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Germany takes heat as E.U. leaders meet to discuss energy crisis

German Chancellor Olaf Scholz, Dutch Prime Minister Mark Rutte and French President Emmanuel Macron arrive at Prague Castle on Friday for a meeting to discuss the energy crisis. (Leonhard Foeger/Reuters)

BRUSSELS — The mood in European diplomatic circles this week could be summed up in two words: “Really, Germany?”

After years of listening to German government lectures on austerity, and a summer when some turned down their air conditioning in part to help correct a Germany-driven reliance on Russian natural gas, European Union leaders, officials and diplomats were flummoxed over Germany’s $200 billion plan to protect its residents and companies from high energy prices.

Diplomats accuse Germany of taking a go-it-alone approach and worry that Berlin’s debt-financed spending spree will worsen inflation, exacerbate the rich-poor divide in Europe and unfairly advantage German companies in a way that clashes with the spirit of the E.U.’s common market.

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Germany has defended its measures as fair and proportionate — while also opposing proposals for E.U.-wide price caps or joint borrowing. If any country is to blame, German politicians have suggested, it’s France, whose failing nuclear power plants have added pressure to the European energy grid.

The division was on display Friday at an informal summit in Prague, where E.U. leaders were focused on the energy crisis.

Poland’s prime minister accused Germany of “destroying” the E.U.'s internal market. “The richest country, the most powerful E.U. country, is trying to use this crisis to gain a competitive advantage for their businesses on the single market,” Prime Minister Mateusz Morawiecki said.

Representatives of the 27 member nations spent the day trying to find a way forward on gas prices — but did not reach an agreement. More than a dozen E.U. countries have called for a broad cap on the price of natural gas, but the bloc continues to debate if and how to move ahead with the idea.

European Commission President Ursula von der Leyen pushed for coordination between E.U. countries “so that we don’t outbid each other in the global market.” German Chancellor Olaf Scholz also mentioned the need to coordinate purchases with other countries, including South Korea and Japan, “because Europe is not an island.”

Last week’s German announcement appeared to catch the rest of Europe by surprise — and immediately raised eyebrows.

Outgoing Italian Prime Minister Mario Draghi — credited for holding the euro zone together in his previous job as head of the European Central Bank — took Germany to task, saying, “we can’t divide ourselves according to our fiscal room for maneuver.”

Similar criticism came from France and Spain, while Hungarian Prime Minister Viktor Orban in a news conference called it “the beginning of cannibalism in the E.U.”

Two powerful E.U. commissioners from France and Italy echoed those points in a joint opinion article published in Frankfurter Allgemeine Zeitung and other European newspapers on Monday. Thierry Breton, commissioner for the internal market, and Paolo Gentiloni, commissioner for economy, wrote that Germany’s plan posed “a lot of questions.” They called for financial solidarity within the E.U., suggesting that the bloc might turn to the same tool — joint borrowing — that it used in the pandemic.

Scholz has defended Germany’s subsidies and pushed back against both a bloc-wide price cap and additional joint debt.

Germany’s plan is a “very balanced, very clever, very decisive package that serves to keep prices down and tolerable for as long as these challenges exist,” he said at a Tuesday news conference.

He further argued that Germany’s move was in line with what other countries have been doing. “The measures we are taking are not unique but are also being taken elsewhere and rightly so,” he said, pointing to neighboring France.

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Paris has said it won’t allow natural gas and electricity prices for households to increase more than 15 percent in 2023. Those price caps, though, are expected to cost about $12 billion if special levies on energy companies are taken into account, far less than what Germany may spend, even when calculated per capita.

Meanwhile, less wealthy E.U. countries lack the same means to shield consumers.

On the question of joint borrowing, Scholz pointed to the E.U.’s pandemic recovery fund. “We have a huge program totaling 750 billion euros, most of which has not yet been used, but can be particularly effective right now,” he said.

He also argued that an E.U.-wide price cap would make it more likely that Europe loses out to China and others in the competition for liquefied natural gas.

Germany’s newspapers are firmly following the chancellor’s lead and reading them, there’s a sense that Europe’s energy predicament is France’s fault.

“Macron is taking our electricity — and we foot the bill,” mused conservative weekly Focus, summarizing a widespread sentiment.

About half of the French nuclear power plants are under maintenance, which has deprived France of its title of Europe’s largest energy exporter and required it to import electricity from Germany.

“But it seems to be more of a technical, managerial planning failure, as opposed to a political one,” like in Germany, said Elisabetta Cornago, a Brussels-based researcher at the Center for European Reform.

For many Germans, it’s an emotional issue. The country in 2011 decided to exit nuclear energy production and was supposed to disconnect its last reactor by the end of this year. But when German Economy Minister Robert Habeck — a key supporter of that nuclear exit — recently had to announce a delay, he blamed France. Two German nuclear power plants will likely need to run until next spring to compensate for the French production woes, he said.

Another source of German frustration with its neighbor has been French opposition to a natural gas pipeline project between Spain and France via the Pyrenees. The project had been dormant for years. But the Germans, Spanish and Portuguese now view the pipeline as a critical link between LNG terminals in southwestern Europe and central European customers such as Germany.

French officials have argued that existing pipelines between the two countries have enough capacity and a new pipeline would take too long to build. “I do not understand why we would jump around like Pyrenees goats on this topic,” Macron recently said.

As he met Thursday with European leaders in Prague, he took another barely veiled dig at Germany’s insistence to exit nuclear energy even as it struggles to find alternative energy sources.

Rather than another pipeline between Spain and France, he said, Europe needs a strategy for renewables — and for nuclear energy.

Portuguese Prime Minister António Costa and Prime Minister Pedro Sánchez of Spain will travel to Berlin and Paris next week for meetings with Scholz and Macron.

Noack reported from Paris, Brady from Berlin and Ríos from Prague. Meg Kelly contributed from Berlin.

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