Cause and Effect in European Politics and Law

EU Resource Dependency Will Result in a Weaker Europe in the Future

Bogomil Gospodinov, trainee, July 11, 2012

Following the presentation of the national winning article of My Europe initiative – a project supported by euinside in Bulgaria - we are now glad to present the article that grabbed the second prize. The author of this paper, Bogomil Gospodinov, a student in the German Language Highschool in Sofia, will do a short summer traineeship in euinside. We publish the text with insignificant editorial interference. The main theses and conclusions belong to the author.

From times immemorial, the prosperity of every political, ideological or economic entity has depended more or less on resource availability. No matter what age or country we observe, human resources, along with natural ones, are factors that have always determined the great powers worldwide. That is why, if we want to objectively foresee the future of an economy, we have to look closely at the way it obtains and handles its resources.

However, in the dawn of the 21st century, the European Union, with its Single Market of over half a billion consumers, continues to demand and hence to import more and more human capital and natural resources from rival economies. This paper aims to explain the essence of the problem of resource dependency and to give reasons for the EU’s inability to be a self-sufficing and independent economic entity. In addition, an explanation of the importance of the problem is given, as well as its expected negative consequences in the near future.

Nowadays out of all the most influential players in the world market, the European Union, with few exceptions, suffers from

the greatest shortage of crucial to the economy resources,

as for instance crude oil, natural gas, coal and enriched Uranium. In order to meet their enormous industrial and domestic demands and to continue developing, most of the members of the EU import a great deal of their needed goods from economies, which are in the first place their competitors. As a result of this, the normal economic growth of the EU depends largely on external factors, controlled by countries and unions which will not always have the same interest in the well-being of united Europe. In addition to this, Eurostat estimations anticipate that population growth in the EU will be mainly dependent on migration up to 2025, which means that even the workforce and manpower now present uncertainty and instability. It is an indisputable fact that more austere measures should be rapidly taken in order for the European Union to secure and strengthen its position as the world's dominant and prevailing economic leader without being to such a great extent in the hands of external powers.

To begin with, in order to analyse such a large-scale problem, one should basically try to understand and at least enumerate the main reasons for the EU’s resource dependency and the possible outcome. Firstly, we should take into consideration that the territories of the EU are in principle relatively poor in petroleum, natural gas and even in coal especially when we compare the available amounts of resources with the needs, which the continent’s developed industry and infrastructure has in order to function properly. It is the distribution of natural resources across the continent and the world that actually determines at most the constant scarcity and therefore dependence of the EU on territories, which are able to provide and exchange these resources. In addition, the North Sea oil and gas fields have already been exploited beyond their peak, leaving

Europe even more dependent on non-EU countries

for future supply. Consequently, according to Eurostat, in 2009 – 53.9% of the energy in the EU was imported, whereas more than 79%, 57% and 77% of the EU-27 imports of respectively natural gas, crude oil and hard coal, came from countries beyond the EU. Such a great dependency is obviously a major security weakness and in that respect monopolists, such as Gazprom, are rightly considered by experts dangerous for Europe's Independence - as the lack of alternative energy sources often leads to speculation and crises like the interrupted gas flows in January 2009 or the war in Libya in 2011.

Moreover, as reported by the European Commission (November 2000) on the security of energy supplies, if no action is taken, the EU's energy dependency is predicted to climb from 50% in 2000 to 70% in 2030. By 2030, about 90% of the EU oil needs and 66% of its coal consumption will have to be covered by imports, whereas over 60% of EU gas imports are expected to come from Russia with overall external dependency expected to reach 80%.

Naturally, measures have been taken and even though

EU really made significant attempts in the last decades to reduce its dependency

on outside factors, in 2010 only 19.9% of its energy came from renewable sources, whilst a significant part of the rest is still produced with the help of imported resources. To counter that, the European Commission adopted its Second Strategic Energy Review in November 2008 and a new strategy until 2020 in 2010. Those documents address how the EU can reduce its dependency on imported energy, thereby improving its security of supply, as well as reducing its emissions of greenhouse gases. The review and the Energy 2020 strategy encouraged energy solidarity among Member States, proposed action plans to secure sustainable energy supplies, and adopted a package of energy-efficiency proposals aimed at making energy savings in key areas, such as buildings and energy-using products.

