PRAGUE — Against the fairytale backdrop of a medieval castle, in warm words of unity against Russia, European leaders met in the Czech capital on how to deal with the swirling energy crisis engulfing their country. They didn’t even try to hide their differences.
Meeting in Prague on Thursday and Friday, first with leaders from the wider region and then just with them, European Union leaders once again challenged ways that could bring down energy prices. .
European countries are facing dwindling supplies of Russian natural gas, many of which rely on electricity and heating for homes and industries. The shortage is distorting markets, pushing gas prices to historic highs and sending electricity prices skyrocketing. This means that people in Europe are facing unmanageable power prices and a slowdown in factories, while already driving much higher than normal inflation.
As is often the case in times of crisis, EU countries are rapidly falling behind the traditional fault lines of north and south, rich and poor.
Their ability to deal with this crisis will help determine the answers to a broader set of critical challenges. Can they maintain a united front against Russia? And can they maintain political stability at home in the face of election waves and the rise of the far right?
Judging by this week’s meeting at Prague Castle, it doesn’t look good.
The hurdles were set low from the beginning. “There is no decision today,” Ursula von der Herr Leyen, head of the European Commission, the EU’s executive body, said when she arrived at the meeting on Friday morning. Instead, talks should lay the groundwork for a decision later this month on October 20 and 21, when leaders convene in Brussels, she said.
Germany, the bloc’s de facto leader and wealthiest economy, has been accused of prioritizing helping itself, even if it indirectly hurts its partners and undermines its dominant role in the European Union. I’m here.
Its wealth means it can provide large domestic subsidies at the national level. Critics say lowering natural gas prices across the EU is also not a priority, potentially leveling the playing field to benefit poorer countries. Key country diplomats say Germany can afford expensive gas and can bid higher than other poorer EU countries, so far set cap on EU-wide natural gas prices was reluctant to support the idea that On condition of anonymity so that we can speak openly.
Last week, the Berlin government announced a €200 billion ($196 billion) aid plan for German households, businesses and industries. This includes policies to keep natural gas and electricity prices down at home, which critics say will give Germany a clear advantage over its European partners.
The German government is leading a group of wealthy northern EU countries against a series of proposals that could cut the price of natural gas and electricity to cut astronomical energy costs across the board.
More than half of the EU’s 27 member states consider the attitude harmful, and some even say it out loud.
Polish Prime Minister Mateusz Morawiecki told reporters in Prague on Friday morning that “the destruction of the single European market would happen if the German government were allowed to subsidize only its own companies. I strongly oppose it,” he said.
“My message to Germany is to unite and show solidarity with all other countries,” he said. “Because in difficult times, everyone needs to agree on a common denominator, not just her one denominator that is suitable for one country.”
He added that there would be “a heated debate about this German egoism.”
Even French President Emmanuel Macron, who has tried to bridge the two camps, has advocated joint action on energy prices at EU level.
“If we remain selfish and nationalistic, we will be idiots,” Mr Macron said in Paris before flying to Prague on Thursday. “If every country negotiates on its own, there will be very little left in the market. If you negotiate at the European level, you will have influence.”
The German government rejects such criticism.
“Germany is doing the right thing,” he said. We have always been vigilant about financial stability, but it is only natural to be able to deal with crises.”
The prime minister’s claims have little support outside wealthy EU allies, including Austria and the Nordic countries, who are often called ‘frugal’.
“Germany has lost most of its moral authority within the EU, and as a result European institutions and many Member States are criticizing the hypocrisy of the German government both in terms of the historical choices they have made. , as well as the political choices currently being made to deal with the energy crisis,” said Mujitaba Rahman, head of the European practice at consulting firm Eurasia Group. rice field.
“This reflects the degree to which German stars have fallen in Europe,” he added.
The outright criticism of Germany speaks to Berlin’s wobble on the European stage. Berlin continues to transition from the days of Angela Merkel, its leader for 15 years and one of the most important politicians in the bloc’s recent history, to a new coalition that leads Germany. there is by Mr. Scholz.
Germany appears to be losing its traditional close control of the EU’s executive branch, the European Commission, which drives policymaking and has long been accused of being Berlin’s long-term arm in Brussels. .
The commission is headed by Von der Leyen, a protégé of Merkel among German conservatives, political opponents of Social Democrat Scholz.
Shortly after Scholz announced the €200 billion package, two senior European Commissioners, Thierry Breton of France and Paolo Gentiloni of Italy, said: I posted an article In several European newspapers criticizing the plan. They said it could distort the internal market, a core function of the European Union, and its ability to trade freely and fairly within the region.
“Germany’s massive aid plan of €200 billion (equivalent to 5% of GDP) meets our perceived and emphasized need to support the economy. How can EU countries that do not have the same fiscal space support businesses and households?” asked an EU official in the article.
Ms von der Leyen on Friday reiterated her fears that subsidies could distort the single market, calling it “our single greatest asset in times of crisis”.
“So we have to save it and that’s of the utmost importance,” she added.
European Commission expert von der Leyen, who is in charge of developing joint policies, proposed several EU-wide measures to bring down the prices of gas and electricity, suggesting that EU countries could then It said it would provide a way to collectively purchase gas. Spring, it will undermine Germany’s current advantages.
“One thing is very clear: the most important thing is not to outbid each other by co-procuring gas, but the most important thing is to have collective bargaining power,” she said.
Before the next meeting in two weeks, leaders should explore these options and find some compromises.
And no matter how great the criticism against Germany is, it will be difficult to get anything done in the EU without Berlin.
“The view of most of the EU and the Commission is that this is a textbook example of an external shock that requires a collective response to deal with its consequences,” Rahman said.
“But that’s not the German approach or mindset,” he said. “If Germany doesn’t, we can’t get an agreement at European level.”
Erica Solomon Contributed to reporting from Berlin, Monica Pronchuk from Brussels.