European Union considers measures to control soaring energy prices

The potential plan underscores the widespread sense of alarm across Europe as the fallout from the war continues to weigh on European economies. The European Central Bank on Thursday raised interest rates for the second time this year in a bid to cool off inflation without driving Europe into recession.

European Commission President Ursula von der Leyen outlined the measures just days after energy giant Gazprom suspended the flow of gas through a key pipeline — a move initially blamed on technical issues until the Kremlin stepped in to say it was in fact about Western sanctions.

Putin, in defiant speech, threatens Western gas and grain supplies

“We are facing an extraordinary situation, because Russia is an unreliable supplier and is manipulating our energy markets,” von der Leyen said Wednesday. “Our unity and our solidarity will ensure that we will prevail.”

But for all the talk of solidarity, the E.U. remains divided on the details, with some countries expressing skepticism about windfall taxes and others worried about the idea of a gas price cap. Some would like to tweak the bloc’s power market, while others want an overhaul, including the total decoupling of gas and electricity prices. “The devil is in the details,” said a senior E.U. diplomat, speaking on the condition of anonymity to discuss behind-the-scenes talks.

As Europe seeks common ground in the days and weeks ahead, Russian President Vladimir Putin will be looking to exploit the differences in position, playing countries with different levels of dependence on Russian energy off against each other to weaken the West’s response, said Simone Tagliapietra, an energy expert at Bruegel, a Brussels-based think tank. “For Russia, this is about divide and rule,” he said.

In the more than six months since Russia launched its full-scale invasion, the E.U. has been trying to weaken Russia’s energy leverage — with mixed results.

Russian pipeline gas now makes up 9 percent of E.U. gas imports, von der Leyen said Wednesday, not the 40 percent it was at the beginning of the war. The E.U. last week reached its goal to get gas stores to 80 percent well before the weather turns in November. As Europe’s reliance on Russian fossil fuels is waning, E.U. officials say, Putin is losing his grip.

For now, energy markets remain in crisis and E.U. countries are spending billions to subsidize electricity bills. Germany on Sunday announced plans for a nearly $65 billion relief package, with Chancellor Olaf Scholz vowing to clamp down on energy providers who are making “excessive profits.” Income from…