The end of the EU ban on State subsidy

Eamon Dyas

[Eamon Dyas comments on Lucinda Creighton’s article “Ireland is asleep at the wheel as the EU single market is being undone.” (Business Post, 17/12/22)] 

Lucinda Creighton refuses to acknowledge the biggest elephant in the room here – EU’s sanctions on Russia. The Green Agenda may have been the slow-burner on this and is being used as a convenient diversionary cause but it’s the West’s support of Ukraine that’s the main driver for the relaxation of the EU competition rules. Ultimately this is the reason why:

“Ireland, like the Nordic states and other small, innovative and open economies in Europe, is asleep at the wheel as the most important and beneficial principles of the European single market are being undone.”

It’s not that Ireland and these other countries are “asleep at the wheel”. It’s that the greatest moral crusade in modern history has been politically framed by the liberal leaderships of the EU in ways that has paralysed any capacity of these countries to respond in ways that might protect their national interests. 

But not so when it comes to German national interests. Germany has, with the authorisation of the EU Commission already in August been given permission for a 27.5 billion euro state subsidy scheme to

“compensate energy-intensive companies for higher electricity prices resulting from indirect emission costs under the EU Emission Trading System (“ETS”).” [see: ].

Then in September Germany nationalised its energy giant Uniper and in November Germany was permitted to pay out 225.6 million euros to buy SEFE (previously, Gazprom Germania) [see: ].

And then only last week the EU has endorsed a German 1.8 billion euro electric vehicle subsidising package [see: ].

It takes a very determined journalist, particularly one whose specialism is Economics, to refuse to see that the main context of the subject of her article is the Ukrainian conflict and instead leaves the cause of her complaint hanging out there with no visible means of support. 

The reason why Germany is being given enough rope when it comes to EU competition rules is precisely because it possesses an economy that relies on making “real things”. And it’s Germany’s capacity to make “real things” that has underpinned what made Europe possible over the last 30 years or so. And it’s the fact that in turn that ability of Germany to make “real things” relied on cheap Russian energy that makes Germany unique. Without Germany there would have been no Europe as we now know it and without Russia there would have been no Germany as we now know it. 

The EU’s decision to do the bidding of the Anglo-Saxons has essentially ensured that the conditions which made it possible to be what it has become no longer exists and insofar as it continues to exist it will have to destroy what it was. A core of that new existence will require an acknowledgement that the main economy at its centre which made “real things” can now only be sustained through a loosening of its competition rules – the subsidy that previously took the form of cheap Russian energy will now have to take the form of direct state aid. 

And so it had to be once the decision was made to join Washington’s war on Russia. The problem for economies that don’t predominantly make “real things” – those for instance that rely disproportionately on financial services and the like – is that the evolving new relaxation on the rules on state subsidies will not be as beneficial to their national economies.

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