Germany, once the industrial powerhouse of Europe, now finds itself grappling with a crisis that could reshape the continent’s economic landscape. On Monday, Mario Draghi, the former president of the European Central Bank, issued a stark warning: the European Union is facing the threat of a "slow agony." The implications for Europe’s industrial heart are profound. Companies like Hans Keim Kunststoffe, relatively unknown yet vital to daily life, are at the epicenter of this economic storm.
Small Businesses on the Frontlines of the Energy Crisis
Hans Keim Kunststoffe produces components that are used everywhere—from protecting museum exhibits to parts for medical equipment and sunroofs for caravans. This all happens in a small factory nestled in a German town surrounded by the Black Forest, just a short drive from the Swiss border. From the outside, it appears to be a typical family-run operation. But beneath this seemingly ordinary facade lies a much deeper challenge—one that threatens not only Germany’s economy but that of the entire European Union.
Energy costs have soared since the onset of the war in Ukraine. Before 2022, the factory’s annual electricity bill hovered around €80,000. Today, that figure has nearly doubled. While Hans Keim Kunststoffe has passed some of these costs onto its customers, shrinking profit margins have compounded the problem. The harsh reality is that energy costs in Europe remain significantly higher than those of competitors in other parts of the world, particularly outside the EU.
"We’re accustomed to dealing with crises, but this one is different," says Christoph Keim, managing director of the company. Even after some relief in energy prices, he explains, costs have not returned to pre-crisis levels. Unlike their competitors in the U.S. and China, European businesses are still paying double for electricity.
Germany — The Ailing Patient of the European Economy
Germany, the largest industrial power in Europe, has slipped into a recession that is forecasted to drag on until the end of the year. Even titans like Volkswagen, a symbol of German economic might, are facing the very real prospect of plant closures. But this is not just a temporary downturn—it is a systemic crisis. Across the EU, production is contracting in essential sectors such as chemicals and steel. Factories are shutting their doors, and layoffs are becoming increasingly common.
In response to these shocks, European politicians are raising the alarm. Draghi has made it clear: Europe is facing an existential threat. Without dramatic intervention, European industry risks being sidelined on the global stage.
"The moment is truly critical," Draghi declared during the presentation of his report. "We can no longer afford to ignore this."
EU Energy Policy: A Fight for Survival
This warning reverberates in Brussels. Ursula von der Leyen, President of the European Commission, acknowledged that Draghi's call to fast-track the green energy transition is in line with the EU's broader goals. Yet, there’s one pressing problem: time is not on Europe’s side.
While renewable energy promises long-term solutions, it won't rescue the European economy in the near future. China is ramping up production, aggressively seizing market share both inside the EU and beyond. Meanwhile, emerging technologies like electric vehicles and artificial intelligence are poised to consume even more energy, straining power grids that are already overburdened.
“For the first time since the Cold War, we genuinely have to fear for our survival,” Draghi cautioned.
Irreversible Changes: Europe Learns to Live Without Russian Gas
September 2022 marked a watershed moment for Europe’s energy security. The explosion in the Baltic Sea, which damaged the Nord Stream pipeline, sent a clear message: there would be no turning back. As Europe's dependence on Russian gas wanes, the continent is grappling with the high costs of securing new energy sources.
Following Russia’s invasion of Ukraine, energy prices in Europe skyrocketed. Yet, the worst-case scenario was averted. Swift action by European leaders to secure alternative suppliers kept gas reserves from running dry. However, even as the immediate panic has eased, energy prices across the EU remain significantly higher than pre-crisis levels, and much higher than those in competing economies like the U.S. and China.
In 2023, according to the International Energy Agency, the cost of energy in Europe was double that of the U.S. The primary reason? The shift from cheap Russian pipeline gas to expensive liquefied natural gas (LNG). Unlike pipeline gas, LNG requires complex and costly transportation and processing, driving up prices at every stage—from liquefaction to regasification. Worse still, LNG operates on the open market, where the highest bidder dictates the terms.
“Europe had the capacity to pay those high prices, but it’s not sustainable,” says Helen Thompson, a professor of political economy at the University of Cambridge. Today, Europe’s energy needs are tied to expensive gas from Qatar and the U.S., making it vulnerable not only to the volatile geopolitics of the Middle East but also to the shifting winds of U.S. domestic policy.
Europe Must Act Now or Be Left Behind
Europe is at a critical juncture. More than ever, the continent must urgently reevaluate its energy security and industrial policies. While the EU engages in long discussions about transitioning to renewable energy, businesses are closing, and jobs are disappearing. Without decisive action, the European Union risks losing its footing in the global economy.
