Paolo Gentiloni didn’t mean it that way on Tuesday. His guest article, which he published in the FAZ together with the French EU Internal Market Commissioner Thierry Breton, was not to be understood as “criticism of individual countries”, said the Italian EU Economic Commissioner before the meeting of EU finance ministers in Luxembourg. The article said, among other things, that the German 200 billion euro program to ward off the energy crisis – “at least 5 percent of gross domestic product” – raises questions – especially what it means for member states that do not have the same budgetary leeway as Germany decreed.
So that shouldn’t be criticism of Germany. Gentiloni also did not want to directly repeat the demand made in the article to launch a new debt-financed EU program based on the model of the EU short-time work allowance Sure decided in the corona pandemic. But the EU must consider instruments “in the spirit of solidarity” “modelled on what we have newly developed in the pandemic”.
The guest post caused some excitement in Luxembourg. The Italian’s cautious diction after that was obviously due to the fact that the initiative by the two commissioners does not represent an official position of the EU Commission. Valdis Dombrovskis, the agency’s vice-president responsible for economic affairs, said in Luxembourg that the proposal “will still have to be discussed thoroughly”. Austrian Finance Minister Magnus Brunner added that it was probably the “individual opinion of two commissioners”.
Misunderstandings in Luxembourg clarified
Gentiloni also acknowledged in Luxembourg that the current economic situation is fundamentally different from that of the pandemic. “We have very high inflation, and the economic crisis is based on supply shortfalls, not on a slump in demand.” With this argument, Federal Finance Minister Christian Lindner (FDP) rejected calls for a new EU debt fund “at the present time”. The German program is also not an economic stimulus package, but a “defensive umbrella”.
On Tuesday, Lindner gave the impression that he had dispelled the criticism from the EU Commission, but also from a number of other member states, about the “double boom”. Lindner said he was able to clear up some “misunderstandings” at the Eurogroup meeting on Monday evening. It was apparently not clear to everyone that the program was designed for the period up to 2024 and as a “defense shield”. Ideally, the 200 billion euros would not be used in full.
Others spend more money per capita
The program is also “proportional” because other states have spent more money in relation to their population. In Berlin, for example, it is pointed out that the corresponding Dutch program comprises more than 50 billion euros. Around 18 million people live in the Netherlands and over 80 million in Germany. The minister added that the reform of the market design of electricity and gas markets and joint gas purchasing are more important than new EU programs.
The Eurogroup’s final declaration makes no mention of new EU debt. The provisional compromise formula is that the EU countries should be cautious with their spending because of the high inflation and that all measures to combat the energy crisis must be coordinated. The criticism of Berlin is also taken up in the statement to the extent that “distortions in the internal market” are to be avoided. This probably means that a new EU program may be off the table in the short term, but is likely to come back into discussion in the medium term.