Germany claims to be prepared to withstand winter without Russian gas

Germany "will be able to cope with this winter" and guarantee its energy supply despite the cessation of deliveries of Russian gas on which its economy largely depends, Foreign Minister Olaf Scholz assured on Sunday.

Thomas Osborne
Thomas Osborne
04 September 2022 Sunday 06:30
17 Reads
Germany claims to be prepared to withstand winter without Russian gas

Germany "will be able to cope with this winter" and guarantee its energy supply despite the cessation of deliveries of Russian gas on which its economy largely depends, Foreign Minister Olaf Scholz assured on Sunday.

"Russia is no longer a reliable supplier of energy... The federal government has been preparing for this eventuality since the beginning of the year," the leader told reporters, noting that thanks to the diversification of supply sources and supplying gas reserves, the country is in a position to face a prolonged paralysis of the Nord Stream gas pipeline.

This message of calm from the German Government is accompanied by a new plan for massive aid to purchasing power, to mitigate the effects of inflation, through measures of 65,000 million euros and after laborious discussions within the coalition of Olaf Scholz .

Key measures include a promise to limit, and even redistribute, the huge profits made by energy companies in the wake of the current crisis; higher payments to retirees, students, parents and the unemployed; and actions to curb the astronomical rate at which electricity prices are rising.

The measures are "a big, substantial step to bring relief to citizens," Scholz said at a news conference he held at the chancellery in Berlin to present the deal. The crisis is "Putin's responsibility," he said, referring to the Russian president and the war in Ukraine.

Germany has faced a spiraling energy crisis since Russia's decision to almost shut down gas deliveries through the Nord Stream 1 pipeline in the wake of its attack on its neighbor and the heavy sanctions the international community subsequently imposed. On Friday, Gazprom announced that it would not restart the pipeline as planned after three days of maintenance.

The Social Democrat, at the head of a coalition made up of environmentalists and liberals, had met this Saturday, until late at night, with the main government figures to finalize this plan, which had been expected for several weeks.

Inflation rose again in Germany in August, to 7.9% in one year, still driven by rising energy prices after the war in Ukraine.

In October, a tax on gas is due to come into force to prevent the bankruptcy of German energy groups. It will lead to a further increase in the energy bill.

The head of Germany's central bank, the Bundesbank, has seen inflation likely to reach 10% by the end of the year, for the first time since the 1950s.

As in other European countries, the rise in prices is fueling citizen concern and the calls for demonstrations, mainly at the initiative of the extreme right or the extreme left, worry the government.

Since the beginning of the Russian invasion of Ukraine at the end of February, the government of Olaf Scholz has already released two trains of aid to households for a total of about 30,000 million euros.

The announcement of this new plan has been postponed several times, illustrating the friction between the three parties of the ruling coalition for nine months.

Symbol of the difficult compromise found: Olaf Scholz's commitment to deal with "speculation" in the energy market and the extraordinary profits of producers who "benefit" from record gas prices, in the words of the chancellor.

This issue has divided the government since the beginning of the summer. Environmentalists and Social Democrats want a tax on the billions earned by certain groups. The liberal camp, represented by Finance Minister Christian Lindner, is fiercely opposed.

The government finally decided to advocate the introduction, at European level, of a mandatory contribution to be paid by companies in the energy sector, a measure that "is not subject to tax law", said Mr Lindner.

EU member states will meet next week to discuss the reform of the European energy market and possible initiatives to rapidly reduce consumer bills.

The German government says it is ready to act only if no agreement is reached at the European level, but Olaf Scholz said he was "confident" in the possibility of an agreement among the Twenty-seven.

This obligatory contribution could contribute "several tens of billions of euros", assured the Minister of Finance.

Among the other measures of the aid plan, the Government provides for the payment of heating costs to the beneficiaries of the housing subsidy and an allocation of 1,500 million euros to set up a new bonus in public transport.

It is about replacing the popular nine-euro monthly pass that Germans were able to enjoy until the end of August on the entire bus and train network, excluding high-speed lines.

The financing of this new ticket would be borne by the State and the regions and the future installment should cost "between 49 and 69 euros".

In Europe's largest economy, the threat of a gas shortage this winter appears to be receding. The country is struggling to reduce its dependence on Russia, which still supplied 55% of its gas imports in February, and believes that its efforts are beginning to bear fruit.

Projects to install several floating terminals for the import of liquefied natural gas (LNG) have experienced a marked acceleration, the country has diversified its suppliers and relaunched coal-fired power plants.

"We will be able to face this winter," concluded Olaf Scholz, in response to Russia's scolding.