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Germany bails out Uniper, vowing ‘whatever it takes’ to avert energy crisis

Germany will bail out gas importer Uniper, Chancellor Olaf Scholz said Friday, promising to do “what is necessary and as long as it is necessary” to help keep the country afloat amid fears of a Russia-driven energy crisis.

Speaking to reporters in Berlin, Scholz — who interrupted his summer holidays in the Bavarian Alps for the announcement — said his government would acquire 30 percent of Uniper, Germany’s biggest gas importer, as well as provide €7.7 billion in government support and expand a credit line from the state-run KfW investment bank from €2 billion to €9 billion.

The chancellor also announced “further relief” measures “on a permanent basis” to shield citizens from increasing energy prices caused by Russia’s war on Ukraine. The move contravenes signals earlier this week from the government’s finance minister, who insisted that strict fiscal planning left little wiggle room for further support packages for citizens.

“You never walk alone,” Scholz said in English, then continued in German: “We will do what is necessary, and as long as it is necessary, and we will be very stable as a country in facing the challenges on the energy markets amid the Russian war of aggression against Ukraine.”

The chancellor’s remarks were a clear reference to the famous “whatever it takes” slogan from Mario Draghi, the outgoing Italian prime minister, who made his pledge almost exactly 10 years ago as head of the European Central Bank, trying to reassure those concerned about Europe’s markets amid the financial crisis.

“I think Draghi’s words were very clever at the time, and they also contributed to the fact that many people understood that these are difficult times but that they can rely on those who have responsibility to do what is necessary,” Scholz said on Friday.

“And that is exactly how it is now,” he added, without providing further specifics on support measures for citizens, only indicating that those receiving unemployment support would get additional payments.

Backtracking on debt reduction targets?

Asked whether his finance minister, Christian Lindner, was on board with the spending plans, Scholz said it had been “a joint decision of the government, on which I have full agreement with the minister of economy [Robert Habeck] and the minister of finance.”

Lindner’s fiscally conservative Free Democratic Party (FDP) had previously pledged to reapply Germany’s constitutionally enshrined “debt brake” as of next year — a promise that seems increasingly far-fetched. However, officials in Berlin insisted on Friday that, at least according to the current plans, Germany could still comply with its debt rules despite vows of further financial aid.

The chancellor left no doubt that Russia was to blame for the increased gas prices and the resulting energy crisis, stressing that “the arguments put forward” by Russian energy provider Gazprom for justifying critical reductions in gas supplies to the EU, such as issues with the maintenance of a turbine, “are not true.”

Last week, Scholz accused Russia of using gas deliveries as a “weapon.”

Gazprom on Thursday resumed only partial delivery of gas supplies to Germany following a 10-day-maintenance of the original Nord Stream pipeline, which prompted Habeck, the vice chancellor, to announce a series of measures aimed at boosting energy security while also accusing Russia of “using its power to blackmail Europe and Germany.”

Scholz stressed Friday that the Uniper bailout was necessary because the energy firm “is of paramount importance for the economic development of our country.”

Uniper, which used to receive most of its gas imports from Russia, had to compensate for the reduced deliveries from Moscow by making expensive last-minute purchases on the global market. The practice plunged the country into serious financial distress as German consumer protection laws banned it from passing on most of the increased energy costs to consumers.

However, Scholz said energy costs will rise in October as the government introduces a special levy to share the burden of higher gas prices more evenly between companies and consumers. Scholz indicated that a four-person household should expect annual energy price increases of €200 to €300.

Yet he did not rule out more pessimistic scenarios.

“We believe that we can get through” the coming winter, he said. “Nevertheless, we are always re-examining all the possibilities. You know that very hard worst-case scenario calculations have been commissioned. We are looking at them and if there is anything to conclude from them, we will also be looking at these conclusions.”

Scholz also urged other EU countries to demonstrate solidarity with one another when it comes to reducing gas consumption.

“Solidarity in Europe applies to all member states in an unconditional manner,” he said.

Source : Politico