Scholz defends German energy plan against EU critics – Markets

BERLIN (Reuters) – Chancellor Olaf Scholz on Tuesday pushed back against European criticism of Germany’s 200 billion euro ($198 billion) energy fund, saying other countries were also taking steps to protect citizens historical price shocks.

“The measures we are taking are not unique but are also being taken elsewhere and rightly so,” Scholz told a press conference in Berlin.

France and key members of the European Commission have expressed concern over an autonomous approach by Berlin and are calling for EU-wide solutions to the energy crisis aggravated by the war in Ukraine which has seen the main supplier Russian turn off the gas taps.

They fear that heavily indebted European countries cannot afford the largesse shown by Germany, the EU’s biggest economy, thus distorting the single market.

But Scholz insisted Germany’s planned measures, including electricity price caps, were justified to help citizens and businesses cope with sky-high gas and electricity bills.

“Prices have to come down,” he told reporters, alongside Dutch Prime Minister Mark Rutte.

Asked if Germany was showing a lack of solidarity with its peers in the European Union, Scholz replied that other countries would benefit from massive investments in LNG terminals at German ports.

Germany was creating these import capacities “not only for Germany but also for many of our neighbors in the Czech Republic, Slovakia, Austria and beyond”, he said.

German Finance Minister Christian Lindner also reassured his European counterparts about Berlin’s energy plans during talks in Luxembourg on Tuesday.

“There had been a misunderstanding… Our package… is proportionate if you compare the size and vulnerability of the German economy,” Lindner said.

“We use our economic strength to protect ourselves.”

Both Lindner and Scholz stressed that the €200bn fund would finance support measures until 2024, “so it’s not just for a short period”, the Chancellor said.

Berlin’s defense came after two key members of the EU executive singled out Germany for its plan in a rare rebuke from Brussels to the bloc’s most powerful member state.

Internal Market Commissioner Thierry Breton and Economy Commissioner Paolo Gentiloni, of France and Italy respectively, said the Berlin plan ‘raises questions’ about fairness and called for a ‘European instrument’ to help countries.

They added that the creation of a mechanism similar to the so-called SURE program, which the EU launched during the coronavirus crisis, should be considered.

This has provided member states with soft EU loans to pay for short-time work schemes decimated by pandemic lockdowns.

James R. Rhodes