The German principle of solidarity: the strong takes more

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Europe is still struggling with the effects of the pandemic, but experts are under no illusion that it was only with decisive aid and the massive Next Generation EU recovery plan, the employment support fund “SURE” and joint vaccine management that it was possible to avert a deep recession. However, the energy crisis and growing social anger amid record-high inflation and astronomical gas and electricity prices have led the EU to another crossroads. This is another opportunity to reaffirm – through decisive action – the principle of solidarity. The European Union responded to Russia’s aggression against Ukraine in the form of successive packages of sanctions. Already at this stage it was evident that Europe did not speak with one voice, and some countries – in the name of their particular interests – were ready to maintain economic relations with the aggressor, regardless of the enormity of the evil caused by the war. Faced with Moscow’s use of energy as a weapon of war, Europe has managed to separate itself from Russia by diversifying its sources of supply and increasing its strategic reserves in record time. Now is the time to tackle the energy costs that are having a huge impact on households and businesses across Europe. Will the Union be able to stay united? Will the richer countries of the Community act according to the aforementioned principle of solidarity? When supporting EU entrepreneurs, a concerted effort should continue to help them remain competitive and stay employed, paying particular attention to maintaining a level playing field in the internal market. In this context, the huge € 200 billion aid plan decided by Germany (worth 5% of Germany’s GDP) responds to the need to support its economy. But it also raises questions. How can EU countries that do not have the same fiscal space also support businesses and households? Europe was in turmoil after the announcement of the German recovery plan. The outgoing Italian Prime Minister Mario Draghi called for solidarity among the twenty-seven, and not only for national solutions that depend on the individual fiscal capacity of the member states. Luxembourg Minister Claude Turmes also expressed his criticism and directly asked the European Commission not to allow this “crazy race” in which member states compete with each other to subsidize energy expenditure. Meanwhile, Germany, as usual, has nothing to reproach itself for, saying that criticism from some EU countries is unacceptable, especially since other governments have been taking similar steps for a long time. The German minister of economy and climate (Robert Habeck) gave as an example France with its system of limiting electricity prices on the retail market, and even Spain and Portugal, which with their Iberian mechanism introduced a gas price cap at wholesale electricity market auctions. In turn, Finance Minister Christian Lindner stated that the planned aid is proportionate, given the size and sensitivity of the German economy. However, economists have no illusions that such a large support granted to German companies will disturb the current functioning of the internal market. The cash injection provided by the government of Olaf Scholz means a huge advantage of German companies over enterprises from those EU countries that cannot afford such aid. No wonder then that Italy, Poland and Spain are pointing out hypocrisy to Germany, pointing out that they have led to energy dependence on Russian resources, and ultimately to galloping inflation and soaring energy prices. Many journalists point out that Germany is no longer hiding its particularism. What is worse – the instrumental treatment of the EU by German politicians takes place with the consent of Brussels. One should recall here the famous mechanism of sharing gas with Germany, which – in the name of European solidarity – was called by leading German politicians in Brussels, such as, for example, Manfred Weber. What is also surprising is the passivity of the EU Competition Commissioner Margrethe Vestager, who has been mouth watering about the German aid package. Solidarity ends where other members of the Union demand support. For example, Germany is against the maximum price of gas in the European Union, for which a group of 15 countries, including Poland, France, Italy and Spain, is postulating. According to Berlin representatives, the introduction of price limits in the EU may discourage gas sellers who, driven by the desire for profit, will send raw materials to regions where they will be able to sell them at market prices. Despite the announcement that the German aid package will be verified in terms of compliance with the common market rules, everything indicates that the EU will once again turn a blind eye to German abuses. The article The German principle of solidarity: strong takes more comes from the website of the Forum of the Polish Economy.

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