Gas cap divide ‘fires up’: Germany-EU energy gap

Europe is divided in two a few hours before the leaders sit down at the hot negotiating table for it energy crisis in Prague. At the center of the reactions is Germany, whose decision to act unilaterally by promoting a mammoth national package of 200 billion per hour, which rejects the solution of the ceiling, is testing the endurance of European solidarity and the very cohesion of Europe.

Rutte on Soltz’s wing – The unused 230 billion of the Recovery Fund is on the table

On his side, Chancellor Olaf Solz has Dutch Prime Minister Mark Rutte, with whom they stated in a joint press conference in Berlin that the unused 230 billion of the recovery fund could be used.

However, this money is little for the member states and each country cannot get as much as it wants. There are certain conditions between them and fiscal discipline.

A ceiling must be placed on the price of imported natural gas, the price of natural gas must somehow be decoupled from the price of electricity while its purchase, storage, distribution become more efficiently a European, Community affair. And such a necessity cannot be resisted by national petty budgets that undermine overall European solidarity, said Prime Minister Kyriakos Mitsotakis.

The fire of European division is burning as Germany insists on the package of 200 billion euros for its own consumers.

“This is a misunderstanding…our package is not disproportionate, indeed it is proportionate if we compare the size and vulnerability of the German economy,” German Finance Minister Christian Lindner said.

One after another, Germany’s EU partners accuse it of a lack of solidarity as Germany entrenches itself in its national interests.

“This means that there will be no common European business support program for the energy crisis, and this is the beginning of cannibalism in the Union,” Hungarian Prime Minister Viktor Orbán underlined.

“Six months ago we were saying, we won’t last with the tax benefits. I believe that many member states have now realized that this is an unsustainable path, which can endanger European solidarity,” noted Belgian Prime Minister Alexander De Croo.

Yellow card in Germany and by EU commissioner Gentiloni who again throws the idea of ​​joint borrowing on the table

“The point is not to criticize member states … if we want to face this crisis, I think we need a higher level of solidarity and we need to put in place common tools,” said Economic Affairs Commissioner Paolo Gentiloni.

“Common debt does not help us to strengthen our competitiveness in the long term or to ensure the sustainable financing of states,” said German Finance Minister Christian Lindner.

As if all that weren’t enough, Germany is also preparing for possible cuts in electricity exports to France to protect its own grid. At the same time, people in Europe are taking to the streets.

“We are talking about increases that have tripled the costs borne by families for electricity, gas, fuel and food. I am describing a situation that cannot continue. We are in danger of collapsing,” says USB union member Faviola Bravi.

The German package must first get approval from the European competition commission to be implemented.

Solz on the 200 billion package: “The measures are justified, we are doing the same as the other countries”

At the same time, the chancellor called it justified Olaf Solz his government’s plan to protect the economy from the energy crisis with a package of height 200 billion eurosresponding to criticism from the European Commission and other member countries of undue advantage for German companies and undermining of European solidarity.

“The measures we are taking are justified. They are not isolated and have been adopted in other countries as well. Like many other countries, we will do the same with natural gas. Some have long been in the process of doing exactly what we have planned for this year and the next two years, with great support and measures. Maybe not everyone has noticed that.”Mr Solz said during a joint press conference earlier today with the Prime Minister of the Netherlands Mark Rutteafter the conclusion of the meeting of the German-Dutch climate council, with the participation of ministers from both countries.

Mr. Scholz even characterized the German plan as “very smart, very balanced and very decisive package” and pointed out that the money that will be allocated will also support natural gas importers. “We know the need to maintain solidarity in Europe and much of what we do, e.g. the creation of conditions for the import of natural gas, do not concern only us, but are also useful for other European countries”he said, to add: “In terms of concrete steps we take to help our citizens, it’s clear that every country needs to do something. There are other countries with tools that are not very different from ours.”.

For his part, Mr. Rutte supported the German initiative, stressing that the Germany has the right to take national measures, while rejecting the proposal to introduce a cap on the price of natural gas from the EU “as ideology” and warned of the risk of gas not being sold in Europe, but in Asia. However, the two leaders agreed that the absolute priority at the moment is the reduction of energy prices while ensuring the energy supply throughout Europe. Olaf Solz pointed out that natural gas prices remain too high, to an extent that is not justified by the supply-demand relationship, and stressed the need to continue the effort to combat speculation. He even expressed the belief that natural gas exporters such as Norway, the US and Arab countries are willing to cooperate in order to lower prices.

The two leaders also appeared wary of taking on joint debt in the EU to deal with high gas prices, as has happened during the coronavirus pandemic. Mr. Soltz referred to Recovery Fund which, as he said, has not been exhausted. “We have a huge program of 750 billion euros, most of which has not yet been used and can be particularly effective at this time. These funds could now help,” he said. “Before we think about new funds, we should use the ones already available,” Mr Rutte agreed.

Energy Commissioner: The EU should learn from the Iberian mechanism

The European Union can learn lessons from Spain and Portugal’s mechanism for capping the price of natural gas, although the plan is not suitable for immediate implementation across Europe, Energy Commissioner Country Simpson said today.

“We can certainly learn from their experience. The measures are not automatically appropriate for (the whole of) Europe,” Simpson told a European Parliament committee meeting. He explained that one of the reasons why the plan could not be implemented across the European Union is that, unlike other EU countries, the two Iberian countries have numerous LNG terminals.

The European Commission is considering the options available to contain gas prices and Commissioner Simpson said much will depend on the outcome of the EU summit on Friday.

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