Time is slipping away, as Mario Draghi starkly warned: “We can no longer ignore this.” If European leaders fail to curb soaring energy costs and safeguard their industries, the continent could fall into a "slow agony," gradually losing its economic influence on the world stage.
Azerbaijan: Europe’s Lifeline in the Energy Crisis
In the wake of global energy instability, exacerbated by the Russian-Ukrainian conflict, the European Union has found itself in urgent need of alternative energy sources. Once heavily dependent on Russia for its gas supply, Europe was forced to find new solutions swiftly. Azerbaijan, once regarded primarily as a regional energy player, has emerged as a key savior of Europe’s energy security.
Today, Azerbaijan plays a pivotal role in supplying Europe with reliable oil and gas deliveries, establishing itself as a strategic partner. This is not merely a short-term fix, but a long-term solution that is helping Europe secure its energy future with more dependable and stable partners.
Azerbaijan’s Surge in Energy Exports: A New Leader Emerges
In January 2024, EU countries exported around 2,000 tons of petroleum products to Azerbaijan—an increase of 2.4 times compared to the same period in 2023. In financial terms, this amounted to €4.5 million, doubling the previous year's value. Leading suppliers included Greece, Germany, and the Netherlands, underscoring Azerbaijan’s rising prominence as a key buyer of EU petroleum products.
But oil and gas exports form the cornerstone of the Azerbaijan-EU energy partnership. In 2023, EU nations, including Italy, Germany, and the Czech Republic, boosted their imports of Azerbaijani oil to 20.3 million tons—a four-year high. This 2.6 percent increase from 2022 highlights Europe's growing reliance on Azerbaijan to fill the energy void left by the decline in Russian supplies.
Natural gas has similarly proven to be a lifeline. In the first half of 2024, Azerbaijan increased its gas exports to Europe by 12 percent compared to the same period the year before, delivering 6.4 billion cubic meters of gas. Italy, Greece, and Bulgaria were the main recipients, further cementing Azerbaijan’s critical role in Europe’s evolving energy landscape.
The Southern Gas Corridor: A Vital Artery for Europe
One of the key drivers behind Azerbaijan's rise as Europe’s energy lifeline is the Southern Gas Corridor, a 3,500-kilometer pipeline that carries gas from the Caspian Sea to Southern Europe. Backed by international financial institutions, the Southern Gas Corridor has provided Europe with a secure and diversified gas supply, helping nations like Italy, Greece, and Bulgaria reduce their dependence on Russian energy.
At the 10th Ministerial Meeting of the Southern Gas Corridor Advisory Council, held in Baku in March 2024, discussions focused on expanding this critical corridor and ensuring long-term energy security for Europe. Azerbaijan’s President Ilham Aliyev underscored the importance of the project, noting that it not only delivers essential gas supplies but also establishes a long-term strategic partnership between Azerbaijan and the European Union.
Looking Forward: Azerbaijan’s Growing Role in Europe’s Energy Security
As Europe navigates an increasingly complex and unstable energy landscape, Azerbaijan has stepped forward as a reliable partner, providing the continent with a critical lifeline of oil and gas. With projects like the Southern Gas Corridor, Azerbaijan is helping to stabilize Europe’s energy needs while building a foundation for long-term cooperation. The EU’s reliance on Azerbaijani energy is no longer a temporary solution—it’s part of a long-term strategy to diversify energy sources and ensure a more secure future.
In an era of shifting geopolitical landscapes and escalating energy crises, Azerbaijan’s role as a strategic energy partner for Europe has never been more important.
The Future: Green Energy and Renewables
While Azerbaijan is currently focused on its vital role in supplying oil and gas to Europe, the country is also laying the groundwork for a future driven by green energy. As global efforts accelerate towards renewable energy, Azerbaijan is positioning itself as a leader in this transition, investing in projects like offshore wind farms in the Caspian Sea. These initiatives hold the promise of delivering sustainable energy solutions not only to Azerbaijan but also to Europe.
Giles Dickson, CEO of WindEurope, highlighted Azerbaijan's ambitious plans to export clean energy generated from these offshore wind farms. New power cables will be laid under the Black Sea, connecting the Caucasus to Europe, ensuring that Azerbaijan’s green energy reaches European markets. This project underscores Azerbaijan's long-term vision and its growing strategic importance in Europe’s energy transition.
Azerbaijan as a Strategic Partner for Europe
The events of the past few years have underscored a critical truth: Europe’s energy security depends on its ability to diversify sources. Azerbaijan has emerged as a crucial ally, providing stable oil and gas supplies while establishing long-term partnerships that will help Europe meet its energy needs for decades to come.
