PRAGUE—European leaders who have been compromising on their response to Russia’s war in Ukraine all year now face a growing rift over how to offset the rising damage of high energy prices to their domestic economies.
Italy and several other countries will square off against Germany at a summit in Prague on Friday, in a spat that mirrors clashes from past crises. Heavily indebted countries fear that their wealthier neighbors will gain an unfair edge by supporting their businesses and consumers.
At the center of the battle is frustration from governments who say their calls for a European Union-wide limit on gas prices have until recently been sidelined, even as wealthier countries like Germany and France have announced big spending plans at home to cushion businesses and consumers from soaring energy prices. Russia’s squeeze on gas supplies has sent prices soaring across the EU, causing factories to shut down and fueling expectations that the bloc is heading into a recession.
Last week, Germany announced an energy relief package valued at up to €200 billion, equivalent to around $196 billion, that includes price limits on gas and electricity, in a sign of the fiscal firepower Berlin can muster to shore up its economy. The plan sparked a backlash from some European leaders, in part because Berlin has resisted calls for a broader cap on wholesale gas prices and pushed back on calls for common borrowing.
“As we confront common threats, we cannot become divided according to the space in our national budgets,” departing Italian Prime Minister
said after Germany’s plan was released. He said EU member states should agree on a common response “to keep Europe united once again in the face of an emergency.”
Two EU commissioners,
wrote in an opinion column this week that Germany’s plan raised questions about how EU countries that don’t have the same resources can support their households and businesses. They said the EU should consider common borrowing that they said could follow the example of the bloc’s fiscal response to the Covid-19 pandemic.
The criticism appears to have rankled Berlin. German Chancellor
who met his French counterpart on Monday, took aim at Mr. Breton this week for the opinion column.
“Commissioner Breton certainly looks around, even where he comes from, and therefore knows that the measures we are taking aren’t singular, but are also being taken elsewhere, and with good reason, by the way,” Mr. Scholz said at a press conference in Berlin.
Others have come to Germany’s defense. Dutch Prime Minister
said he believes Germany’s plan is “perfectly legitimate.” Speaking ahead of a gathering of EU and other European leaders in Prague on Thursday, Mr. Rutte said Germany, “has absolutely the possibility and the sovereignty to take those decisions.”
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The European Commission, the bloc’s executive arm, is expected to try to find a compromise among member states on Friday for additional steps the EU can take to deal with the crisis. Leaders are set to discuss the possibility of an EU-wide cap on wholesale gas prices during the summit, among other measures meant to ease the burden.
Ursula von der Leyen
on Thursday said she was willing to propose a cap on gas prices after the commission previously appeared to resist such a move. She also suggested the commission could look at ways to boost EU funding for investments in energy infrastructure and efficiency.
Italy and three other countries on Thursday circulated a proposal for a so-called price corridor that they said could set limits on gas prices and fluctuate depending on global prices to ensure the bloc can keep attracting supplies. They added that steps could be taken to allow some gas to be bought at prices above the capped level if concerns emerged about possible supply shortages.
Write to Kim Mackrael at [email protected] and Laurence Norman at [email protected]
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