The EU Looks to “Jungle” Sacrifice Zones to Help It Out of Energy Crisis
European Union foreign policy chief Josep Borrell’s comments last year describing the bloc as a garden and much of the rest of the world as jungle were widely criticized.
Often missed, however, was that his view wasn’t just an assessment of the current lay of the land but was also forward-looking: “Because the jungle has a strong growth capacity, and the wall will never be high enough in order to protect the garden. The gardeners have to go to the jungle.”
In essence he was describing a great shift underway in the EU – one that is increasingly set on moving polluting industry and energy generation outside the garden and to the bloc’s periphery in the Balkans (and North Africa, which I’ll detail in a post tomorrow). In the mind of the European elite, such an initiative will “help the EU meet its geopolitical, economic, and climate goals.” Or in other words:
- Keeps up the illusion of rejecting Russian fossil fuels.
- Wages are much lower on the European periphery.
- The garden is kept clean.
The contradictions in the EU’s endeavors over the past year and a half are probably best exemplified by the German Greens. Rabidly anti-Russian, they opposed any natural gas from Russia while simultaneously working to shut down Germany’s remaining nuclear power plants. Naturally this left Germany burning more coal, paying exorbitant prices for LNG, and shoveling money at industry in an attempt to soften the blow of higher energy costs.
As the whole of the EU follows a similar path, it’s interesting that the bloc does not have the same expectations for the statelets in the Western Balkans:
Here are more details from Reuters:
The Council of Ministers of Bosnia and Herzegovina has agreed to begin negotiations on building a gas pipeline to ship gas from Russia, the head of Republika Srpska’s representative office in Russia told state news agency RIA in an interview published on Monday.
RIA cited Dusko Perovic as saying: “The Council of Ministers of Bosnia and Herzegovina gave the green light to start the negotiation process”, and that region’s government would seek to have gas shipped via neighbouring Serbia.
There are also major EU plans to build 3.5 billion euros worth of gas-fired power plants, pipelines, and liquefied natural gas terminals in the Western Balkans. According to a March report from Global Energy Monitor and Bankwatch:
In 2021, the six countries of the Western Balkans – Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia – consumed a mere 3.7 billion cubic metres (bcm) of gas or 4% of what Germany used that same year.
Source: Global Energy Monitor, Global Gas Infrastructure Tracker and Global Gas Plant tracker
Since the Western Balkans do not currently need the gas (at least not unless more industry is moved there from the EU), it would appear the natural gas plants will transfer electricity to the EU. On top of the natural gas, there are also plans for major photovoltaic plants in Albania, Kosovo, and North Macedonia, and giant wind farms in Bosnia and Herzegovina, North Macedonia and Serbia.
There are numerous plans or projects already completed linking the power grids of the Western Balkans with the EU. For example, there are power interconnectors under the Adriatic Sea that will send energy from the Balkans to Italy (which is being expanded), and there are other interconnector projects linking to the EU nations like Hungary and Croatia. Importantly, this will in effect help “green” Europe as the natural gas will be burned outside the EU’s borders.
As of now, the plans would create new hurdles for EU accession for the Balkan nations as it increases their emissions and goes against the EU Energy Community Treaty. Given that accession is still many years away –if ever – Germany is instead focusing on establishing a Common Regional Market to implement the “four freedoms”—the freedom of movement for goods, capital, services, and people—across the region’s economies. The thinking goes that this will “provide tangible benefits to the region’s citizens by creating a more attractive destination for Western capital, especially as global supply chains struggle to adapt to political imperatives for near- and friend-shoring.”
On May 31, European Commission President Ursula von der Leyen unveiled a new plan to bring the Western Balkans closer to the EU. It includes further aligning the region with the EU’s single market, more regional economic integration, judicial and anti-corruption reforms, and more EU funding.
European manufacturing already had a small presence in the Western Balaksn – especially Serbia – and a European Parliament study from last year notes how there is room for it to grow:
…Since 2011 external imbalances have improved. In some countries, export-led growth policies, associated with increased inflows of FDI into the manufacturing sector, have led to a substantial reduction in trade deficits in goods and services.
EU policies should be nuanced in relation to the different Western Balkan economic structures, with manufacturing-related infrastructure focused on Serbia, North Macedonia and Bosnia and Herzegovina….
The region has recently become a much more attractive investment destination, especially North Macedonia and Serbia, due to the provision of privileged tax breaks as well as other subsidies to foreign investors along with the establishment of special economic zones in Bosnia and Herzegovina, North Macedonia and Serbia. These economies have attracted large inflows of foreign investment into the manufacturing sectors, especially car components industries which have linked their economies into global supply chains for the first time.
Aside from heavy industry, there are other opportunities for the EU. From Intellinews:
Elsewhere in the region, Albania’s clothing and textile industry is largely geared to importing materials that are then turned into partially or fully finished garments or shoes and re-exported, a process dubbed ‘facon’. The industry developed thanks to Albania’s low costs – this is a labour-intensive sector and Albania has the lowest minimum wage in Europe – and its proximity to Italy, one of the world’s leading fashion countries.
According to industry insiders, typically, clothes and shoes are exported almost complete to Italy, where Italian workers add the final touches and packaging, allowing the products to go out to the shops with the prestigious ‘Made in Italy’ label.
