HomeEuropeGermany keeps door open to using EU loans amid energy crisis

Germany keeps door open to using EU loans amid energy crisis

BERLIN — The German government stressed Tuesday that it is not willing to discuss fresh EU debt via loans “at present” — but it left open the door to potentially endorsing such a plan later.

Bloomberg reported Monday that German Chancellor Olaf Scholz “will support joint issuance of European Union debt” to tackle the fallout from the energy crisis, as long as the money is issued as loans and not grants.

Two officials also told POLITICO that in response to widespread criticism of Germany’s €200 billion gas price relief package, the chancellor had indicated that EU loans could be an option to support partner countries that might struggle to set up similar support measures for their economies. Such a solidarity mechanism could be based on the SURE program that the EU set up as a first response to the coronavirus crisis in 2020 and which is based on loans that are underpinned by a system of voluntary guarantees from EU countries.

Crucially, Germany’s fiscally conservative Finance Minister Christian Lindner does not rule out such a plan — although he said he does not believe this is the right moment for it.

Asked about the idea, a spokesperson for Lindner referred to an interview with Spiegel at the weekend, in which the finance minister rejected the issuance of fresh EU debt via grants — as happened under the EU’s €750 billion fund to recover from the pandemic— but signaled openness to potentially discussing a loans-based solution similar to SURE.

“The SURE program … consists of loans that were only jointly backed by guarantees from the member states. That is something different,” Lindner said.

However, he stressed that “at present, I see no reason for this discussion.” The spokesperson said these comments reflected Lindner’s position as of Tuesday.

A spokesperson for the chancellery did not respond to questions about Scholz considering the issuing of new EU loans similar to SURE, a solution that was pitched by EU Commissioners Paolo Gentiloni and Thierry Breton last week.

The government spokesperson instead listed other financial tools that are already being mobilized at the European level, notably the €750 billion recovery fund.

“Only around one-fifth of the funds [from the recovery fund] have been disbursed to date,” the spokesperson said. “Therefore, a large part of the funds is still available to support investments and reforms in the member states and can thus contribute to crisis management and ecological transition in the energy sector.”

Moreover, the spokesperson referred to the REPowerEU program that was agreed last week by EU finance ministers.

“This is a package with which we are mobilizing funds of well over €200 billion, to a considerable extent from previously unused credits, reinforced for example by substantial grants. To this end, we now also need to quickly reach an understanding with the European Parliament so that these funds can be used in a timely manner.”



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