“There are currently no supply bottlenecks,” emphasizes Economics Minister Habeck. But who knows how the broken relations with the important supplier country Russia will continue to develop. Because an important appointment is coming up.
The gas is flowing – but the federal government is preparing for the fact that this could change. Economics Minister Robert Habeck (Greens) activated the early warning stage of the so-called gas emergency plan on Wednesday.
A crisis team should now keep a close eye on the supply and report daily. The gas network operators should divert gas if necessary and, if necessary, endeavor to procure additional gas.
The reason for this step is an appointment this Thursday in Moscow. President Vladimir Putin wants to meet there with representatives of the Russian gas giant Gazprom and the central bank. The background to this is Putin’s demands that Germany and other western countries no longer pay for gas deliveries in euros and dollars but in rubles – which they reject.
What to expect from the Moscow meeting?
On Wednesday last week, Putin gave the Russian central bank and government a week to determine the modalities for switching from foreign currency to ruble payments. Now he wants to be informed about the state of affairs. According to the Kremlin, the conversion of payments from euros and dollars to rubles is not yet to come into effect this Thursday. Gas delivery and payment are separate processes, Kremlin spokesman Dmitry Peskov said on Wednesday.
Should consumers fear for their energy supply?
No. Because the gas is currently flowing, summer is approaching and, according to the industry association Zukunft Gas, German gas storage facilities are 26 percent full, which is within the range of the last five years. But if deliveries from Russia break down, Germany will face a difficult winter, according to Habeck. However, private households also enjoy special protection in the event of a shortage. Certain branches of industry would then have to take a backseat. Permanently higher energy prices are also expected as a result of the war in Ukraine. Turning away from cheap Russian gas will come at a cost.
What does this mean for customers who are not private households?
The gas is still flowing. But if the worst came to the worst and gas became scarce, the Federal Network Agency would have to decide who would have to stand back. Like household customers, priority is given to “basic social services” – from the areas of health care, basic social care, emergencies, security, education or public administration. But the definition only looks simple on paper. If, for example, the food and pharmaceutical industries were given preference, then companies that produce the necessary packaging would also have to be able to continue producing, explained a spokeswoman for the Ministry of Economic Affairs.
What does this mean for the German economy?
The Federation of German Industries (BDI) already sees them in distress. “German industry sees the danger that companies will face existential difficulties because of energy prices or because of a Russian ban on exports of energy raw materials,” explained BDI Managing Director Joachim Lang and called for state aid. Some energy-intensive companies are already being forced to scale back production because of the high cost of gas and electricity. BDI President Siegfried Russwurm warned: “In the event of extensive supply disruptions, there is a threat of production stops with unforeseeable consequences for growth, supply chains and employment.”
The Association of German Chambers of Industry and Commerce (DIHK) warned of “extreme economic consequences” against the background of an impending supply stop for Russian natural gas. The Association of the Chemical Industry (VCI) explained that in the event of a supply failure, oil would at least be partly available from other regions, which is not possible with natural gas in the short term. In the event of a delivery stop, a “severe recession with a massive loss of jobs” in Germany must be expected, said general manager Wolfgang Große Entrup to the Munich “Merkur” (Wednesday). The chemical and pharmaceutical industries consume large amounts of oil and gas.
The “economic experts” screwed their economic forecast for this year down significantly. The German Council of Economic Experts only expects economic growth of 1.8 percent due to the war in Ukraine. If the conflict intensifies and, for example, gas supplies to Germany fail to materialize, there is a risk of a recession.
How much gas is currently coming from Russia?
According to the latest information from the Federal Ministry of Economics at the end of last week, the proportion of Russian gas deliveries in Germany has meanwhile fallen from 55 to 40 percent. Habeck promised that by the summer of 2024 it could be possible to become independent of Russian gas, apart from a few shares. In the case of oil and coal, Germany should manage to break away from Russia to a large extent in the course of this year.
According to the EU Commission, around 40 percent of the gas consumed throughout the EU comes from Russia. According to estimates by the Brussels think tank Bruegel, the EU countries currently spend around 420 million dollars (380 million euros) on Russian gas and almost 400 million dollars (362 million euros) on oil from Russia.
Where will the energy come from in the future?
There are several answers to this. The federal government wants to promote energy efficiency, i.e. more economical consumption, through technology or, for example, better insulation of houses. She also directly calls on citizens to save energy. Secondly, the expansion of renewable energies should be further promoted. Coal-fired power plants are to remain in reserve longer. And finally, the EU and Germany are trying to find new energy trading partners. The USA wants to supply large quantities of liquefied natural gas (LNG) in the future, and terminals are planned in Germany. Habeck recently traveled to Qatar and the United Arab Emirates to promote cooperation on the import of LNG and hydrogen.
Do European countries help each other out?
According to European law, the EU states are obliged to help each other when things get tight, explains the Ministry of Economic Affairs. This requires treaties that neighboring countries conclude with each other. Germany is in negotiations with nine neighboring EU countries, and agreements have already been reached with Denmark and Austria. A signing with Italy is imminent, and negotiations with Poland and the Czech Republic are well advanced. Discussions with France, Belgium, Luxembourg and the Netherlands are to be intensified.
How painful would a gas supply freeze be for Russia?
The Russian state budget is largely dependent on income from the oil and gas business. In the third quarter of 2021, their share was 34.5 percent. Experts assume that without the income from raw material exports, the budget could slip massively into deficit. However, at the same time, Russia has immense financial reserves and reserves of foreign currencies (currencies). Some of it has been frozen by Western sanctions, but not all.
Does that make financing Putin’s war more difficult?
From the Kremlin’s point of view, the war chest is also well filled with reserves. The economist Janis Kluge, Russia expert at the Stiftung Wissenschaft und Politik, also assumes that the war is not consuming that much money at the moment. The most expensive, i.e. armaments such as tanks, rockets and airplanes, have already been built and purchased in recent years. “Through our energy imports in the past years and decades, we have enabled Russia to afford the rearmament,” said the economist of the “Tagesschau”. Russia can easily pay the running costs such as soldiers’ pay and diesel.
The “economic wise man” Volker Wieland also assumes that Putin can continue to finance his war. The Russian central bank could spend rubles at any time if even higher inflation was accepted. «Of course, there is a lack of foreign exchange and government revenue in the event of an import embargo or delivery stop. But the government can also continue the war independently,” Wieland told the “Welt”.
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
