Estonia’s choice to limit its response to merely postponing an excise tax increase appears conspicuously modest. It may prove short‑sighted, as it puts our companies at a competitive disadvantage compared with countries where support measures are more robust, writes Jüri Ratas.
Europe had barely begun to recover from the last energy shock and the wave of inflation triggered by Russia’s invasion of Ukraine when a new blow arrived — this time from the Middle East. The Strait of Hormuz, one of the world’s most important trade corridors, was closed for weeks due to military conflict.
The consequences were swift. We soon saw how abruptly energy prices can swing, how fragile our usual supply chains are, and how extensively disruptions in the supply of fuel, fertilizers, and critical raw materials affect us.
The European Union was not a party to this conflict, yet its effects reached us quickly and painfully. We saw it immediately on the price boards at gas stations and heard about declining availability of goods. Farmers are being hit not only by more expensive diesel but also by fertilizer shortages; bus companies are being forced to cut routes, and airlines to cancel flights. Energy‑intensive industries are seriously concerned that they may have to scale back production.
The longer the Strait of Hormuz remains closed, the greater the impact. But even if it were to reopen immediately, recovery would take time, and we must prepare for second‑ and third‑round economic effects.
Author: Jüri Ratas, Member of the European Parliament (Isamaa, EPP)
Read more: ERR.EE
