Appeals for an urgent European Union intervention to cap gas prices in the energy market were met with staunch opposition from Germany and caution from others as leaders met in Brussels.
The cautious camp, which includes Ireland and the Netherlands, insists that more study is required to understand the consequences of imposing the various forms of gas caps that have been suggested by different member states, expressing fears of unintended consequences to market meddling.
“We need a full MRI scan before we can start operating on the body,” one diplomat put it.
In a video address to the 27 leaders at the start of the summit, Ukrainian president Volodymyr Zelenskiy said that Russia had destroyed a third of his country’s energy infrastructure, accusing Russian president Vladimir Putin of deliberately trying to cause a new migration wave and to “provoke social tension in European countries”.
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The energy crisis “is Russia’s calculated pressure on the family budget of every European family”, he told the leaders, according to a released copy of his speech, calling for them to provide air and anti-missile defence systems “to make it completely impossible for Russia to destroy our energy system”.
As leaders hunkered down for the late-night discussions, journalists complained of the cold in the European Council buildings, where heating and lighting has been limited as part of energy-saving measures being put in place across Europe.
German chancellor Olaf Scholz ruled out a gas cap, several diplomats said, and pushed for tweaks to draft conclusions to water down talk of two temporary forms of capping suggested by the European Commission this week.
But Italy’s Mario Draghi – attending his final summit as prime minister before a new government led by the hard-right Giorgia Meloni is expected to form – called for the wording to be strengthened, insisting that he would block consensus until the leaders committed to more ambitious action, diplomats said.
Those in favour of market intervention, like Rome and Athens, have expressed fears that if intervention is delayed it won’t come in time to help households pay for their energy bills this winter, warning of the risk of social unrest and even a public backlash against support for Ukraine unless action is taken.
“If no agreement comes out of this the message will be we can be united against Putin, we can be united in support of Zelenskiy, but we can’t be united for households and businesses who are struggling to pay their energy bills,” one official said. “People will ask ‘why can’t the EU be there for us’?”
The 27 have already agreed to divert revenues from energy companies back towards households and businesses to compensate for high energy bills. But as the cost-of-living crisis puts governments under intense political pressure, countries with less ability to borrow and spend are desperate for some EU-level intervention to prevent bills from being high in the first place.
A debate is beginning on whether to create a new EU financing programme, like those made to counteract the economic damage of the Covid-19 pandemic, to help governments offer more supports.
Fiscally conservative Finland warned it would oppose any such measure, while some officials suggested that rules could be tweaked to repurpose unused pots of money from previous programmes to address the energy crisis without new borrowing being necessary.
One back-of-the-envelope calculation circulated on the summit sidelines estimated that almost a trillion euro could be raided from the unspent money of other EU programmes if needed, if unused cohesion funding, money from the Covid-19 stimulus programme, and funds from the REPowerEU energy transition fund were redirected.
“Some countries are pushing for new budget lines,” the European Parliament president Roberta Metsola told press after leaving the meeting of leaders. “Other countries are saying let’s be creative, others are saying let’s move money, or being a little bit more flexible with deadlines. I think that none of this should be excluded.”
