Russia is closing the gas pipeline to Poland and Bulgaria, while threatening to do the same with other European countries. So far, official Germany has reacted calmly to Moscow’s announcements. “At the moment, the country’s energy efficiency is guaranteed,” the state-run energy network said in a statement on Wednesday, adding that it was “monitoring the situation very closely.” For its part, the Ministry of Economy points out that “the flow of natural gas remains at normal levels”, but notes “with concern” that the flows to two European countries have already stopped, so it remains “in close coordination with the EU”.
Economy Minister and Vice-Chancellor Robert Habek, from the Green Party, no longer rules out the possibility of Moscow ending energy supplies to Germany following the latest developments in Ukraine, while boldly stating that in this case the German economy is facing the danger of a severe recession and accuses the Kremlin of “using energy as a weapon.” If Moscow, with its threats, simply wanted to soar gas prices, it has certainly achieved its goal. On Wednesday morning, the prices for futures contracts in natural gas increased by 20.2%. “Investors are afraid that Poland and Bulgaria were just the beginning,” economist Marcus Matthias Koep said on the website of the first German television program (ARD).
“A 10% is normal”
However, at noon on Wednesday the price increase was limited to around 10%. Robert Ratfeld, an analyst at the holding company Wellenreiter, told ARD that “a 10% increase in reaction to the closing of the tap in Poland and Bulgaria is rather normal”, because if we look at the big picture, prices remain below maximum levels of the last six months “. Commerzbank analyst Carsten Fritz also spoke of a normal market reaction, recalling that the Yamal pipeline, which carried gas to Poland, had already had a degraded role in recent months. “As of January 2022, gas flows through Yamal do not exceed 2% of Russia’s total sales to Europe,” he said.
The question is not only whether Germany can survive without Russian gas, but also whether Russia can survive without its exports, ARD analysts estimate: “Today 18% of Russian gas exports go to Germany, which is the largest market for Russia “, they remind. Matthias Koep, an economist at the military academy at the Technical University of Zurich (ETH), argues that Russia’s boycott of Poland and Bulgaria, countries that are “not important gas markets anyway” is primarily “one intimidation for countries like Germany, but which is not credible. ” In the long run, Cope argues, Russia “is like shooting itself in the knee” with this tactic, as it proves to be an unreliable energy supplier and interlocutor. “In the future, anyone who has an alternative will avoid Russia,” warns the German analyst.
Review of financial forecasts
However, presenting the “spring forecast” for the course of the German economy, Vice Chancellor Robert Hubeck was forced to manually revise the overall forecast for the current year. According to the new data, the forecast is around 2.2% per year for 2022 and 2.5% for 2023. The good news, says Habek, is that in recent months the dependence on Russian natural gas has significantly decreased. gas: While before the start of the war Germany imported 50% of its needs from Russia, today the percentage has been reduced to 35%.
DW – Giannis Papadimitriou
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