Kohl and Chirac bid to end deadlock over EU electricity

Date: 30/05/1996

By Thomas Klau

EFFORTS to bridge the gap between Paris and Bonn over the planned liberalisation of the EU's electricity market are set to be pursued at the top political level when French President Jacques Chirac and German Chancellor Helmut Kohl meet in Dijon next week.

But despite the two leaders' stated intention to bring the controversy over the Union's electricity market directive nearer to a conclusion, sources close to the negotiations say they do not expect differences to be ironed out at their mini-summit on 5 June.

Instead, they say, a solution is more likely to be found at the European level, if at all, with France or Germany being outvoted later in the month by a majority of EU member states agreeing to press ahead either with a large-scale or more modest liberalisation.

Kohl and Chirac, however, “have a gentleman's agreement not to outvote each other”, said one official.

At the last meeting of EU energy ministers earlier this month, the Italian presidency's hopes of a compromise foundered on Franco-German intransigence.

While Paris argues that far-reaching liberalisation would jeopardise 'universal service' and push up electricity prices for small consumers, Germany and the UK insist that roughly 40&percent; of the market, at least, be opened to competition after five years. Bonn and London are also demanding that distributors be included in the liberalisation drive, a proposition rejected by France.

“Our two positions are really very far apart,” said one source close to the talks. “It is almost a philosophical difference. I do not believe we can reach agreement on a bilateral basis.”

Bonn is worried that partial liberalisation would open the German market to foreign competition, while France was able to preserve the monopoly of its state-run electricity giant Electricité de France (EDF).

To defuse such fears, ministers agreed at their last meeting to include a reciprocity clause in the directive, even though the Commission has questioned the legality of such an instrument. They also drafted an agreed form of wording for a clause on public service obligations.

Sources suggest that the chances of a compromise would decrease dramatically if the controversy were allowed to drag on into the Irish EU presidency later this year.

In a renewed attempt to thrash out a deal, energy ministers are expected to meet on 20 June, one day ahead of the EU summit meeting in Florence.

Energy Commissioner Christos Papoutsis has hinted that the Commission might use its Article 90 powers, which allows it to break up monopolies without the agreement of national governments, should member states remain deadlocked.