Germany, urged to “stop Putin’s war machine,” is defying Russia’s energy embargo

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The professor, Rüdiger Bachmann, is co-author of a paper published this month, which shakes up support for a ban on Russian energy imports. It is one of several studies that state that such a step would damage the German economy, but would ultimately be manageable.

These findings contrast with Scholz’s warnings that an embargo would devastate the economy and risk social unrest. The Chancellor expressed his displeasure with the experts in one interview to the broadcaster ARD and said it was “irresponsible to add mathematical models that then don’t work”.

“You get it wrong!” he exclaimed.

The standoff is at the center of a deepening debate in Germany over how quickly the country can wean itself from Russian oil and natural gas and what kind of sacrifices the government should demand from the public.

Germany gets about 55 percent of its natural gas and 35 percent of its oil from Russia. Boycott advocates say it’s important to act quickly to deny Moscow funding for its war in Ukraine. However, Scholz has insisted on a more phased approach.

He has promised to unravel his country’s energy system from Kremlin-affiliated companies and, in a major change, sank the Nord Stream 2 gas pipeline – a move the United States has been pushing for for years. But the chancellor, a Social Democrat leading a left-liberal coalition government, has ruled out an immediate embargo, claiming it would plunge Europe into recession and threaten “hundreds of thousands of jobs”.

“Russia is watching this discourse in Germany very closely,” said Janis Kluge, an expert on the Russian economy at the German Society for International Politics and Security. “Seeing statements about mass unemployment and GDP loss gives the Russian leadership confidence, influence and the feeling that they have a powerful tool in their hands.”

The United States — which last year got about 3.5 percent of its oil from Russia and no natural gas — earlier this month banned oil imports from Russia and recently pledged to ship more liquefied natural gas to its European allies. The European Union, in turn, has pledged to cut Russian gas imports by two-thirds by the end of this year and end the bloc’s reliance on Russian fossil fuels before the end of the decade. But even as Russian President Vladimir Putin continues his assault on Ukraine, the US administration has been unable to persuade the EU to join an embargo that has support in Poland and the three Baltic states while it is on the resistance of countries like Italy, Hungary and especially Germany.

Ukrainian President Volodymyr Zelenskyy has called on German politicians to look at the matter from a moral point of view. rather than “through the prism of economics”.

In the prime-time TV interview, Scholz did not resist an emotional appeal, but rather the competing economic analysis.

To Bachmann, who studied in Germany and the USA and u. a Professor of Economics At Notre Dame since 2014, the Chancellor’s rebuke – nicknamed “Scholzomat” for his usually reserved communication style – was something of an endorsement.

“It shows that we’ve achieved it,” Bachmann said in a phone interview from his South Bend, Indiana office, which gave me too many uncertainties, and we’re not willing to pay that price.’ ”

Scholz’ impatience with the expert analysis offers an insight into the dilemma he faces. A recent poll showed that a majority of the country would like the government to respond more proactively, 55 percent of them Interviewed by broadcaster ZDF advocate an embargo. But the geographic differences are stark. A opinion poll of three federal states in the former communist east came to the opposite conclusion: more than two-thirds of those surveyed in Saxony, Saxony-Anhalt and Thuringia spoke out against shutting down Russian energy supplies.

While industry associations warn of an embargo, saying the debate is “playing with fire”, for one the opinion leaders in berlin are mobilizing. When a public appeal was published this month arguing that Germany’s responsibility to avoid war means “absorbing the consequences of a short-term energy boycott,” and quickly garnered the support of lawmakers, business leaders, academics and civil society representatives.

“Looking back on its history, Germany has repeatedly sworn that there must NEVER AGAIN be wars of conquest and crimes against humanity,” the appeal reads. “Today is the hour to fulfill that vow. We must try everything to stop Putin’s war machine with our political and economic means.”

Numerous MPs from the main opposition party in the German Bundestag, the CDU, added their names. Katja Leikert, who sits on the foreign affairs committee, said Russia’s attack on its neighbor means that “we need to look beyond short-term business interests and see what’s at stake for us in the long-term if we don’t stop Putin’s aggression.”

As Europe’s largest economy, she said, Germany should use its leverage “before attacking other countries.”

But the Social Democratic deputy chairman of the Bundestag’s economic committee, Hannes Walter, defended the government’s actions. “I really understand the arguments,” he said in an interview, “but we don’t currently have the renewable energy that would allow our industry to survive an embargo.”

Economics and Climate Minister Robert Habeck recently flew to the Persian Gulf region to strike deals on alternative sources of natural gas with Qatar and the United Arab Emirates. Last week he told reporters that Germany’s dependence on Russian oil had fallen from 35 percent to 25 percent, gas from 55 percent to 40 percent and coal from 50 percent to 25 percent.

Habeck, a member of the Green Party, said Germany could be independent of Russian coal by the fall, but finding alternative gas sources would take longer until 2024. Meanwhile, he claims an immediate embargo would hurt the country’s gross domestic product by as much as 5 percent contracting as he has done recommended is possible, this would have devastating consequences for German livelihoods.

Bachmann and his co-authors, representing three countries, came to a different conclusion. They forecast the GDP loss would be between 0.5 and 3 percent, a drop that matches the comparable drop seen in 2020 as a result of the coronavirus pandemic.

“The question then is whether the government is willing to use the tools it has developed during this crisis, such as short-term work programs and state support for threatened industries,” Bachmann said.

The analysis should not serve as a slogan for an embargo, but as an explanation of its consequences if one should come into force, also on the instructions of the Kremlin. The title of the paper is “What if?”.

Sebastian Dullien, the director of Germany’s Institute for Macroeconomic Policy, said the model omits too many factors and doesn’t take into account the “depths of the recession that we would see”. One problem, he said, is that the analysis relies heavily on the possibility of substituting available resources and workers from certain sectors for others. “But there is an amplifying effect across the economy,” he said.

Other learn, from the National Academy of Sciences Leopoldina, said Germany could do without Russian gas if the state itself bought alternatives and relied more on coal. But it acknowledges uncertainties, including how cold the coming winter will be.

The government has also questioned the notion that Russian energy exports are funding the war. Scholz spokesman Steffen Hebestreit said on Monday that funds flowing to Russia were “not usable” because of the sanctions and argued that “what Russia can then do with this money is severely restricted”. But Kluge, the expert at the German Society for International Politics and Security, said restrictions do not completely prevent the use of these resources, for example in the case of imports from willing partners like China.

This week, the German Economic Advisory Council, an advisory body that assesses government policies, is set to release an economic forecast likely to address rising energy prices and a future without Russian oil and gas. One of its members, Veronika Grimm, said the existing analysis suggested the consequences of an embargo would be serious but “doable”.

“We need to be clear about what ‘doable’ means,” she said. “We are capable of dealing with it if it is deemed necessary for our national security or the future security of Europe.”

Notre Dame professor Bachmann said he did not envy the chancellor that she had to weigh these security goals against the economic consequences. “Times are tough for the chancellor right now,” he said.

Vanessa Guinan-Bank contributed to this report.

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