In recent years, Europe has been facing one of the greatest geopolitical and economic challenges in its modern history. The sanctions imposed on Russia after the invasion of Ukraine in 2022 were one of the most drastic political decisions of the European Union in the field of foreign policy and economy. Although the objective of the sanctions was to limit Moscow’s economic and strategic power, their effects deeply affected the European economies themselves.
Europe, which for decades relied on cheap Russian energy, suddenly found itself in a state of energy insecurity and economic pressure. At the same time, the new war in Iran raises concerns that a similar energy shock could be repeated. These events bring to the fore not only the energy dependence of Europe but also the deepest structural weaknesses of the European Union.
For more than thirty years, the economic development of many European countries relied heavily on the flow of cheap natural gas and oil from Russia. Germany, Italy, Austria and several Central European countries had developed an energy model based on long-term contracts with Moscow.
Russian natural gas was significantly cheaper than many alternative sources and was transported through extensive pipelines directly connecting Russia to the European market. This allowed European industries to operate at relatively low energy costs, which enhanced their competitiveness internationally.
The abrupt cessation or drastic reduction of these flows after 2022 has caused an energy crisis. Gas and electricity prices skyrocketed, causing many industries to face severe difficulties. In some cases, factories scaled back production or moved to areas with lower energy costs, such as the United States or Asia.
The rise in energy costs had ripple effects throughout the European economy. Businesses faced higher operating costs, while households faced increased electricity and heating bills.
Governments have been forced to allocate billions of euros in subsidies and support measures to avert a social crisis. But this burdened public finances and increased the fiscal burden of many states.
At the same time, Europe turned to alternative energy sources, such as liquefied natural gas (LNG) from the United States, Qatar and other producers. Although this option has helped to stabilize the energy market, LNG is usually more expensive than natural gas transported through pipelines.
As a result, Europe is currently faced with a structurally higher energy cost compared to some of its competitors.
Geopolitical instability in the Middle East raises new questions for Europe’s energy security. A potential war with Iran, or a wider conflict in the region, could seriously affect global oil and gas markets.
Iran is located in a strategic area near the Strait of Hormuz, one of the most important sea passages for the global oil trade.
For Europe, which already faces higher energy costs, such a new shock could have serious consequences. European economies will once again be faced with increased inflation, reduced growth and pressures on industrial production.
These developments also highlighted the deepest weaknesses of the European Union, as a political and economic organization. Although the EU is one of the largest economies in the world, its ability to take quick and coordinated decisions is often limited by the complexity of its structure.
One of the key weaknesses is the need for consensus among many member states with different interests and priorities. Energy policies, for example, vary significantly from country to country. Some countries rely on nuclear power, others on coal, while others on natural gas or renewable sources.
This variation makes it difficult to formulate a single energy strategy. When crises arise, decisions are often made late or after intense negotiations.
Another major problem is Europe’s dependence on external suppliers for critical resources. The post-2022 energy crisis has shown how vulnerable the European economy can be when essential supplies are interrupted.
The same dependence is seen in other sectors, such as raw materials, microprocessors and some cutting edge technologies. The lack of strong industrial self-sufficiency creates strategic risks in times of international tension.
Whether the European Union succeeds in turning these crises into an opportunity for deeper integration and reform will largely determine its role in the global balance of power in the coming decades.