What is more, although in the last decade there was a gradual decline in the share of crude oil and petroleum products, solid fuels, and nuclear energy in total gross inland consumption, the energy dependency especially on natural gas actually increased gradually, instead of declining as foreplanned. Simply put, that means that if the same tendencies continue, a future European Union in 2030 or 2050 could turn out to be a highly-developed puppet in the hands of less developed societies, whose only power is to possess huge amounts of important resources. Of course, such an irrational distribution of wealth could lead only to confrontations, as, for example, the current situation of the technologically advanced, but resource-lacking EU, slightly resembles the pre-World War II embargo on Japan just before the attack of Pearl Harbour.

Furthermore, as many of the EU citizens are part of a strong consumer society and maintain a very high average standard of living, there are many problems related to overconsumption and hence inefficient distribution of wealth. A good example of this, is the Eurostat statistics, related to the EU consumership, which shows clearly that throughout the period 1996-2006 there was a substantial increase in overall consumption expenditure of households (8,800 Euro per capita in 1996 vs 13,300 Euro in 2006), of which only a little over a fifth (21.9 %) was devoted to housing, water, electricity, gas and other housing fuels. Additionally, the amounts of municipal waste in EU-27 constitutes 260 million tonnes (nearly 500 kg per capita) in 2009, which was high above the average worldwide.

That is another reason for the wide discrepancies between EU’s always increasing demands and the impossibility to meet its own needs. As a consequence, again measures were taken and campaigns were launched and strategies were formulated by the EU institutions in order to reduce the thrown-away waste and the senseless consumerism. However, although such actions may have had a slight effect, in general more tangible response is needed for a drastic change to occur. If nothing decisive is done for overconsumption to be cut back, it is very likely that in the distant future most of the EU’s intellectual capacity and efforts will be directed to overcoming the local problems with waste and overproduction, instead of creating and distributing more wealth or achieving new scientific or economic successes. Besides, better efficiency with regards to consumption has proved to be a good solution for territories, lacking significant natural deposits.

The insufficient human resources,

respectively working force, will also be a huge problem for the EU. Europe, and namely the EU, faces a serious demographic decline in the last 60 years. Many members of the union are expected to experience a considerable decrease in population over the coming decade, as birth rates are low with the average woman having 1.6 children. Also the relatively high death rate (an average of 10.33 for every 1000 citizens) and the effect of the two world wars on subsequent European generations continue to be a problem for many of the developed countries like Germany or Austria. The gradual increase in life expectancy is also one of the contributing factors to the ageing of the EU-27 population – alongside relatively low levels of fertility that have persisted for decades.

These factors on their own, account for the desperate need of the EU for cheap manpower and fresh healthy population. For example, the Turkish “invasion” of Germany and the timidly answered migration from the former European colonies to the continent are a proof for the EU’s economy thirst for young and strong workers. In 2010 in Germany, France, Great Britain and Spain alone there were respectively 7.1, 3.8, 4.4 and 5.7 million of mostly young immigrants (non-nationals) searching for work. Nonetheless, the chaotic and unnatural settlement of millions of low-educated and extremely poor people has led and will continue to lead to confrontations with the indigenous highly-developed European population, even higher criminal rates and more issues with hunger and health care. All things considered, the

EU should probably try harder

when it comes to resource dependency and management. In order for the EU members to enjoy brighter and more prosperous future, the available resources should be consumed with more caution and effectively, while the imports should constitute only a small percentage of what we need to meet our demands. That is why better policies should be adopted towards consumerism and demographic issues. Of course capitalism is mainly about exchanging wealth, so it is impossible and naïve not to depend on outside factors and powers, but in order for the EU to be a dominant and powerful economic unit in the future, it should first lessen its dependency maximally and try to set new trends, instead of just following them. In that way, I hope a better future will await Europe in 30 or 50 year from now.

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