Europe is currently conducting two stress tests. One is on its energy suppliers, to see how badly they would fare if Russian gas was disrupted. The other is on euro zone banks, to ensure they are strong enough to finance economic recovery.
It is hard to know which of the two is the more important. But it is clear that an effective regime for energy security requires many of the same elements as financial stability.
One is the need for credibility in the stress tests. Europe flunked its original bank assessments by modelling scenarios that weren’t sufficiently stressful. The new test being conducted by the European Central Bank looks more credible.
The European Union is only now conducting its first gas test. Member states last month submitted their results to the European Commission, which is now reviewing them before coming up with recommendations next month. It shouldn’t pull its punches.
Part of the gas test involves checking whether countries have done what they are already supposed to have done to improve security. After gas via Ukraine was disrupted in 2009, companies were told they needed to ensure supplies in the event of a 30-day disruption.