Berlin prepares for the event that Russia suddenly cuts off gas supplies to Central Europe
Germany is preparing for the interruption in Russian gas supplies. The Federal Minister of Economy, Robert Habeck, activated this Wednesday the first preventive stage of the alarm system within a plan to supply the country with natural gas in case of emergency. The objective is to guarantee supply in Germany in the event that Russian President Vladimir Putin decides to suddenly close the gas pipelines that transport Siberian gas to Central Europe. “There are no bottlenecks in supply,” stressed Habeck, who stressed that “despite everything, we must increase preventive measures to be prepared in the event of an escalation by Russia.” The environmentalist politician affirmed that the supply of natural gas to industry and individuals is guaranteed. The first stage of the three available to the preventive alarm system does not contemplate restrictions on supply by the state. This would require supply flows to worsen dramatically, said the former chairman of the Greens, who stated that this is not currently the case.
Habeck’s decision is a reaction to Russia’s threats and demands that its gas supplies to Europe be paid in rubles, although the contracts establish the payment in dollars, under penalty of closing the tap due to the sanctions dictated by the West against the Moscow regime for the invasion and war unleashed in Ukraine. The also federal deputy chancellor stressed that “we will not accept any breach of supply contracts” and assured that Germany will, despite everything, be prepared for that eventuality. The “Gas Emergency Plan” is based on a 2017 European Union order that establishes the measures to be taken to guarantee supply. In the first preventive stage of the alarm system, the Federal Ministry of Economy, the Federal Networks Agency, the managers of the long-distance supply networks and the 16 federal states coordinate in the detailed observation of the situation and collect daily data . “The crisis cabinet analyzes and assesses the supply situation so that, if necessary, new measures can be taken to guarantee supply. The federal government is doing everything possible to continue to guarantee supply in Germany,” Habeck noted.
Not until the third stage of the alarm system when the Federal Network Agency decides which industrial branches and regions should receive natural gas supply as a priority. “We are not in that situation nor do we want to reach it,” said the German head of Economy. Habeck appealed to private consumers to save gas and stressed that every kilowatt hour that is not spent is a help. His office stressed that supply to all Germans is currently guaranteed. “But despite everything, we call on all gas consumers, both in the economy and individuals, to reduce their consumption as much as possible,” said the green politician. The federal deputy chancellor assured that the activation of the first stage of the alarm system is a purely preventive measure and pointed out that he had promptly informed the European Commission about its implementation. In the event that Russia suddenly and completely cuts off its gas supply, the German economy would be severely damaged.
10 year recession
The German Institute for Economic Research (DIW) calculates that the end of the supply of Russian oil and gas to Germany, whether due to a Western embargo or a cutoff by Moscow, would bring with it a ten-year recession and a contraction of the German economy of 3% that would manifest itself after 18 months. The DIW researchers also point out in their study made public today that this radical cut would also give rise to an increase in inflation of 2.3%. The authors of the analysis emphasize that “an embargo of this type has never occurred in such a situation”, so that all the assumptions and calculations that have been assumed and made to carry out the study are uncertain, although they are convinced that the end of Russian gas supplies in Germany, whatever the cause, would have similar consequences for the economy as the coronavirus pandemic.
The move would also have dire consequences for Russia. “Even if Russia were able to sell a good part of its primary energy supplies to third countries, such as China, it must be reckoned that it would only be possible with appreciable price reductions,” says the analysis, which highlights that a possible end to the supply of Russian oil and gas to Europe “has the potential to destabilize the Russian economy and put pressure on the Russian government to call off its destructive war in Ukraine.”