PRAGUE – In the fairytale setting of a medieval castle and amid warm words of solidarity against Russia, the European leaders who met in the Czech capital didn’t even try to hide their disagreement over what to do about the energy crisis engulfing their countries.
Gathering in Prague on Thursday and Friday – first with leaders from the wider region, then just between them – European Union leaders took another stab at the possible ways to lower energy prices.
European countries are facing an increasingly depleted supply of Russian natural gas, with many people dependent on electricity and heating in homes and industries. Scarcity has distorted the market, pushed gas prices to historic highs and led to a dizzying increase in electricity prices. This means that Europeans are facing unmanageable electricity bills and factory slowdowns while inflation, already much higher than normal, is pushed up. go even higher.
As often happens in crises, EU countries quickly fall behind their traditional fault lines: north versus south, richer versus poorer.
Will they be able to tackle this crisis that will help define answers to a host of more important challenges: Can they work together to soften and shorten the looming recession? Can they maintain a united front against Russia? And will they be able to maintain political stability at home in the face of a wave of elections and power?
Judging by the meetings in Prague Castle this week, it doesn’t look great.
“There will be no decision today,” said Ursula von der Leyen, president of the European Commission, the EU’s executive body. Instead, she said, the negotiations should prepare the basis for decisions later this month, on October 20 and 21, when the leaders will convene in Brussels.
Germany, the bloc’s de facto leader and by far the bloc’s wealthiest economy, is accused of prioritizing helping itself, even if it indirectly hurts its partners and hurts weaken the bloc’s dominant role in the European Union.
Its wealth means it can provide large subsidies in the country on a national level. Critics say they also don’t prioritize lowering the price of natural gas for the EU as a whole, which could level the playing field to the benefit of poorer countries. Diplomats from key countries say Germany can buy expensive gas and outbid other poorer EU countries for it, and has so far been reluctant to support the idea of limits. natural gas prices for the entire EU. on condition of anonymity, so that we can speak frankly.
Last week, the Berlin government announced a 200 billion euro ($196 billion) aid plan for German households, businesses and industry. It includes policies that limit domestic electricity and natural gas prices and, according to critics, will clearly give Germany an advantage over its European counterparts.
The German government leads a group of wealthier countries in the north of the EU against a menu of proposals that could cut natural gas or electricity prices to reduce the cost of astronomical energy across the board.
More than half of the EU’s 27 member states think that attitude is harmful, and some are saying it outright.
“We strongly oppose the destruction of the European single market, a destruction that would take place in the event that the German government is only allowed to subsidize its businesses,” Polish Prime Minister Mateusz Morawiecki told Polish Prime Minister Mateusz Morawiecki. reporters in Prague on Friday morning.
“My message to Germany is to unite, to show solidarity with all others,” he said. “Because in difficult times, everyone has to agree on a common denominator, not just one that fits a country.”
He added that there would be “a lively discussion about this German egoism.”
Even President Emmanuel Macron of France, who is trying to bridge the gap between the two camps, is advocating joint action on energy prices at the EU level.
“If we remain selfish, nationalist, we will be fools,” Macron said in Paris on Thursday before flying to Prague. “If each country negotiates by itself, the market will not be much. If we negotiate at the European level, we have influence. “
The German government rejects such criticism.
“What Germany is doing is right,” the country’s prime minister, Olaf Scholz, told reporters after a meeting in Prague on Friday. “That is exactly what we must do now to ease the burden on our citizens. We are an economically strong country, so we can do this. We are always mindful of our financial stability and rightfully so, so that we can act in crises.”
The prime minister’s arguments are finding little support outside of the EU’s circle of wealthy allies, which include Austria and the Nordic nations, commonly known as “savers”.
“Germany has lost a large part of its moral authority in the EU and as a result, European institutions and many member states are ready to unequivocally condemn the hypocritical behavior of the German government, both in its choose the history they have given. as well as the political choices currently being made to address the energy crisis,” said Mujtaba Rahman, head of Europe at Eurasia Group, a consulting firm.
“This reflects the extent to which Germany’s stardom has declined in Europe,” he added.
Public criticism of Germany speaks to Berlin’s woes on the European stage, as the country continues its transition from the era of Angela Merkel, a 15-year leader and one of the key politicians. in the bloc’s recent history, into a new governing coalition led by Mr. Scholz.
Germany appears to be losing its traditionally tight control of the European Commission, the EU’s executive arm, which promotes policymaking and has long been accused of being a long-arm of the EU. Berlin in Brussels.
The committee, led by von der Leyen, a defender of Mrs. Merkel among conservatives in Germany, is a political enemy of Mr. Scholz, a member of the Social Democrats.
Shortly after Mr. Scholz announced his €200 billion package, two senior European commissioners, Thierry Breton, representative of France, and Paolo Gentiloni of Italy, published an op-ed Several European newspapers criticized the plan. They say it could distort the core function of the European Union: the internal market and the possibility of free and fair trade within it.
“The huge aid plan of 200 billion euros decided by Germany (worth 5% of its GDP) meets a need that we recognize and have emphasized – to support the economy. But it also raises questions. How can EU countries without the same financial space also support businesses and households? ” EU officials asked in the news.
Ms von der Leyen on Friday echoed concerns that the subsidy could distort the single market, calling it “our only best asset in times of crisis”.
“So we need to preserve it, it’s paramount,” she added.
Ms. von der Leyen, whose expert at the European Commission is responsible for formulating common policies, said she would propose a number of EU-wide measures to reduce gas and electricity prices, and offer ways way for EU countries to buy the next natural gas. spring, which would reduce Germany’s current advantage.
“One thing is very clear: it is paramount that we have a contract to buy gas so that we avoid paying higher prices but we have the right to collective bargaining,” she said.
Before their next meeting, in two weeks’ time, leaders will need to scrutinize these options and reach some compromise.
And, no matter how big the criticism of Germany, it is difficult to do anything in the EU without Berlin.
“The view of the majority of the EU and the commission is that this is a prime example of an external shock that requires a collective response to help deal with its consequences,” Mr Rahman said.
“But that is not the approach nor the thinking in Germany,” he said. “And if that’s not the German position, you can’t get an agreement at the European level.”
Erika Solomon contribution reports from Berlin and Monika Proncczuk from Brussels.
