we deal with numbers every day at the Handelsblatt. One thing has particularly occupied me in the last few days, because it represents the full extent of the dilemma into which Europe, especially Germany, has maneuvered its way through its energy dependency on Russia.
35 billion euros the European Union has paid Russia for imports of oil, gas and coal since the beginning of the war, EU foreign policy chief Josep Borrell calculated. For comparison: Ukraine has only one of the EU states so far one billion euros received for weapons and military equipment.
You can literally feel how the pressure on the EU and each individual state increases, to ban the import of Russian energy: with every day of war, with every atrocity in Ukraine and with every euro transferred to Russia. Europe has already decided on a coal embargo with a transitional period of four months. Oil is to be discussed next Monday in the Council of EU Foreign Ministers.
The German economy is preparing for the worst. How exactly is described by a team of Handelsblatt reporters in our Friday title. To do this, the colleagues looked deep into the companies. And they explore the question that deeply divides leading economists: How badly would an import ban really damage Germany? And: Could he even influence this incredibly senseless war?
So that you know what we’re dealing with, it’s always worth taking a look at the figures: Every day, around 200 million euros flow from Germany to Russia for energy supplies. The quantities that would have to be replaced in the event of an import ban are immense, as these three graphics show:
- Of the roughly 86 billion cubic meters of gas that Germany needs each year, more than half comes from Russia.
- When it comes to oil consumption, which is almost 100 million tons a year, the Federal Republic is dependent on Russian supplies for a third.
- In the case of coal, around 57 percent of German demand in 2021 was covered by imports from Russia.
According to Forsa, many Germans, namely 43 percent, are still in favor of completely abandoning Russian oil and gas imports. There are also divided opinions in our editorial team, as this pros and cons of the energy boycott shows.
One thing is clear: a gas embargo would have devastating consequences for Germany. My colleague Sebastian Matthes believes that it would not only result in an economic slump, but would also trigger a structural break that would jeopardize the country’s entire business model. And yet the step might be necessary in the end.
What many overlook these days: A gas embargo would also affect other EU countries: “People say: Oh, it’s Germany,” Borrell said yesterday. “No, it’s not just a German problem, because the German economy is very closely intertwined with the European economy,” he said on Friday on the train journey of a delegation from EU Commission President Ursula von der Leyen to Kyiv.
35 billion euros – it is not just a dilemma that is expressed in this number. There are several: a moral dilemma, an economic dilemma, a foreign policy dilemma. And in the debate, unfortunately, the aspects are all too often mixed up.
What else kept us busy this week:
1. All of these figures show how important and urgent it is for EU countries to become less dependent on energy imports from Russia. Last but not least, this requires more speed in the expansion of renewable energies. In order to get faster, Federal Economics and Climate Protection Minister Robert Habeck presented a so-called Easter package. Yes, the 500 or so pages are quite a challenge, comments my colleague Klaus Stratmann – and yet the “Easter package” raises expectations that can hardly be fulfilled.
Germany doesn’t even dare to dream of energy self-sufficiency – in contrast to some homeowners. Numerous technologies are now helping to become less dependent on gas, oil and electricity prices within your own four walls. What are the requirements, how much does the changeover cost, and how reliable is the independent supply? We have created a guide for you.
2. The federal government is taking over the management of Gazprom Germania, the former subsidiary of the Russian Gazprom group. The Federal Network Agency will be appointed as trustee until September 30, 2022. This spectacular process is intended to maintain security of supply. Klaus Müller, President of the Federal Network Agency, is convinced that the transfer of trusteeship for Gazprom Germania to his authority will calm the markets: The step serves “precisely to bring stability to the market,” said Müller in an interview.
3. What is Vladimir Putin up to? The western world has been asking itself this question ever since Russia invaded Ukraine. Joe Kaeser is someone who can assess the Kremlin boss even better than many politicians. The longtime Siemens boss has known the Russian president personally for many years – and admits mistakes in dealing with Putin. Kaeser sees a change in the 69-year-old – “from a man who was looking for dialogue and proximity to Europe, to a president who followed an extremely cold logic, to a regent who views world history from an ideological point of view”.
(Photo: Thorsten Jochim for Handelsblatt)
4. The important central banks, the Fed and the ECB, are fighting inflation with increasing determination. The minutes of the most recent meetings that have now been released show that the end of the easy money policy is coming even faster. “Now it’s getting painful,” comments my colleague Astrid Dörner. Borrowing costs for German companies have already risen significantly. The former head of the Bundesbank and outgoing president of the major Swiss bank UBS, Axel Weber, is preparing investors for hard times – and accuses the central banks of making mistakes.
5. The Bundesbank is alarmed because of the banks’ lending in the hot real estate market. The granting of residential real estate loans continues to increase, although buyers bring less and less equity, warns board member Joachim Wuermeling in an interview with the Handelsblatt. “The growth is taking place in a market that is becoming increasingly vulnerable due to rising real estate prices.”
6. To the last, supporters of compulsory vaccination tried to prevent it from failing. Chancellor Olaf Scholz even ordered Foreign Minister Annalena Baerbock from the NATO meeting in Brussels to the Bundestag to be able to vote. It didn’t help, the traffic light’s proposal fell through with a bang. The defeat has a month’s lead. We document the history of failure.
7. Shortly before the first round of the election on Sunday, French President Emmanuel Macron’s team is seriously concerned that the unthinkable could happen in the runoff two weeks later: a victory for right-wing populist Marine Le Pen. According to French electoral law, the two best-placed candidates have to stand for a further ballot. In his report, our France correspondent Gregor Waschinski describes why the French are also deciding on the future of the EU in this election – and on the West’s unity with Putin.
8th. The stock exchanges have recently developed comparatively well despite the Ukraine war. The leading German index, the Dax, is back at the level it was before the Russian invasion. The recovery of the MSCI World index and the leading US index S&P 500 is even more pronounced. At the same time, the risks for investors are increasing. Many are wondering: Are the stock markets pricing the risks correctly? One thing is clear: Investors must expect setbacks this year. But there are hopes in the Dax indices – even apart from weapons manufacturers.
9. Kazakhstan, the tenth largest oil exporter in the world, shows how Russia treats states that it counts as part of its sphere of influence. In cooperation with the Correctiv research center, my colleagues Mathias Brüggmann and Martin Murphy tell a story about oil for Europe, supposed storm damage and coincidences that nobody actually believes in.
sincerely
your
Kirsten Ludowig
Deputy Editor-in-Chief Handelsblatt
You can receive the Morning Briefing plus free of charge as part of your Handelsblatt digital subscription or subscribe separately here.