Lindner defended the German approach as a “defensive shield” against the “energy war” sparked by Russian President Vladimir Putin’s invasion of Ukraine. Germany is showing Russia that they have the economic strength to protect themselves. According to observers, this is exactly where the background to the unrest that was triggered by the German gas price brake lies, since other countries do not have an economic strength comparable to Germany. Rather, what is required is a common path that has yet to be defined, with the search for a solution already beginning on Thursday at the level of the heads of state and government at the informal summit in Prague.
If Lindner has his way, the “measures taken are appropriate in proportion to the size of the German economy and measured in terms of the term up to 2024” and “certainly not oversized” compared to the packages of other countries. In addition, the German government has decided “to use as little as possible of the 200 billion euros,” said Lindner, who continues to see himself as a fighter against excessive debt.
Some other countries have “already been doing, with great support, exactly what we have planned for this year and the next two years,” said Germany’s Chancellor Olaf Scholz on Tuesday at a meeting with the Dutch Prime Minister Mark Rutte in Berlin. EU Internal Market Commissioner Thierry Breton knows for sure “that the measures are not isolated, but are also being taken elsewhere, and with good reason, moreover,” Scholz said in response to the criticism of the German energy crisis package that had previously been voiced by the EU Commission.
The German 200 billion package “raises questions”, it was also said in this context in a joint guest article by the EU Commissioners for Economic Affairs and the Internal Market, Paolo Gentiloni and Breton, in the “Frankfurter Allgemeine Zeitung” (“FAZ”, Tuesday). -Output). There are “member states that do not have the same budgetary leeway as Germany” and therefore may not be able to support their consumers and economy equally, the text says. The Italian Gentiloni and the French Breton therefore advocate “common European instruments”.
As a model, they refer to the SURE program that the EU launched during the coronavirus crisis. It provides member states with cheap EU loans, especially for short-time work. Since the beginning of the Russian war of aggression in Ukraine, French President Emanuel Macron has also been pushing the EU to use a weighty instrument based on the CoV reconstruction fund he initiated.
A rejection comes from Germany. The instruments of the CoV crisis cannot be transferred “one to one” to the current situation, as Lindner said in Luxembourg. On the other hand, Lindner was open to alternative EU instruments. “We have to make progress in joint gas purchasing, we have to change the design of the electricity market,” as Lindner said.
“Give the middle finger to the rest of Europe”
Countries like Italy, Spain and Luxembourg continued to criticize Germany’s gas price brake. Like the EU Commission, they also made it clear that not all countries would have the financial means to finance such measures and that the internal market could therefore be distorted. The outgoing Italian Prime Minister Mario Draghi warned of “dangerous and unjustified distortions of the internal market” if the EU states outbid each other with their relief packages. Hungary’s Prime Minister Viktor Orban finally identified a “beginning of cannibalism in the EU”.
For Politico’s European news portal, there was no question in the run-up to the finance ministers’ meeting that there would be “tough questions from his European colleagues” for Lindner in Luxembourg. They were simply “shocked” by Germany going it alone, according to Politico, pointing out that while Germany is blocking an upper limit for gas prices at EU level, it has approved a EUR 200 billion gas price cap in its own country. “Germany gave the rest of Europe the middle finger with this package,” said an EU official behind closed doors, according to Politico – and that “very heated up the mood in the other countries”.
According to the Politico information, there are also voices within the EU member states that not only accuse Germany of creating a competitive advantage with billions in subsidies, but also that Germany has also caused the current crisis with its previous energy policy. Some EU member states “believe that Germany has a responsibility to show solidarity and not just look after itself – not least because Berlin has helped Gazprom expand its hegemony in Europe.”
Brunner against “national solo efforts”
Finance Minister Magnus Brunner (ÖVP) also spoke out against “national solo efforts” in the run-up to the meeting of the euro finance ministers and pleaded for a common European approach to the energy crisis. Once again, Brunner put a European cap on the amount of gas required for electricity generation. The EU Commission’s recent proposal to siphon off energy companies’ profits from the crisis is “not going far enough”. According to Brunner, this is merely a matter of “combating the symptoms”, according to which it is now much more important to “tackle” the design of the European energy market and to push ahead with the decoupling of gas and electricity at EU level.
Unanswered questions also in German federal states
However, the gas price brake that has been decided is also causing debates in Germany itself. Before a meeting with Chancellor Olaf Scholz on Tuesday, the German federal states called for clarity about the financing of relief measures. There was some ambiguity about how gas prices would be capped. “This must now be clarified quickly,” demanded North Rhine-Westphalia’s Prime Minister Hendrik Wüst: Families and companies should know what they are up to at the beginning of the heating period.
At the end of September, the German government agreed on what Scholz described as a “double boom” and worth up to 200 billion euros. According to the German government, the declared goal of the package, known as the “defense shield”, is to protect citizens and companies from unbearable costs in the energy crisis. The central point of the aid package is a state subsidy for “basic consumption” of gas until the end of winter 2023/24.
Twenty billion for renewables
A 20 billion package approved in Luxembourg at the level of finance and economics ministers is about long-term investments. Specifically, they want to convert funds of this magnitude from the coronavirus development fund and also make the money available for investments in the energy sector. The aim is to move away from fossil fuels from Russia and invest more in renewable energies.
To implement the project, the EU countries can now change their corona virus recovery plans, as can be seen from the notification from the states. The EU Commission announced in May that 225 billion euros in loans from the RRF CoV development instrument were still available. According to the announcement, the RRF can also be increased by transfers from other EU funds. The EU Parliament still has to approve the project. Then the States and Parliament can negotiate it before it can come into force.