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Spain’s Sánchez warns Germany that €200B energy plan must not disturb EU single market

A CORUÑA, Spain — Spanish Prime Minister Pedro Sánchez warned German Chancellor Olaf Scholz that Berlin’s €200 billion gas price relief scheme must not lead to disturbances and unfair competition in the EU’s single market.

Speaking Wednesday at the closing press conference of Spanish-German government consultations in northern Spain, Sánchez drew a direct comparison between the new German aid scheme and the coronavirus pandemic. Back then, richer countries like Germany were able to dole out big sums to cushion the economic fallout of lockdowns while smaller countries could not afford such rescue measures, which led to distortions at the European level and ultimately the need to set up an EU-wide €750 billion coronavirus recovery fund.

“We have already had debates during the pandemic about the national responses, which need to be given,” Sánchez said in reference to Germany’s €200 billion scheme.

“But logically, we must also give a response at the European level. To defend something very important: the level playing field, the single market. That means that we don’t come out of this crisis as countries with bigger economic differences … That would lead to the fact that the functioning of the common internal market would not be so efficient,” Sánchez warned.

“I think that the German government also has these considerations in mind,” the Spanish leader said.

Scholz defended the measures that his government announced last week, which triggered a backlash from French and Italian EU commissioners.

“If I saw it correctly, [the German support measures] are in line with what others have been doing,” the chancellor said, naming Spain, France, the Netherlands and also the U.K. as examples.

“There is no one, almost no one, who doesn’t do this,” Scholz said. “Every program is different. Maybe it’s also important to see that what we’ve presented here is a program for the years 2022, 2023 and 2024, and if you put it in that way, it fits quite neatly into the whole set of all the decisions that have been made elsewhere in Europe as well.”

Beyond the question of the €200 billion scheme, Scholz and Sánchez sought to portray a close alliance in A Coruña, which was cemented by the signing of a Spanish-German action plan. Under the plan, Berlin and Madrid aim for closer cooperation on foreign policy and climate change, and to push for facilitating EU decision-making by shifting to qualified majority voting in areas like foreign policy.

Sánchez addressed Scholz as “my dear friend” and lauded how close cooperation between both governments had become recently, while Scholz even spoke a few sentences in Spanish to underline his commitment to close partnership with Madrid.

However, when it comes to another current hot potato at EU level — the question of whether the bloc should introduce a price limit on imports of gas, which is being fiercely debated ahead of an informal meeting of EU leaders in Prague this Friday — the two leaders split once again.

While Scholz vehemently opposes such a price cap, which he fears would lead to global gas shipments going to Asia instead of Europe, Sánchez said the EU should “explore the possibility of setting a limiting price on gas imports.”

“This must be well studied so as not to disincentivize the supply of gas to Europe,” the Spanish prime minister added.

Unsurprisingly, both leaders found common ground when asked about the MidCat gas and green hydrogen pipeline from the Iberian peninsula to Northern Europe, which Berlin and Madrid have been pushing for amid resistance from France.

Recently, Paris has been signaling that it might be willing to reconsider its position — a trend that Scholz appeared to confirm when he was asked whether the opposition by French President Emmanuel Macron could be overcome.

“We do not have the impression that this is excluded,” the chancellor said.

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