Orbán lashes out at German ‘bombshell’ energy package

Hungarian premier Viktor Orbán has warned that Germany’s planned €200bn energy support package amounted to “cannibalism”, threatening European Union unity at a time when member states were under severe economic stress because of Russia’s invasion of Ukraine.

Orbán on Monday echoed surprise and criticism from other EU member states complaining the uncoordinated borrowing package unveiled by Berlin on Thursday risked distorting fair competition within the bloc.

“It came as a bombshell when Germany announced it was in a position to help its own companies with hundreds of billions of euros,” Orbán said at a press conference, complaining that there was no EU solution to help European companies.

Berlin has come under fire since announcing a “protective shield” for businesses and consumers struggling with soaring energy costs, as policymakers elsewhere in Europe accused Germany of failing to properly co-ordinate its response to the crisis and of risking distortions to the single market.

Mario Draghi, the outgoing Italian prime minister, said last week that “faced with the common threats of our times, we cannot divide ourselves according to the space in our national budgets”.

Orbán’s outspoken attack will add to the tensions between Hungary and its partners over the response to the war in Ukraine. The prime minister has long criticised the EU’s sanctions policy, saying they hurt the EU more than they hurt Russia.

Hungary, meanwhile, announced it had received a special deal from Russia’s Gazprom, which agreed to defer its next six months’ payments for gas above a certain price level by three years. The deal saves Budapest about €1bn at current spot prices of about €173 per megawatt hour while the savings could balloon to €4.5bn with gas prices at €300/MWh, according to the government.

But Orbán was not alone in being wrongfooted by the scale of Germany’s intervention.

Our energy market is sick and these electricity and gas prices are like a fever. We have to first reduce the fever.

Speaking as he arrived at a meeting of finance ministers in Luxembourg on Monday, French finance minister Bruno Le Maire said member states were entitled to announce their own support measures to shelter their economies from surging prices — pointing out that Paris had done so itself. The total tab for France’s energy measures this year is about €24bn, according to the French finance ministry.

But he warned that the eurozone needed a better-co-ordinated strategy and that interventions had to be targeted in order to avoid skewing the single market. “It is essential that we preserve a level playing field between eurozone member states and EU countries more generally,” he told reporters.

In an opinion piece published in The Irish Times and other newspapers on Monday night, two European commissioners said the German borrowing package “raised questions” and that it was important to avoid fragmenting the single market by setting up a race for subsidies. Paolo Gentiloni, economics commissioner, and Thierry Breton, internal market commissioner, called for a “European budgetary response” to the energy crisis. 

Christian Lindner, the German finance minister, defended the package on Monday, saying it was proportionate given the size of the German economy and that the spending would be spread over two years. “It is a measure to protect the key structure of our economy,” he said.

For its part, the European Commission refused to say whether Berlin had notified it of the plan, which could breach state aid rules. A spokeswoman said only that Brussels was in dialogue with the German government.

She also referred to comments from Ursula von der Leyen, the commission president, on Saturday. “Without a common European solution we seriously risk fragmentation. So it’s paramount that we preserve a level-playing field for all in the EU in the single market,” von der Leyen said.

A majority of member states are pushing for a cap on the price of imported gas, which would reduce the level of domestic subsidies required, but Berlin and others are blocking the move. Their leaders will renew the pressure on Scholz on Friday at an informal EU summit in Prague.

Karel Hirman, the Slovak economy minister, who supports the gas price cap, told the FT that countries such as his could not match Germany’s help for consumers. “Our energy market is sick and these electricity and gas prices are like a fever. We have to first reduce the fever,” he said.