Two of the biggest impediments to more EU industry in the Balkans are energy and transport infrastructure. We’ve already seen the above plans for energy. On the issue of transport, last year (oddly enough, on the day after Russia launched its SMO in Ukraine) the EU announced a 3.2 billion euro package to improve transport connectivity in and to the Balkans.
For years Germany has been the EU country leading the charge on the Balkans policy in recent years. In 2014, Germany started the Berlin Process, an effort to strengthen ties between the Balkan states and the EU. It has evolved into the infrastructure and development projects taking place today, although has done little to move the countries anywhere closer to EU status.
Germany is among the top three export destinations for Serbia, Croatia, Bosnia-Herzegovina, Montenegro, Macedonia, Albania and Kosovo and is one of the top European investors in the region, making Berlin the most important EU partner for the Balkan states. German industry has numerous operations across the region.
Berlin also has a bit of an energy crisis on its hands – with a critical minerals problem likely soon to follow as relations with China deteriorate. Once again, the EU is looking to the Balkans for a solution.
The region has a ton of mineral resources such as copper, chromite, lead and zinc, with some of the largest deposits in Europe. Serbia happens to have vast lithium deposits, and a closer look at the situation there is illuminating.
Last year, in the face of overwhelming public opposition Belgrade revoked the licenses for the $2.4 billion Rio Tinto project in the country, but the project is far from dead. Opponents of the mine believed the government’s cancellation was only temporary and was intended to avoid backlash ahead of elections, and there are plentiful reasons to believe that to be true. Rio Tinto has continued to buy up land in the area, and is also offering financial aid to local businesses in an apparent curry good will.
In November, Belgrade also signed declarations of intent with the Slovakian battery maker InoBat for a factory in Serbia. Rio Tinto happens to be an investor in the company.
Berlin is one the strongest proponents of the project, which also has strong backingfrom the UK, Australia, the US, and Brussels. The latter is currently reliant on China for roughly 97 percent of its lithium but aspires to quickly secure an entire supply chain of battery minerals and materials. According to Handelsblatt, the German government listed the Serbian lithium mine as one of the most important projects in order to secure the raw material and reduce dependence on China.
The EU is fully aware that its policies to push forward with intense mining in the Balkans will invite resistance, but pushes forward nonetheless. As an EU Parliament study notes:
…policies to attract foreign investors, considered important for increasing government revenues and for economic development, could conflict with objectives in rural development or respect for environmental norms. As indicated earlier, demonstrations have taken place in Serbia by people who have been asked to sell their land at low prices and leave their agricultural activities on family farms, in order to implement agreements with foreign companies on the exploitation of minerals (e.g. Rio Tinto for the extraction of lithium) that could lead to environmental degradation.
It’s also worth noting that Sweden has the EU’s only heavy rare earth metal deposit of note. It’s not a new discovery; it was identified decades ago, but the public remains largely opposed to mining it because of negative effects on animal habitats and the country’s second largest lake, which is less than a mile from the site. And there has not been similar pressure to get the mine (and processing facilities) up and running despite the EU’s near total reliance on China for rare earths.
The Serbian public is overwhelmingly against the mine, just as they are against NATO and increasingly the EU, but the government in Belgrade typically swims against the current of public opinion behind closed doors. As Lily Lynch writes at New Left Review:
Upon closer inspection, however, the image of Serbia as a faithful servant of Moscow starts to fall apart. At the United Nations, Serbia has consistently voted to condemn Russia’s invasion of Ukraine. Serbia has been a member of NATO’s bilateral Partnership for Peace program since 2006. In recent years, Serbia has participated in more military exercises with NATO than it has with Russia. While Western media has fixated on the presence of Putin coffee mugs at tourist stands in Belgrade, Serbia has quietly held high-level meetings at NATO headquarters. Last year, NATO Secretary General Jens Stoltenberg thanked President Vučić for his ‘personal commitment’ to the partnership between Serbia and NATO. The Serbian armed forces have also worked closely with KFOR, the NATO security force in Kosovo, for many years. Serbia might be pro-Russia before the domestic public; but behind closed doors, it is closer to the West.
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Maybe nothing sums up the future EU-Balkans relationship more than the recently announced plan for Albania to help water the garden.
Puglia, the heel of the Italian boot, is filled with picturesque hilltop towns, olive groves, glistening beaches, and trulli – white-painted limestone houses with conical roofs. It’s also a region dealing with increasing drought that threatens its agriculture and tourism.
According to Corriere della Sera, Albania has now greenlit a $1 billion project to build an undersea water pipeline that would send 150 million cubic meters of water to the southeastern Italian region every year.
The plan could be incredibly shortsighted on Albania’s part. The country has historically been blessed with an abundance of freshwater and relies on hydropower to meet much of its energy needs. But it was also forced to ration electricity last year because of drought, and the problem is only expected to worsen with ongoing climate change.
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While the beautification of the garden continues to drive away blue collar jobs, positions for the professional managerial class are also now being weeded out. Western European companies, searching for ways to cut costs and boost margins, are increasingly sending software development, administration, payroll handling and research jobs to Eastern Europe.
It’s unclear what the people remaining in Borrell’s utopia are supposed to do? As of now, simply tending to one’s garden doesn’t pay the ever-increasing bills.