EU leaders squabble over energy crunch response

© Reuters. FILE PHOTO: The European Union flags flutter ahead of the gas talks between the EU, Russia and Ukraine at the EU Commission headquarters in Brussels, Belgium September 19, 2019. REUTERS/Yves Herman

By Jason Hovet, Sabine Siebold and Robert Muller

PRAGUE (Reuters) -Divisions between European Union leaders over capping gas prices and national rescue packages resurfaced on Friday as they met at Prague Castle to discuss how best to deal with a winter energy crunch caused by Russia's war in Ukraine.

Fifteen EU states want a price cap on gas but do not agree on the details of how it should be done. Germany, Denmark and the Netherlands oppose any cap, worried that it would make it difficult to buy the gas they need to keep their economies running and dampen any incentive to reduce consumption.

Austrian Chancellor Karl Nehammer said any price cap must be devised and implemented in a way that supports power suppliers.

"The negotiations are ongoing. And they will be intense because... it is our goal to support... energy providers with it, so that the supply of gas does not decrease," he said.

Czech Prime Minister Petr Fiala specifically mentioned capping prices of gas used for electricity production, while Latvia's Krisjanis Karins said a cap would be "grand" if the bloc could still ensure supplies from producers.

The summit's chairman, European Council President Charles Michel, said no decisions were expected on Friday but hoped the discussion among leaders would lead to a deal when they next meet on Oct. 20-21.

"The energy crisis is a very important challenge we need to address," Michel said, adding he was hoping to advance talks on reducing demand, securing supplies and lowering prices. "I hope to take steps into the right direction."

POLAND FUMES

Polish Prime Minister Mateusz Morawiecki took Germany to task for what he sees as lavish spending of 200 billion euros ($196 billion) in subsidies to shield consumers and businesses from soaring energy costs.

"At the European Council there will be very intensive discussion on this topic," Morawiecki said late on Thursday. "So the Italians couldn't do that, the French couldn't do that, the Poles couldn't do that, but they can do it."

"If that is equal, fair and just treatment of the principle of the European Union's common market then I am very sorry but there is something I don't understand," he said.

Belgium's Alexander De Croo disagreed, however, saying big national support packages were necessary in the absence of any pan-EU action.

"We could not just leave people coping with the cold weather," he told reporters. "But the real solution is that we act together in the market and then those big (national) support packages won't be necessary anymore."

The leaders will also discuss in Prague providing more financial and military support to Ukraine.

The EU's top diplomat, Josep Borrell, said it was important for all European nations, including those outside the EU, to stand in solidarity with Ukraine against Russian hostility.

($1 = 1.0199 euros)