European Union leaders will discuss Thursday how to shore up their countries’ industries, hit by soaring energy prices since the outbreak of the war in Ukraine and now facing the threat of US competition fueled by grants.
The poorest EU countries want a coordinated response to the US Inflation Reduction Act (IRA)—$430 billion in tax breaks for green energy—because they lack the deep pockets of richer member states, like Germany, to shore up their industries.
The tug of war between the 27 leaders in Brussels will not be conclusive, according to diplomats.
Still, it will mean the EU ends 2022 struggling to hold together after a year of closing ranks to support Ukraine after it was invaded by Russia in February and pressing Moscow with far-reaching and unprecedented economic sanctions. .
The president of the European Commission, Ursula von der Leyen, proposed before the summit to relax the rules on state aid for renewable energy and clean technologies to protect European industry.
“There is a risk that the Inflation Reduction Act (IRA) will create unfair competition,” she said in a speech. “We have to give our answer, our European IRA.”
However, the EU is divided between traditionally “dirigista” countries, who want a joint “sovereignty fund” to be created to ensure a level playing field across the bloc, and wealthier states, who align themselves with the principles of the free market.
“Some states have deep pockets and ample scope to support their industry through national schemes, others don’t,” said a senior EU diplomat. “We don’t want a national grants race between member states… but there have to be carefully worded limits.”
Although this dilemma is likely to be put on the shelf for another summit in February or March, the leaders could agree on a ninth package of EU sanctions against Moscow on Thursday.
Disagreement over whether or not to offer exemptions to the EU ban on exporting fertilizer to Russia has put the deal on hold.
Some say these restrictions pose a threat to food security in developing countries, while others argue that loosening them would only open loopholes for Russian oligarchs who own fertilizer companies to circumvent EU sanctions against them.
According to the authorities, the leaders are not expected to hold in-depth talks on the EU’s attempts to agree on a natural gas price cap, but will leave the negotiations in the hands of energy ministers, who will meet on Monday for the third time. time.
Since Russia cut off gas supplies to Europe, bills have skyrocketed, affecting European citizens and forcing some companies to close.
According to a draft of the summit conclusions, the leaders will urgently call for more gas deals to replace Russian fuel, including through the joint purchase of gas between EU countries.
The summit will be overshadowed by the corruption scandal that arose last week in the European Parliament.
Belgian prosecutors accused Eva Kaili, a Greek MEP, and three others of taking bribes from World Cup host Qatar to influence EU policies.
Qatar and Kaili have denied any wrongdoing.