In solar panels dispute there is only one winner: the European Commission

The Chinese understand how important a balanced tariff policy is for national development. Europeans don't. The current trade controversy between the European Union and China is strong evidence of this.

European nations are prisoners of a self-inflicted supranational system that forces them to act against their national interests and in favor of financial and trade cartels. Under the EU system, national interests are replaced by "European interests".

But Europe is not and never will be a nation. Europe can exist only as an empire-like state, which by definition cannot be ruled by a representative system.

A representative elected in Milan can represent an Italian voter in Sicily, while a representative elected in Finland can represent an Italian or a Greek citizen. Thus, the EU as created by the Lisbon Treaty can only be ruled by external representative democracy.

However, an external representative system actually negates true representation. Government is exerted by an oligarchy - in this case the European Commission - which rules as the executive, the legislature and even the judiciary.

Under the treaty, the EU is supposed to make all the laws in member states. These laws are drafted by "experts" who are very sensitive to the interests of the private sector. EU energy policy, strongly ideological, is a product of such interests.

According to EU doctrine, national interests are bad, private interests are good. Society works because individuals, moved by greed, seek profit. Greed is supposed to produce the common good. This is the free-market doctrine that has brought us little common good and a global crisis.

De-nationalization does not run smoothly, as shown by the controversy over Chinese solar panels.

Suddenly, the EU Commission decides that cheaper Chinese panels represent unfair competition. So it decides to raise tariffs. Why? Officially, to protect European industry.

However, the commission moved on the basis of a complaint filed by an association mostly representing German producers. Germany is the largest producer of solar panels in the EU, and its industry has been the hardest hit by Chinese competition.

China has threatened to take action against another European product: wine. But wine is a French and Italian interest. French and Italian wine producers feel they are being unjustly punished and are upset by China's response.

The losers in this fight are Germany, China, France and Italy. The winner is the European Commission, which likes to pit nations against each other to strengthen its control.

China's best interest is to negotiate bilaterally with each nation. However, against their own interests, European nations insist that China should negotiate only with their self-inflicted controller, the EU.

If China had bilateral relationships with EU member states, trade issues could be regulated by bilateral agreements based on mutual interests.

China should find ways to conduct bilateral negotiations with single EU member states.

The principle of bilateral relationships among sovereign nations should be kept alive, as it is the only workable system in the world. One day, after the Babel Tower that is the EU has collapsed, those relationships will be the cornerstones of reconstruction.

On the specific case: Is it worth China starting a strategic fight on solar energy? Is the solar industry the right bet? Not quite.

China exports 21 billion euros worth of such technology to the EU. It is a remarkable figure, but the future of this industry is shaky.

The boom in solar energy has been based on massive public subsidies, the same sort of subsidies the EU accuses China of implementing.

By 2020, Germany will have invested 135 billion euro in incentives for solar energy. Electricity produced by plants built in 2005 will receive 50.23 cents per Kwh for 20 years, five times as much as market prices.

Utilities are forced to buy this "renewable" energy at that price and sell it to the consumer who foots the bill. Someone has characterized this as "the largest transfer of wealth from the bottom to the top".

Without public subsidies, solar energy could not survive. Not only is it very expensive, but it is also highly inefficient, because for half of the year it is turned off.

Italy, which has more sunshine than Germany, has just ceased its incentives program for solar energy because there is no money in the budget, and this means that no more solar plants will be built.

Thus, Italy has reached the saturation point for the solar component of its energy supply, at almost 10 percent. Was it worth the 6.7 billion euros in incentives?

Experts are questioning whether it would have been wiser to invest the money in, say, subway systems, which would have reduced CO2 much more than solar energy.

Recent studies by energy associations show that Italy's future is nuclear energy, if minimal growth targets are to be achieved and unemployment decreased.

Solar energy and so-called renewables have been massively subsidized in an ill-advised effort to help the environment. But there was no thorough plan on how much it would cost nor much effort made to find more efficient alternatives.

Policymakers thought the economy was strong enough to pay for such extravagances, but the financial crisis forced the issue of cost to the surface.

Sooner or later, healthier criteria for energy plans must be re-established, such as energy-flux density as defined by US economist Lyndon LaRouche, as the pivot of a modern economy. China must be ready for that moment.

The author is the editor of EIR Strategic Alert Service.

(China Daily European Weekly 06/21/2013 page9)