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Spain and Germany strengthen alliance and pressure France to build gas pipeline

By Andreas Rinke and Belén Carreño

LA CORUNA (Reuters) -At a time of a shifting balance of power within Europe, Spain and Germany's leaders vowed on Wednesday to strengthen their alliance and doubled down on their plan to build a new Pyrenean gas pipeline despite opposition from mutual neighbor France.

German Chancellor Olaf Scholz and Spanish Prime Minister Pedro Sanchez held their countries' first inter-government consultations in nine years, in the northern Spanish city of La Coruna, resulting in a joint action plan emphasizing closer cooperation, particularly on energy and security matters.

In a joint news conference, the two Social Democrat leaders, who respectively run the European Union's first and fourth largest economies, played down their differences on how to approach Europe's energy crisis in the wake of Russia's invasion of Ukraine.

The summit came as the European Union's traditional French-German axis appears to be faltering somewhat and Italy has elected its most right-wing government since World War Two.

"Our relations are exceptionally close and consistent," Scholz said in a joint news conference with Sanchez in La Coruna, where he traveled with a large delegation including his economy, foreign and finance ministers.

"In European matters, when Spain and Germany go hand in hand, there is a big potential to unblock agreements and advance in integration," said Sanchez.

The action plan, published earlier on Wednesday, said the countries would "continue to lobby for a higher interconnection capacity of the Iberian Peninsula in order to enhance its contribution to the security of supply to the whole of EU".

"The construction of a sufficiently big hydrogen-ready gas pipeline across the Pyrenees to be operative by 2025 is of paramount importance in order to achieve a truly robust internal energy market within the EU, accelerate the green transition and reinforce EU's strategic autonomy."

In the news conference later, Scholz said he did not have the impression France had ruled out the pipeline.

"Some connections are maybe not economic every day, but they can become it," he said, referring to French scepticism.

'LEVEL PLAYING FIELD'

Spain and Germany also agreed to strengthen cooperation on defence although the two leaders said they did not discuss the issue of a German-led European missile defence shield as it had not been on the agenda.

The final version of the action plan excluded a mention in an earlier draft of common "air defence".

Germany wants to build the shield with four layers, Scholz said, drawing on its 100 billion euro ($99 billion) special fund for the military.

Separately, Scholz defended his 200 billion euro plan to combat the impact of rising energy prices. The plan has drawn criticism from EU partners who accuse Germany of using economic resources that are not available to its neighbours, which could erode the competitiveness of other members of the bloc.

The chancellor said other countries had also laid on relief packages and Germany was working hard on improving energy security for the whole region through initiatives such as new terminals to import liquid natural gas.

Sanchez did not directly criticize Germany over the plan but pointed to the importance of maintaining a level playing field "so that we do not come out of this crisis with greater economic differences between countries."

($1 = 1.0117 euros)

(Reporting by Andreas Rinke in La Coruna, Belen Carreno in Madrid and Kirsti Knolle and Sarah Marsh in Berlin ; Editing by Alexandra Hudson and Jonathan Oatis)