Probably the most politically sensitive question in the debate about the multi-billion dollar US subsidy program for green technologies is whether the EU should respond with a new debt fund.

The French government is promoting this to prevent companies from migrating to America.

Henrik Kafsack

Business correspondent in Brussels.

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Some in the EU Commission are also of the opinion that this is the only way the EU can prevent countries such as Germany and France from generously promoting their industry and financially weaker countries such as Italy and Spain being left behind.

Commission President Ursula von der Leyen has so far kept a low profile.

Instead, the President of the European Council, Charles Michel, tried in a one-off process to create facts.

He presented a draft for the conclusions of the EU summit on February 9th and 10th, with which the heads of state and government advocate new EU debt.

The FAZ has received the internal draft.

Equal access for everyone

All must have “equal access” to funding to enable an effective EU response, it says.

The Commission should "build on the success of the Sure program in particular".

The EU had launched this in the Corona crisis to secure the national short-time work programs.

She had taken on 100 billion euros in debt for this.

Later, the 800 billion euro Corona development fund was added.

In terms of content, the advance is not surprising.

Michel has recently shown himself open to new EU debt in several interviews.

As President of the European Council, however, his role is more that of an "honest broker".

The draft conclusions, which are sent to EU countries ahead of the summit, are designed to find compromises, not to advance the Council President's own political ideas.

In addition, the summit in February was never supposed to make any concrete decisions on new EU debt.

The EU leaders are only to have a first discussion on how the Europeans can react to the US "Inflation Reduction Act" (IRA) and the high energy prices, which are likely to remain high for a few more years, in order to maintain their competitiveness.

Decisions should only be made at the next summit in March.

The reaction of the states was correspondingly violent.

Diplomats spoke of a "bizarre approach".

At least Michel managed to unite the council: everyone hates the draft, said a diplomat.

The draft goes too far even for supporters of new EU debt, which also includes countries such as the Czech Republic and Slovakia.

They are likely to fear that the move will only lead to growing resistance to new EU debt.

Michel would have done better to be inspired by the facts rather than his personal opinion, said another diplomat.

It would have been better to have waited until the European Commission presented the announced communication outlining its response to the IRA in the middle of next week.

This announcement is likely to be based heavily on what von der Leyen drafted a few days ago in a speech at the World Economic Forum in Davos.

She wants to react to the US aid of 369 billion dollars with a four-stage plan.

These include the already announced further softening of the EU rules for state aid and also joint EU funds such as a European sovereignty fund.

But that's just one point.

Von der Leyen also wants to improve the regulatory environment, tackle the shortage of skilled workers and expand trade.

It is also about China, according to the commission

According to the Commission, Michel is concentrating too much on the question of financing.

The EU must first clarify how much money is actually necessary to secure a strong position in the global market for green technologies.

It also plays a role whether the EU can still get access to US aid.

So far, this has been limited to countries with which the US has a trade agreement.

The EU doesn't have that.

However, the Commission and the US government are negotiating an exemption.

Ultimately, however, it is not just about an answer to the IRA, but also about how the EU positions itself towards China, which is paying even more aid, according to the Commission.

The EU must also clarify which sectors it wants to promote.

In the long term, the new sovereignty fund should take over, in the short term there should be a bridging solution.

It is said that at the end of the process it will be decided whether EU debt is required for this or whether money, for example from the Corona Fund, can be reallocated.

However, there are also different opinions in the Commission on how the EU should proceed.

Industry Commissioner Thierry Breton, for example, has brought a fund of 350 billion euros into play, which is to be financed at least in part by EU debt.

That could be a sum in the tens of billions, they say.

Commission Vice-President Valdis Dombrovskis, on the other hand, emphasized in Brussels on Wednesday that the high energy prices and the IRA posed major challenges for the EU.

However, there is no lack of money, not least thanks to the Corona Fund.