Officials Unhappy with the Inflation Reduction Act:
Its Subsidies Could Drive Investment Out of Europe

Dave DeCamp / AntiWar.com

(November 27, 2022) — High-level European officials are furious with the Biden administration and are now accusing the US of profiting from the war in Ukraine while Europe is facing a potential energy crisis.

In comments to POLITICO, a senior EU official said, “The fact is, if you look at it soberly, the country that is most profiting from this war is the US because they are selling more gas and at higher prices, and because they are selling more weapons.”

The US-led sanctions campaign on Russia has backfired on Europe as it has ratcheted up energy prices to the point where Europeans may face blackouts this winter. On top of the energy situation, European leaders also fear they will lose out on investments due to unprecedented subsidies included in the US’s Inflation Reduction Act, which President Biden signed into law in August.

The Inflation Reduction Act includes $369 billion in subsidies and tax breaks for green businesses, incentivizing companies to invest in the US instead of Europe. European leaders have publicly criticized the US for the legislation and are considering subsidies of their own, signaling the beginning of a new trade war.

The senior EU official told POLITICO that the double whammy of high energy prices and loss of trade to subsidies could turn public opinion against supporting Ukraine. “We are really at a historic juncture,” the official said. “America needs to realize that public opinion is shifting in many EU countries.”

The POLITICO report said that the Inflation Reduction Act brought Brussels into “full-blown panic mode” and is causing European officials to question if the US is really an ally. “The Inflation Reduction Act has changed everything. Is Washington still our ally or not?” an EU diplomat said.

The EU is also unhappy that it’s purchasing American gas for four times the cost of what it’s sold for in the US, although the difference in price could be explained by transportation costs and the fact that it’s resold by European companies.

While the US government doesn’t control the price of gas being sold to Europe, the Biden administration did pressure Europe to wean itself off much cheaper Russian energy, which in turn benefited American gas companies.

Despite leading the sanctions campaign against Russia, the US takes no responsibility for the high energy prices even though President Biden has admitted the policy would hurt both Americans and Europeans. “The rise in gas prices in Europe is caused by Putin’s invasion of Ukraine and Putin’s energy war against Europe, period,” a National Security Council spokesperson said.

The biggest beneficiary of Biden’s Ukraine policy is the weapons industry, as the US and its allies have shipped tens of billions of dollars worth of weapons into the country. The policy, being led by Secretary of Defense Lloyd Austin, a former Raytheon board member, has depleted Western military stockpiles, leading to a major uptick in orders for US and other Western military equipment.

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