SHARE
COPY LINK

POLITICS

EU ministers urge unity after Germany’s energy ‘bazooka’

EU finance ministers on Monday pleaded for unity after Germany announced a €200 billion plan to help German households and businesses pay for high energy prices, amid accusations that the EU's biggest economy was acting alone.

The European and German flags wave in the wind in front of the Reichstag in Berlin.
The European and German flags wave in the wind in front of the Reichstag in Berlin. Photo: picture alliance / dpa | Kay Nietfeld

Europe is struggling with historically high energy prices as it faces an early autumn cold snap and a coming winter almost certainly to be endured without crucial Russian gas supplies because of the war in Ukraine.

Many EU countries have announced national programmes to shield consumers from the high prices. But Germany went the furthest on Friday when it announced its mammoth plan, which will see help pouring to Germans for two years.

Arriving to talk with his eurozone counterparts, German Finance Minister Christian Lindner insisted the spending was “proportionate” to the size of Germany’s economy and said his goal was to use as little of the money as possible.

READ ALSO: Germany to spend €200 billion to cap soaring energy costs

But Germany’s largesse rankled several EU capitals, some of which feared their industries could take severe blows while Germany’s sits protected, deforming the EU’s single market.

Outgoing Italian prime minister Mario Draghi has slammed Berlin for its lack of solidarity and coordination with EU partners.

French Finance Minister Bruno Le Maire, without directly criticizing Berlin, called on partners to agree a common strategy against the price shock and for countries to refrain from going it alone.

“The more this strategy is coordinated, united, the better it is for all of us,” he said.

Risk to ‘European unity’

Others pointed to the unprecedented solidarity shown in the Covid-19 crisis in which the 27 EU nations, against all expectations, approved a jointly financed €750 billion recovery plan.

“Solidarity is not only on the German shoulders, I think this is something that we have to deliver at European level,” said EU economics affairs commissioner Paolo Gentiloni.

“We have very good examples from the previous crisis on how solidarity can react to a crisis and also reassure financial markets. I think that this is our goal,” he said.

While a Covid-style recovery plan is not in the cards for now, Le Maire said €200 billion in loans and €20 billion in aid should be devoted to REPowerEU, a programme to help countries break their dependence on Russian gas.

READ ALSO: Will Germany set a gas price cap – and how would it work?

Bruegel, a highly influential think tank in Brussels, called the German plan a spending “bazooka” that many EU countries were unable to match, creating a potential source of animosity.

“If the German gas price brake gives German business a much better chance to survive the crisis than, say, Italian business, economic divergences in the EU could be deepened, and European unity on Russia undermined,” it said in a blog.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

POLITICS

Germany’s homegrown cannabis industry awaits legalisation

In the east German countryside, close to Dresden, a former abattoir is now home to the biggest indoor cannabis farm in Europe.

Germany's homegrown cannabis industry awaits legalisation

Behind the recently renovated concrete walls, the German startup Demecan has been growing marijuana in accordance with the law for the past year.

The company is one of only a handful in Germany to have a license for the production of this “green gold”, which has been legal in Germany for medicinal use since 2017.

But the budding industry is eyeing a bigger prize: Chancellor Olaf Scholz’s government plans to legalise the drug for recreational use as soon as 2024, which would leave it with one of the most liberal cannabis policies in Europe.

READ ALSO: Germany agrees on plan to ‘legalise recreational cannabis’

‘Tenfold’

Inside the building, the smell of the plants — lined up in their hundreds under yellow grow lamps — is overwhelming.

“We will have the option to expand the facility to cultivate recreational cannabis,” Demecan’s managing director Philipp Goebel tells AFP.

The government coalition, led by Scholz’s Social Democrats, has put forward a roadmap for the legalisation of cannabis with a target date of 2024.

Under the draft plans, adults would be allowed to hold a maximum of between “20 and 30 grams” of cannabis for private consumption, via a network of licensed stores and pharmacies.

Demecan’s massive complex, which covers around 120,000 square metres, produces one tonne of cannabis a year, but it has yet to reach capacity.

The company could quickly increase production “tenfold” to meet growing demand, Goebel says.

Harvests at the farm happen every two weeks with workers plucking the flowers from the plant stems before they are dried.

“I like this job a lot, it is not like any other,” says 34-year-old Sven

Skoeries, who studies horticulture alongside his responsibilities at the farm.

Demecan has no trouble recruiting for its growing business, in a region otherwise marked by its ageing population and lack of workers.

“It’s a trendy product that generates a lot of interest,” Goebel says.

“It’s a new industry, that’s interesting for me,” says Jana Kleinschmidt, 25, as she snips off leaves with a pair of scissors.

As well as its own production efforts, Demecan has a license for the import of another 20 tonnes of cannabis into the country from Canada annually.

“We are currently supplying 55 percent of the German market,” says Goebel, who notes his firm is in “pole position” to capitalise on legalisation.

The Domecan campus, pictured in March 2022. picture alliance/dpa/dpa-Zentralbild | Sebastian Kahnert

Snoop Dogg

The recreational cannabis market in Germany is a potential four-billion-euro business, according to a recent study by the Heinrich Heine University in Düsseldorf.

In recent months, fundraising in the sector has taken off as businesses await the green light from legislators.

Berlin startup Cantourage, a manufacturer of cannabis-based medicines, floated 15 percent of its shares on the Frankfurt stock exchange in November.

Cansativa, the only online platform for the sale of therapeutic cannabis products in Germany, raised $15 million in February with the help of US rapper Snoop Dogg.

Sanity Group, a German company that focuses on cannabis-derived products, likewise raised $37.6 million in September.

Legalisation looks like a good deal for the government, too. The same study from Heinrich Heine University estimated the move would boost the public finances by €4.7 billion per year.

But the idea remains controversial.

READ ALSO: KEY POINTS: Germany sets out plans for cannabis legalisation

At the end of October, Klaus Reinhardt, the head of the German Medical Association, called the plans “almost cynical”.

It was “shocking” to legalise a substance that could “lead to behavioural problems in adolescents, as well as addiction and psychological changes”, he said. The conservative opposition to the government has also set itself against the move.

The Bavarian state Health Minister Klaus Holetschek, who is part of the conservative Christian Social Union party, called the idea “a dangerous signal for all of Europe”.

First, however, the government’s plans need to be approved by the European Commission — or they risk going up in smoke.

SHOW COMMENTS