It is 2,360 kilometers from Madrid to Meseberg. But for Pedro Sánchez it is still natural to accept Olaf Scholz’s invitation to the Brandenburg baroque palace. For the chancellor, the Spanish prime minister is a welcome key witness that something can work that could solve some of his problems.
“Citizens must have the impression that the burden is being shared fairly. That’s why we passed this tax,” says the tanned Sánchez in the castle garden, Scholz next to him should agree inwardly. The two-day cabinet retreat in Meseberg forms the framework for a package that will help decide how well Germany gets through this economic war with Russia – and whether the traffic light coalition gets the curve after weeks of teasing.
Sánchez used a set of instruments for the relief that the FDP has so far rejected in the traffic light: Large electricity, gas and oil companies in Spain will have to pay additional taxes in 2022 and 2023 on their high profits from the war-related sharp rise in commodity prices. Banks are also asked to pay more – the goal is additional income of seven billion euros in two years. The social democrat from Spain is considered a key witness in the SPD that this way can work and will be popular with the people.
With the billions in rain, local and regional transport should be free for commuters by the end of the year, and around one million students should also receive an additional 100 euros a month as a state scholarship so that nobody has to drop out of their studies because of the high energy costs. Likewise, the gas price in Spain and Portugal is capped at 40 euros per megawatt hour in order to significantly relieve consumers and companies, in Germany and other EU countries the price has recently skyrocketed to over 300 euros.
Sánchez is there for two hours, and the agenda also includes a new national security strategy, which Spain has also implemented. It is no longer just about military issues, but about how to learn from the mistakes in Russia’s policy and how foreign companies can be prevented from having too much influence on power grids and energy supplies.
In these times, security should be a case for practically all departments, just like climate protection. As a project, Scholz is also focusing on the rapid construction of a gas pipeline from Spain via France in order to better supply Western Europe, later this will also be used for hydrogen transport.
But marginally, the topic of relief dominates in Meseberg. For Scholz and his coalition partners from the SPD, Greens and FDP, the central question is: Where should the money come from to fulfill the chancellor’s promise of “You’ll never walk alone”. Christian Lindner rules out suspending the debt brake again.
In the SPD they emphasize that Lindner will have to move, so they listened with interest to a statement by the FDP chairman and federal finance minister, which could indicate movement in the direction Sánchez had taken. “The federal government must address electricity prices with the utmost urgency,” he tweeted. “We have to decouple the profit autopilot on the electricity market – profits must not increase at the expense of consumers.”
The SPD parliamentary group is demanding an electricity and gas price brake from the traffic light coalition, albeit differently in Spain. A certain consumption should be capped per household. “It must be made clear that consumption beyond the limited basic needs can be subject to a high price increase,” the paper says. So the saving of energy should also be stimulated. A hardship fund could serve to protect households that have no way of reducing their consumption to a basic requirement.
As an alternative, CDU leader Friedrich Merz has brought an energy price flat rate of 1000 euros into play for lower and middle incomes. One thing is certain, billions more are at stake, and so far there has hardly been any talk of aid for industry, which will hardly be able to pay the energy prices.
The SPD says that a tax on additional profits, for example in the electricity sector, is much better for the FDP to sell to its own voters because this affects the sense of justice of many citizens. Scholz dodges a question about it, but emphasizes, like Sánchez, that a relief package should also take account of the question of justice. Sánchez emphasizes that in Spain there is great approval for the measures, which are also a redistribution in favor of the working middle class.
The price of electricity has recently shot up to a record high of over 1000 euros per megawatt hour on the Leipzig energy exchange, because due to low water levels, despite the lack of gas, 15 percent of the electricity still comes from gas-fired power plants – many hydroelectric power plants are not running and dozens of nuclear power plants in France are at a standstill, Germany is helping with power off.
Since the electricity price for all producers is based on the price for the most expensive power plants – these are currently gas power plants – the operators of coal-fired power plants, solar and wind energy plants also collect enormous additional income – although they have no increased costs at all.
According to a “Spiegel” report, Minister Robert Habeck’s Federal Ministry of Economics is therefore working on an excess profit tax on electricity generated from lignite and renewable energies. The state could set a fixed consumer price for electricity from these sources. The sum that the producers also earn from sales on the electricity markets, they would have to cede to the state.
Chancellor Scholz emphasizes in Meseberg that work is being done intensively and, above all, confidentially on the planned third relief package, but he is still not looking at the cards. The aim is to get a “relief package that is as tailor-made as possible, as efficient as possible, as targeted as possible” on the way. It should mean that no one is left alone with their problems.
It is expected that the key points could be available at the weekend or at the beginning of the week so that Scholz can present them in time for the general debate on the Chancellor’s budget for 2023 next Wednesday in the Bundestag. After the days of chaos, he tried to calm things down with the technical errors in the gas levy and SPD attacks on the survey king Habeck.
The gas storage tanks have now been filled to almost 85 percent, which significantly improves the security of supply for the winter. For him, it’s about “that we as the federal government work together closely and closely,” says the Chancellor. The retreat is characterized by the “willingness to work closely together in a serious situation for the good of the country.”