The Economics Minister was one of the first to correctly identify the problem with an oil embargo – his conclusions are debatable.
(Photo: Imago Images)
Robert Habeck is a pragmatist. You can always hear from his officials how quickly the Federal Minister of Economics solves problems. In the current case, it should rather be: “wants to solve”. Habeck identified the problem weeks ago.
If the EU decides on an oil embargo against Russia, which will only come into effect in a few months, Russian President Vladimir Putin will be happy. Because the price of oil will rise, and Putin will benefit.
So far the problem. Now the pragmatist’s solution: In a television interview on Monday, Habeck explained his plan to impose a cap on Russian oil. Nice idea: So that Putin doesn’t benefit from higher prices, we simply don’t allow higher prices at all. But this is a static view that ignores one thing.
With the introduction of a price maximum, demand increases. This runs counter to all efforts to become independent of Russian oil. A lower price in the EU alone would reduce Putin’s revenues. However, if a customer as large as the EU sets a significantly lower price, the world market price will also drop.
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Other major powers will be happy. India is already buying more and more Russian oil and will certainly do so even more. A lid that can only be as big as the EU is not a solution for a pot that encompasses the entire world.
Sanctions against the transport ship operators are not enough
That could be prevented if Putin didn’t have a chance to sell the oil to Asia. This would require comprehensive sanctions against oil transport ship operators. They are definitely planned. Just by the time they’ve been decided, implemented and enforced, we’ve had the embargo for a long time, and Putin has been making good money until then.
The price cap is not primarily a regulatory problem, but a strategic one. After all, a tariff, also an intervention in prices, would be the better option because the consequences would be much more controllable.
>> Read about this: Why the EU should rather make Russian oil more expensive than boycott it
The question also arises as to whether Habeck’s proposal is at all the result of a strategic consideration or whether it is about avoiding a jump in inflation in one’s own economy as a result of the embargo decision. If that is the case, the division of labor in the financial institutions should be pointed out: economic policy should search for the generally best measures. The central bank is specifically responsible for combating inflation.
More: Germany’s most important refinery for Russian oil before the takeover