Once regarded as a regional player, Azerbaijan has transformed into a key energy supplier for Europe. As global energy markets face increasing instability, Azerbaijan’s strategic flexibility and capacity to adapt have made it an indispensable partner. For Europe, this relationship represents far more than just oil and gas—it signals a forward-thinking partnership rooted in sustainability and energy security.
How Azerbaijan Became Europe's Energy Anchor
Before the Ukraine war, Russia supplied approximately one-third of the gas consumed by the European Union. This dependence allowed Moscow to dominate the energy market and exert significant influence over European politics. However, the onset of the war changed everything. Europe suddenly found itself in the midst of an energy crisis, where securing alternative suppliers became a matter of survival.
Azerbaijan, with its vast oil and natural gas reserves, stepped in at the perfect moment. The country offered Europe stable and reliable supplies, mitigating the impact of the Russian gas cut-off. Baku quickly cemented its status as a strategic energy partner by signing long-term contracts with eight European nations, including key players like Italy, Romania, and Hungary. In 2024, Azerbaijan is expected to export 12.5 billion cubic meters of gas to Europe—a volume that is becoming a cornerstone of Europe’s energy security.
Azerbaijan’s role has grown beyond just a stop-gap measure. It is now a long-term energy partner, shaping Europe’s path toward a more secure and sustainable future.
The Southern Gas Corridor: A Critical Artery for Europe
One of the cornerstone strategies that has propelled Azerbaijan to the forefront of Europe’s energy market is the Southern Gas Corridor. Stretching 3,500 kilometers from the Caspian Sea to the southern regions of Europe, this pipeline system is more than just a means of transport—it’s a lifeline. Supported by international financial institutions, the Southern Gas Corridor has been instrumental in diversifying gas supplies for key EU nations such as Italy, Greece, and Bulgaria, reducing their dependency on Russian energy.
Azerbaijan’s President, Ilham Aliyev, has frequently highlighted the project’s significance as a cornerstone of the nation’s energy strategy and a testament to its robust partnerships with Europe. During the 10th Ministerial Meeting of the Southern Gas Corridor Advisory Council in March 2024, leaders gathered in Baku to discuss expanding the corridor’s capacity to meet growing demand. The Southern Gas Corridor is not just a response to immediate needs; it paves the way for long-term cooperation at a time when global energy markets are becoming increasingly volatile.
Green Energy: Azerbaijan’s Next Chapter with the EU
But Azerbaijan’s ambitions don’t end with oil and gas. As the world shifts towards cleaner energy, Baku is positioning itself as a leader in the renewable energy sector as well. Central to these plans is the development of offshore wind farms in the Caspian Sea, which could serve as a new source of clean energy for both Azerbaijan and Europe.
Giles Dickson, CEO of WindEurope, underscored the scale of Azerbaijan’s vision: the country plans to transmit this renewable energy through a new power cable that will be laid under the Black Sea, directly linking the Caucasus to Europe. This ambitious project aims to not only bolster Europe’s energy security but also cement Azerbaijan’s role as a major player in the continent’s green energy future.
Azerbaijan: A Strategic Partner for the EU
The past few years have underscored a fundamental truth for Europe: its energy security hinges on diversifying sources of gas and oil. In this context, Azerbaijan has emerged as a critical and reliable partner, ensuring stable energy deliveries and establishing long-term cooperative frameworks that will support Europe’s energy needs well into the future.
What was once seen as a regional supplier has now transformed into a strategic pillar for Europe’s energy security. As global energy markets face unprecedented disruptions, Azerbaijan’s agility and strategic foresight have solidified its role as an indispensable partner. For the EU, this relationship represents far more than a short-term fix. It’s a comprehensive alliance that is helping shape Europe’s energy landscape for decades to come.
Building a Sustainable Future Together
Azerbaijan’s contribution to Europe’s energy needs is no longer confined to hydrocarbons. The country is spearheading a broader strategy that includes investments in sustainable energy infrastructure. With plans to build wind farms in the Caspian and export clean power to the EU, Azerbaijan is helping Europe achieve its long-term climate goals while maintaining its status as a pivotal energy provider.
In a rapidly evolving geopolitical and energy landscape, Azerbaijan is proving that it can adapt and lead. By expanding its role from a supplier of conventional energy to a pioneer of green solutions, Azerbaijan is setting a new standard for what a strategic energy partner should be. For Europe, this means more than energy security—it means a reliable, forward-looking ally committed to building a resilient and sustainable future together.