deindustrializing Europe itself.
Well said Thuto! Unelected. Undemocratic and forgetful of their duties but wanting more, more, and more while at the same time saying they defend democracy and values.
Don’t you remember when we elected Van der Leyen?
It was in 2019, the Social Democrats nominated Timmermans as their candidate. Then the conservatives nominated their candidate. Then the candidates had debates and such, it was on TV and everything. The people voted, the conservatives became the largest party and thus got first dibs. The Council proposed a conservative candidate as new head of the Commission, and von der Leyen was approved by parliament.
Oh, maybe you are thinking about how it was Weber and not von der Leyen who was the conservative candidate? How it was Weber in the debates and then through a bit of slight of hand von der Leyen replaced him?
For the readers outside EU: think if after the 2016 election the electoral college the repupblican party leaders got together. Then the electoral college elected Jeb Bush instead, and made Trump speaker of the house as a conciliation price. Democracy, eh?
Not that I like Weber’s policies, but being for all practical purposes elected or for all practical purposes hand-picked by the Council does make a difference.
The platform is not used as a voluntary entity so they want to make it compulsory instead. Brilliant.
I think the comment about energy being a globally traded commodity is crucial here. If producers have freedom to sell to whomever they want (as is the case with LNG, transport allowing) then hard to see how this pooling of what will be only a small proportion of world demand would enable better overall terms.
For pipeline gas where selling opportunities are determined by where the pipeline network goes then maybe it will be a vehicle that is effective in beating down Norwegian prices, for example. Only EU countries (plus the UK…) are in the relevant market, I guess. So the producer would in that case find it harder to bypass the platform to seek better terms elsewhere if the EU governments participate and commit their volume. Probably needs someone to comment on that who knows more about the industry.
The real objective is likely over time to centralize control and make volumes a community property. This is so that countries who are currently getting good deals (from say Algeria) and avoiding scarcity now have to take a share of the pain in the name of the greater good and to support Germany / Netherlands at the centre. Start with a proportion of the volume being included and then ramp it up over time.
When it comes to purchases such as arms then I struggle even more with how such a platform would work. Energy has the advantage with this type of thing that there is very limited room for variable specifications (other than different grades of oil, for example) given it is a commodity. But for armaments the serious money is spent on mega multi year programs where every military has a different perceived requirement and the sourcing decision is driven by politics anyway. I know that NATO has standard calibres and so forth but that all hides a lot of difference. So to have any hope of this working it would need to be empowered to standardise specifications and create binding sourcing decisions. Good luck with that one. Of course, the tendered price is always far lower than anyone ends up paying too so not clear at all how bundling demand deals with that. If they are seriously thinking about doing this for arms then the true objective really must be about control and centralized decision making not better deal making.
Good catch. My first thought was the Commission represents a typical autocracy, which the West has been generally disparaging recently.
The EU commission has proved to be a collection of petty bureaucrats drunk with their assumed power to order everyone to follow their whims. Their whims are destroying that which they think they rule. Time for the small child observing the procession to point out that they are naked.
The current crisis, self-induced crisis, is going to be the end of both NATO and the EU. Good riddance to each.
It’s amusing that EU Commission thinks that they can address the supply problem by waving a magic wand. If they are not importing Russian gas, where is the extra gas going to come from? How is it going to be delivered? Pipeline network in Europe has limited cross capacity, meaning you can’t pipe meaningful amounts of African and Asian gas from Spain and Italy to northern Europe and I am not aware of any plans to address this. Hungary, Italy and Spain have a stable gas supply (although Spain is working hard to piss off Algeria), so they might be reluctant to subsidize Polish/German/Dutch purchases of LNG.
Did you need the war in Ukraine to realize that the European Union is a regressive, anti-worker, anti-democratic and anti-people project?!
Those who suffered (and still suffer) from the Euro-Troika did not need the Ukraine war to know the true nature of the EU…
But hey, the European Commission just decided that now you only need one type of power adapter for your electronics!! Don’t the Eurocrats love the little people so much!? Who cares if Europe is getting poorer and poorer when you just need one power adapter… Thanks EU, I love you!
As winter fast approaches in the northern hemisphere, the European Commission is looking for a way to cushion the blow of the brutally self-destructive sanctions regime it itself has almost single handedly imposed on Europe’s largest energy provider, Russia.
That’s statement show a lack of understanding regarding the functioning of the EU. The Council first mandated the Commission to propose sanctions packages. That means that the national government are responsible for those sanctions, certainly not the Commission.
Feox, you’re right, to an extent. I over egged the Commission’s role in the first sentence, and have pared back the language. I have changed “almost single handedly imposed on Europe’s largest energy provider, Russia” to “played an important part in imposing…” Through the Council, national governments certainly have an important say in these matters. That said, the Commission, working in close collaboration with Washington, has also played a major role in defining and imposing these sanctions. Here are a couple of excerpts from the Politico article I mention in my post (emphasis my own):
I’m sure that Norway will be happy when the EU wants to tell them how much they want to pay for their gas. But here is the thing. OK, they want to have joint gas purchasing and why has already been covered by other commenters above. But who has the say where all that purchased gas goes? Will some countries be favoured above others? Will the distribution figures be kept secret by the Commission for their own reasons? Can some countries demand an extra portion of gas? So many questions.
Well, the Commission is not in a position to strong-arm anybody. But there’s a lot of history here.
The Commission is a well-staffed, well-paid organisation with a strong identity and a long-term strategy of increasing its influence in every way possible. It often succeeds because it has a large budget, a strong institutional memory, and is a single player confronted with ever-more nation-states with less and less in common, who find common positions difficult. The Commission has the traditional advantages in negotiation of the small, organised group.
For thirty years, the Commission has been trying push its way into the so-called “regalian” functions, notably defence. It actually tried to secure a role in defence issues for itself during the Maastricht negotiating process (and was supported by some of the smaller nations) but this was rudely despatched by the British and the French, among others. But the Commission never gives up, hence this stupid proposal. I say “stupid” because the defence market is utterly different from others: in general, countries want different things, in different configurations, at different times, for different purposes. Any history of bilateral and multilateral European defence procurement will quickly confirm this. Oh, and the EU already has a European Defence Agency, which has been trying and largely failing, to do this for twenty years.
If we have a group buy of deck chairs, then the risk that the Titanic will sink is reduced. And that way nobody will be allowed to pay more for a chair with extra flotation and violate our unity. Plus if we set one price for all chair sales, the manufacturers will have to cave in and sell at our price
EU member states have allowed themselves to be trapped in a corner. On one side they have the EU, and the other the US, the EU being in effect the US’ henchman (or should I say ‘henchwoman’ enforcer).
They have surrendered their sovereignty and dignity, as evidenced by their meek willingness to allow their economies to be severely damaged by the sanctions imposed on Russia on top of previously bad EU economic policies and lockdowns during the pandemic.
If the EU is the 51st US state, in all but name, then the EU member states are themselves merely provinces or districts with little effective self-determination. Weak and powerless, at the mercy of an unelected un-democratic EU regime that does the bidding of its US regime bosses.
The ultimate irony is that the dictatorial EU claims to uphold freedom and democracy, neither of which it allows its member states, and neither of which are present in its pet project – Ukraine!