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Eugal natural gas receiving station near Greifswald: What does a stop mean for Germany?
Photo: Stefan Sauer / dpa
After the German government announced that it would suspend the approval process for the controversial Nord Stream 2 Baltic Sea pipeline, the debate about exploding energy prices in Germany has intensified.
In order to hit Russia economically as a sign of disapproval of Russian aggression against Ukraine, according to calculations by the Kiel Institute for the World Economy (IfW), one would have to continue exactly there.
Accordingly, the West can hit the Russian economy hardest by stopping gas imports.
A halt to trading in gas would result in a 2.9 percent slump in Russian economic output, according to the researchers' recently published simulation calculation.
A complete renunciation of Russian oil, on the other hand, would only reduce economic output by 1.2 percent.
It is questionable what effects the whole thing would have on Germany.
"I don't think anyone should fool themselves, we already have high energy prices, and that will affect us too," said former Foreign Minister and SPD politician Sigmar Gabriel about stopping Nord Stream 2, even if he took the step politically welcome.
However, the Kiel trade experts now write in their study: "For Germany and the EU, the economic damage would be extremely small in both cases." According to the IfW, it does not matter whether an import embargo was imposed by the EU or whether Russia decided on a delivery embargo.
According to IfW economist Hendrik Mahlkow and his team, German economic output could even increase slightly by 0.1 percent if Russian gas were not used, as could that of the EU as a whole.
"The reason for the plus is that the western allies would replace the missing imports from Russia with products from the alliance partners and Germany is particularly competitive here."
Economist: Stop of Nord Stream 2 manageable
In the event of a gas embargo, Germany would have a cost advantage in the energy-intensive production or processing of metals, for example, because its energy mix only consists of relatively small parts of Russian gas.
An embargo on machines and machine parts would shrink Russia's economy by 0.5 percent, an embargo on vehicles and vehicle parts by 0.3 percent.
According to the IfW, these measures would only have minimal negative effects for Germany and the EU.
E.ON CEO Leonhard Birnbaum is much more pessimistic than the IfW in assessing a complete failure of Russian gas supplies.
He warns of the medium-term consequences for German industry.
“As of today, some companies would have to be switched off from the supply,” said the head of the energy company of “Zeit”.
Admittedly, the acute effects would not be so drastic because the end of the heating period had almost been reached.
"But next winter, the energy industry would probably no longer be able to easily supply a number of industrial customers."
"Our calculations are of an exemplary nature, but they clearly show that the medium-term economic consequences of trade embargoes would hit Russia much harder than its western allies," says IfW researcher Mahlkow.
For this reason, Russia's threat to stop deliveries of gas or oil would not be credible.
Former Russian President and Deputy Head of the Russian National Security Council, Dmitry Medvedev, had already threatened: "Welcome to a new world where Europeans will soon be paying 2,000 euros per 1,000 cubic meters of gas!" He left open whether he was interested in prices when importing or for the end consumer, in any case that would be well above current prices.
Nord Stream stop “absolutely understandable”
In view of the economic consequences, stopping the Nord Stream 2 Baltic Sea pipeline by the federal government is absolutely understandable, says Mahlkow.
"This does not further strengthen Russia's geopolitical position, and it does not per se mean that Russian gas supplies have to decrease further."
The background to the sanctions is the recognition of Donetsk and Luhansk as independent regions by Russian President Vladimir Putin – and his deployment of soldiers to eastern Ukraine.
However, according to a Russia expert, the punitive measures taken by Great Britain so far, which are aimed at oligarchs and banks, are not in the least sufficient.
In the meantime, other countries and the EU have followed suit and issued similar sanctions, namely the USA, Japan, Australia and Canada.
They all aim to punish businessmen and decision-makers who support President Vladimir Putin's policies, for example by freezing funds.
Members of the Russian parliament who voted to recognize the “people's republics” are also affected.
The EU sanctions should come into force this Wednesday.
Before the regular meeting of the federal cabinet, Chancellor Olaf Scholz (SPD) and the federal ministers responsible for security issues discussed the situation in the conflict between Russia and Ukraine.
Scholz believes it is possible that the pipeline will never go into operation.
Unfazed by the sanctions, Putin said on Wednesday, Defender of the Fatherland Day: "But I repeat: Russia's interests and the security of our citizens are unconditional for us." Russia is always open to direct and open dialogue, to the search for diplomatic solutions .
Apr/Reuters/dpa