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Scholz says energy support plan is 'justified'

October 4, 2022

German Chancellor Olaf Scholz has defended a costly package to protect homes and firms from soaring energy costs. The EU says it is talking to Germany about the policy, which critics say will distort competition.

Workers in a steel factory
Berlin is being accused of handing German industry an unfair advantage with the packageImage: Rupert Oberhäuser/picture alliance

The German chancellor on Tuesday said a €200 billion ($198 billion) energy support package was justified and that similar steps were being taken elsewhere.

The "defensive shield" includes a gas price brake and a cut in fuel sales tax. It is aimed at protecting businesses and households from the impact of rising energy prices.

"The measures we are taking are not unique but are also being taken elsewhere and rightly so," Chancellor Olaf Scholz told a press conference in Berlin during the visit of his Dutch colleague Mark Rutte.

"Some have long been in the process, with major supports and measures, of doing exactly what we have set out to do this year and the next two years," Scholz said.

Overall, it's a "very balanced, a very smart, a very decisive package that serves to keep prices down and bearable for as long as these challenges exist," Scholz added.

German Finance Minister Christian Lindner, from the neoliberal Free Democrats, also sought to reassure his EU counterparts at talks in Luxembourg on Tuesday.

"There had been a misunderstanding. ... Our package ... is proportionate if you compare the size and the vulnerability of the German economy," Lindner said.

'Supporting those who need it most'

Later on Tuesday, Scholz met with Germany's state premiers. At a press conference following the talks, the chancellor again defended the government's decision, saying it was their job to "protect jobs" and "support those who need it most."

Scholz said that the most recent rescue package would have "dramatic effects" on the people and businesses watching their financial situation suffer.

He acknowledged that the federal and state governments "were not exactly on the same page," as struggles continued over who would pay for what. However, he said "I am certain we will come to an agreement."

Why is the package controversial?

Opponents of the package say it will distort competition inside the single market by giving an advantage to German businesses.

The European Union's internal market commissioner, Thierry Breton ,and economy commissioner, Paolo Gentiloni, from France and Italy, respectively, say the German plan "raised questions" on fairness. They called for an EU-wide measure to be used to help countries.

The European Commission, which supervises antitrust policy across the EU, said on Monday that it was talking to Berlin about the package.

"We are fully committed to preserving a level playing field and a single market, and avoiding harmful subsidy races," a spokesperson for the commission told a news conference.

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rc/rt (AFP, dpa)