Cost-of-Living Crisis in Central and Eastern Europe: an Overview

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As the cost-of-living crisis is rapidly spreading across Europe, many of us are trying to make sense of this new situation and organise for the months to come. However, analyses available to us are too rooted in Western European perspectives. In late October, a discussion was therefore organised by Gastivists (1) and Corporate Europe Observatory (2) to present the work/initiatives done in Central and Eastern Europe. 

Below is a brief summary of the cost-of-living crisis as seen by activists from Romania, Poland, the Czech Republic, Lithuania, Bulgaria, and Slovakia.

 

Romania: no way to reverse “liberalisation”?

Ani, of Gastivist Romania, shared perspectives from Romania and shed some new light on the often-heard proposal to “nationalise energy systems”. She emphasised that most participants in similar discussions were activists from Western Europe, while CEE narratives are not seen or heard enough. Consequently, there’s a lack of awareness of the different ways in which the cost-of-living crisis appears in different parts of Europe. 

To illustrate the point, Ani brought up a potentially popular idea of nationalising the energy sector. In Romania, liberalisation came as an EU integration requirement. Romania just finished liberalising its energy sector last year and nationalisation therefore might not be that easy to implement. If one would like to reverse the process, then the question is how to do it. Moreover, what does it mean if Austria nationalises its energy sector when they extract gas in the Black Sea with a Romanian company? 

Romania is sandwiched between the EU and Russia, leaving it with much less room to criticise the EU. To sum up, one needs to be constantly aware of macro-politics in CEE when discussing possible solutions such as nationalising the energy sector, because countries in the region are under constant pressure from the EU and the IMF to “modernise”.

Enikő Vincze from Căși sociale ACUM! (Social housing NOW!)—a civic-activist initiative seeking to problematize social housing in Cluj, Romania—talked about housing and cost-of-living crises in Romania.

we should look for anti-capitalist alliances across West and East

In her view, while the voice from Central and Eastern Europe should be given more space in global debates, we need to avoid reproducing the East-West dichotomy, mostly the one made between left-wing positions from different geographies. Instead, we should speak about power relations between advantaged and disadvantaged groups and ask who benefits and who suffers from the multiple crises created by capitalism. Finally, we should look for anti-capitalist alliances across West and East.

In the past, the housing movement in Romania tried to approach trade unions and environmental organisations. Although not as successful as expected, this was a good start to raise awareness about how housing is pertinent to labour and environment issues. The demand was to increase the public social housing stock and stop evictions. However, positions critical to capitalism do not always attract other groups, as trade unions and environmental NGOs are often centre-right, not anti-capitalist.

When it comes to nationalisation, Enikő noted that liberalisation of prices in Romania was a long process, with lots of pressure from the European Commission, which was enforced alongside the privatization of different economic sectors, including the housing and the energy sector. It is now accomplished, although the state still has shares in some electricity and gas companies. This shows that nationalisation/state control is hardly a solution in itself (e.g. such companies still don’t address environmental impact, and follow the same logic of profit-making as private companies). Therefore, nationalisation in this domain might not be a sufficient solution to the energy cost crisis.

A lot depends on how the companies are run. Even if companies are nationalised but continue to be run according to the principles of private enterprises and gas will continuously be traded on commodity markets and the stock market, the situation will not change much. There is a need to assure a large social control on the distribution of goods and services (including housing, energy, food, healthcare etc.) for the benefit of the population regardless of people’s  class position or social status or personal financial resources. 

 

Poland: people want renewables, the government does not

Speaking about Poland, Nawojka Ciborska from the Bombelki Kolektyw stressed the need to fight the “unnecessary and climate-damaging gas industry”, while the Polish section of Gastivists emphasised the need to navigate a rather similar “Russia vs. the West” narrative.

