(Reuters) - European Union leaders on Friday agreed to give more financial and military aid to Ukraine, but a full day of talks in Prague’s ornate royal castle seemed to bring them no closer to deciding on whether or how to cap gas prices.

Most of the EU’s 27 countries want a cap on gas prices, but disagree on the details, with options including a cap on all gas, a “dynamic corridor”, a price ceiling on gas used for power generation specifically or on Russian gas only.

The EU has been discussing the matter for weeks, so far without result, although the 27 have agreed other joint steps to help them weather an acute energy crunch as runaway prices threaten to bring about a recession in the bloc.

“Everyone agrees we need to lower power prices but there is no agreement what instruments to use to that end exactly,” Poland’s Prime Minister Mateusz Morawiecki said.

Italy’s Mario Draghi said the bloc’s executive European Commission would present for the next meeting of EU leaders on Oct. 20-21 a broader package of short-term measures to lower prices and longer-term steps to redesign the electricity market.

The cap is one of a range of proposals and initiatives by European states to cope with plummeting gas supplies from Russia, which once supplied 40% of Europe’s needs, and rocketing prices . They have eased off this year’s peaks but remain more than 200% higher than at the start of September 2021.

Germany and Denmark oppose a cap, worried that it would make it difficult to buy the gas their economies need and dampen any incentive to reduce consumption.

‘THIS IS NOT FAIR’
Warsaw also lashed out at Berlin over its plan to spend up to 200 billion euros ($196 billion) in subsidies to shield German consumers and businesses from soaring energy costs.

“The richest country, the most powerful EU country is trying to use this crisis to gain a competitive advantage for their businesses on the single market. This is not fair, this is not how the single market should work,” Morawiecki said.

German Chancellor Olaf Scholz said the gathering cleared “misunderstandings” about Berlin’s package, which he defended as the right thing to do, adding that France, the Netherlands and others had their own support measures in place as well.

French President Emmanuel Macron, however, said the package had created “tensions” among countries who can’t finance such a big national package, and added that a solution would be to let member states tap a European fund that has provided loans for furloughs during the COVID-19 pandemic.

The head of the European Commission, Ursula von der Leyen, underlined the need for joint gas procurement.

“At the end of the winter, when our storages will be depleted, it is of paramount importance that we have a joint procurement of gas so that we avoid to outbid each other ..., that we have a collective bargaining power,” she said.

A GENERATION TO REBUILD UKRAINE
While squabbling over ways out of the energy crisis, the bloc showed unity in vowing continued support for Ukraine.

“We are determined to mobilise all possible tools and means to support Ukraine with financial means, with military support, with humanitarian support and of course with political support,” said the summit’s chairman, Charles Michel.

The bloc would back Ukraine for “as long as it takes”, von der Leyen said after Ukrainian President Volodymyr Zelenskiy addressed the EU leaders through a video link.

“Russia brought war to our land ... And only thanks to the fact that the Ukrainian people stopped this invasion by Russia, Russia cannot yet bring the same war to other parts of Europe, in particular, the Baltic countries, Poland, and Moldova,” Zelenskiy said, according to a transcript on his website.

He called for more air defence systems to protect Ukrainian energy infrastructure from Russian strikes, for international pressure to remove Russian troops from the Zaporizhzhia nuclear power plant in occupied Ukraine, and for funds to rebuild Ukraine.

The bloc’s top diplomat, Josep Borrell, said he wanted the bloc to earmark more money for military support for Ukraine, including for training, and that specific proposals on that would be discussed later this month.

Scholz pledged an important German contribution to the European training mission but, ahead of a reconstruction conference in Berlin on Oct. 25, also warned that rebuilding Ukraine would take a generation.

Source: Reuters

--Agencies