IMF chief: Harsh winter could lead to social unrest in European states

By Al Mayadeen English
Source: Agencies
14 Sep 2022 20:19

The IMF Managing Director warns that a hard winter might cause social upheaval in Europe, in light of the dire economic situation and rising fears of a recession.

Russia’s gas delivery network is designed to serve Europe and can’t easily be redirected.

The International Monetary Fund (IMF) Managing Director Kristalina Georgieva said that if the upcoming winter is harsh during an economic crisis, a number of nations in Europe could see societal upheaval.

"There is certainly fear of recession in some countries, or even if it is not recession, that it would feel like recession this winter," Georgieva said during remarks at the 2022 Michel Camdessus Lecture.

"And if Mother Nature decides not to cooperate, and the winter is actually harsh, that could lead to some social unrest."

'Higher potential for social conflict'

A few days ago, the leading EU economic power, Germany, is set to face contraction. Christian Sewing, Deutsche Bank CEO, said in a speech at the Handelsblatt Banking Summit in Frankfurt, as reported by CNBC, that the war in Ukraine “destroyed a number of certainties” on which the global economic system had been founded over for decades.

He enlisted disrupted global value and supply chains, as well as a labor market bottleneck and a scarcity of gas and power, as important causes for Eurozone inflation reaching record highs.

Read next: Euro hits its lowest since 2002

In his speech, the CEO stated that “as a result, we will no longer be able to avert a recession in Germany. Yet we believe that our economy is resilient enough to cope well with this recession — provided the central banks act quickly and decisively now,” noting that for now, many in Germany still have pandemic savings to fall back on in order to meet skyrocketing energy costs, while most companies remain "sufficiently financed".

However, he warned that “the longer inflation remains high, the greater the strain and the higher the potential for social conflict.”

In light of the economic crisis, the European Commission proposed several measures in the energy sector, the price limit for the purchase of Russian pipeline gas requires further study, European Commissioner for Energy Kadri Simson said at a plenary session of the European Parliament.

Simson named the measures that the proposal contains. These included setting a mandatory peak-hour electricity consumption target, revenue caps for low-cost electricity companies, and contributions from oil, gas, and coal companies that are also making "huge windfall profits" amid high prices, she said.

It is worth noting that the energy crisis in Europe was already going on prior to the imposition of a price cap on Russian gas and further worsened since.