Just like Romania, Poland feels squeezed between two bigger powers, the EU/West and Russia, and forced to be friends with one so as to offset the threat from the other. The country is leaning towards the EU, but if Warsaw criticises the EU, that makes it look pro-Russian. And being pro-Russian is seen as acting against Poland’s best interests. Trapped in this binary, the local activists are struggling to say anything. Nawojka brought up an example of the geopolitical Baltic Pipe project. The pipe allows for a flow of Norwegian gas to Denmark and Poland. The main argument for the project was energy independence from Russia. This made it near-impossible to oppose the pipeline for environmental reasons. The project met little resistance in Poland, as such resistance would have been immediately interpreted as treasonous activity.

people on the ground are in favour of renewables

An international initiative to strengthen democratic societies by countering social division and polarisation, called More in Common, conducted a study on the cost-of-living crisis in four countries (including Poland). According to the study, 73% of Polish respondents believed accelerating the transition to renewables would help address the cost-of-living crisis. 53% said renewables were the best way to secure independence from Russia. In short, people on the ground are in favour of renewables.

Solar is perceived as one of the most reliable types of energy, above gas, oil, and nuclear. Solar is seen as something people themselves can put on their rooftops, and not as something that the government regulates or does. Although people on the ground favour solar energy, it does not resonate with the government, which focuses on gas in its energy policy.

Wind energy development is being blocked in Poland, and it is a political decision. A current law says that a wind plant must be removed from any buildings by a distance of ten times its height, which makes installation near-impossible.

 

Czech Republic: timid unions and ambitious far-right

The discussion was joined by Josef Patočka from the Czech platform for socio-ecological transformation RESET. Josef discussed the coalition between environment and housing groups in the Czech Republic. 

reaction to the cost-of-living crisis runs into cultural, political and economic specificities of CEE

Energy poverty is an important issue for transition to a low-carbon economy in the country. In reaction to the energy crisis, environmental NGOs, grassroots movements, such as Fridays for Future and Limity, and housing groups started a coalition campaign „Energy to the People”. Groups began to seek common ground: housing rights advocates started paying more attention to energy consumption, while environmental NGOs took into account the social aspects of just transition. Local activists therefore seek to organise action groups around demands for affordable housing, community energy and energy municipalization. 

Josef Patočka photo

This is also connected to attempts to organise tenant unions in major cities, which is a new thing in the Czech context. Basing the campaign on the strategy of mutual aid, the activists started training people on how to DIY insulate buildings. The activists formed what Josef called “energy brigades” that go around and help with insulation work. In the 1990s, similar energy brigades existed and insulated schools, kindergartens, etc. Today people with the lowest income—20% of the population—still need this kind of support.

According to Josef, reaction to the cost-of-living crisis runs into cultural, political and economic specificities of CEE: low levels of trust between people, lack of organising tradition, and difficult relationships with trade unions (which are always on the defensive).

Josef Patočka photo

However, recently, there have been unprecedented successes in linking environmental issues to demands of trade unions. Public discourse is slowly shifting from anti-communist rhetoric to blaming oligarchs, although any major change is yet to come. On the other hand, trade unions are weak and are used to very low demands. The same applies to their reaction to this crisis, for they only ask to slightly raise the minimum wage and do not seek to renationalise the energy system. Meanwhile, the far-right raises more ambitious demands (e.g., energy to everyone and good relations with Russia to secure the gas supply) and hijacks the left/progressive agenda. Josef expressed hope that their patient organising and campaigning attempts might lay the foundations for a stronger confluence of ecological and social demands in the future, but at the moment they are not there yet.

 

Lithuania: always the “teacher’s pet”

The Lithuanian perspective was presented by Karolis Dambrauskas from the left-wing media platform “Gyvenimas per brangus” („Life is Too Expensive”).

The economy of Lithuania is doing quite well, according to the OECD. It has been on a small but steady rise for the last couple of years. However, much of the population (1/5) still lives under the poverty line, so the growing economy is not benefiting everyone.

Over the last years, the country has followed trends of liberalising energy markets according to the EU demands, and aiming at being a “good member state”

Currently, inflation is a big issue, and the energy crisis is contributing to this. The energy crisis was exacerbated by the Russian war in Ukraine. This caused an increase in fuel prices. The conservative government, led by the Christian Democratic/conservative prime minister, chose to respond to these multiple crises by increasing salaries and pensions. Yet the increase was still insufficient. Therefore, a peculiar situation emerged in the country—people’s general income is growing, but their purchasing power is being eaten by inflation.

Lithuania, too, is sandwiched between the EU and Russia. Over the last years, the country has followed trends of liberalising energy markets according to the EU demands, and aiming at being a “good member state”. At the same time, it tried to be less dependent on Russia, so it stopped buying Russian gas. Currently, the country does not buy electricity from Belarus or Russia, and imports electricity from Scandinavian countries. Gas gets transported via LNG, built in 2014 and symbolically named “Independence”, and via a recently opened pipeline with Poland.

 

Liberalisation of the energy market (that the government wanted so badly) meant that private companies stepped in to provide services, and this was for them an open door without credibility checks. E. g., there was a case where an energy provider (“Perlas energija”) promised low prices for customers. Then, with the war in Ukraine, they said they could not keep the contracts they signed and unilaterally terminated all contracts with customers who did not agree to pay higher prices. This caused chaos, as most customers from rural areas had little choice in finding another provider.

 

Bulgaria: political stagnation and unclear directions

Veni Kojouharova from the environmental organisation Za Zemiata presented the Bulgarian stance towards gas and just transition.

What exacerbates the crisis in Bulgaria is its broken government, according to Veni, since the country has not had a working government for two years. There were six months of stability at the beginning of 2022, but now Bulgarians are looking at yet another general election, unless a coalition gets formed from very different parties. Under such circumstances, any comprehensive attempts to tackle the energy and cost-of-living crises stall.

In addition to a lack of continuity of policies, this instability exacerbates the “Russia vs. the West” divide, which is really significant in the country. According to Veni, Bulgarians don’t get to have their own position, they need to define themselves by either going West/EU or being close to Russia. There was a lot of fake news circulating in Bulgarian media, exacerbated by its lack of independence from political actors.

Bulgaria’s previous government was excessively EU-centric. It took a tough stance on Russia when it cut gas supplies—refused to negotiate, to pay in roubles. The current interim government tried to restart negotiations with Gazprom and is in favour of talking to the Russian gas company. The opposition at the moment is quiet on this, as they are reluctant to express positions lest they become a liability in the future. 

In addition to a lack of continuity of policies, this instability exacerbates the “Russia vs. the West” divide, which is really significant in the country

The message of solidarity with Ukraine is not working so well right now. Political campaigns focus on gas prices, which are of prime importance to the electorate, therefore it’s hard to talk about the environmental issues carbon-based fuels pose. There’s a huge risk that if people feel Russian gas is cheaper, this is where the public opinion will go. There is no incentive to switch to renewables.

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When it comes to energy prices, they are lower than in other European countries. Food prices, meanwhile, are insane, yet people do not have to choose between heating and food just yet. Businesses get a 40% rebate on bills. Bulgarians have suffered from very high heating prices for many seasons, so people do not feel a huge difference.

Nationalisation of energy companies is not discussed at all in Bulgaria because the energy sector is still state-owned (transmission network, etc). Moreover, there are no incentives to switch to renewables because the EU regulations have not been transposed to Bulgarian laws yet and households cannot produce their own energy and deliver it to the grid.

 

Slovakia: not ready to protest

Katarina Jurikova from the Slovak section of GreenPeace spoke about elements in the Slovak culture that distinguishes the country from the West and that need to be borne in mind. First, corruption does not resonate in the country, because everyone is used to it and not ready to protest against it. Nor is there much indignation about windfall profits of energy companies. Third, there is the issue of neocolonialism: Slovaks feel that they’ve been victims of different colonisers—starting with Austria and now with the EU.

Slovak unions are weak, not radical and do not work for the workers

Nor is there a tradition of social movement or unions protesting. Slovak unions are weak, not radical and do not work for the workers, according to Katarina. Slovakia is also unusual because there is a general shift towards pro-Russia sentiments. The majority wants Russia to win the war, according to a recent poll. On the political level, there is hate towards the left/anti-capitalist agenda, as anti-capitalist ideas have been co-opted by the far right. There is a general feeling that things will never change and Slovaks don’t believe things can get better.

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(1) Gastivists (On Facebook: https://www.facebook.com/gastivists/) aim at supporting grass-roots resistance against new fossil fuel and gas infrastructure and at facilitating the flow of information and coherence across the blossoming anti-gas movement.

(2) Corporate Europe Observatory – a Brussels based non-profit research and campaign group whose declared aim is to „expose any effects of corporate lobbying on EU policy making”.

 

Main illustration by Sébastien Thibault