Germany is facing a cascade of bankruptcies and the collapse of entire industries because of Russian gas

Germany’s biggest industries could face collapse due to cuts in Russian natural gas supplies, the country’s top trade union representative warned ahead of crisis talks with Chancellor Olaf Scholz starting on Monday, Bloomberg reports.

“Due to disruptions in natural gas supplies, entire industries are at risk of permanent collapse: aluminum, glass, the chemical industry,” said Yasmin Fahimi, head of the German Trade Union Federation (DGB), in an interview with Bild am Sonntag newspaper. “Such a collapse would have huge consequences for the entire economy and jobs in Germany.”

According to her, the energy crisis is already leading to record-high inflation. Fahimi calls for a cap on household energy prices. The rising cost of Co2 emissions means an additional burden on households and businesses, Fahimi added. According to her, the crisis could lead to social and labor unrest.

Economy Minister Robert Habeck said Saturday that the government is working on ways to deal with rising costs faced by both utilities and their customers, without elaborating. He previously warned that curbing Russian gas supplies risked leading to deeper turmoil, comparing the situation to Lehman Brothers’ role in triggering the 2008 financial crisis.

Germany must prepare for deeper cuts in Russian gas supplies as President Vladimir Putin pursues a deliberate strategy of raising prices to undermine European unity, Economy Minister Robert Habeck said.

“It’s not about chaotic decisions, it’s about an economic war, completely rational and very clear,” Habeck, a vice chancellor in Olaf Scholz’s government, said Saturday at a panel discussion. “After one reduction of 60 percent, the next logically follows.”

German leaders are raising warnings of impending turmoil and natural gas shortages in Europe’s biggest economy, which relies on Russia for about a third of its energy. Putin gradually reduced supplies after European countries imposed sanctions in response to Russia’s invasion of Ukraine.

German utilities are at risk of cascading accidents, which could require the activation of a legal clause that would allow them to pass on price increases outside contractual commitments, Habeck said.

Germany stops buying Russian oil until the end of the year

Germany will completely stop buying Russian coal on August 1 and Russian oil on December 31 this year, German Deputy Finance Minister Jörg Kukis said at a press conference in Sydney, quoted by Reuters.

The key challenge will be covering the gap that will be left when the EU gives up the 158 billion cubic meters of gas that Russia supplies each year, Kukis stressed to the energy forum in Sydney, organized jointly by the Australian government and the International Energy Agency.
Previously, Russia supplied 40% of the coal and oil used in Germany, the deputy minister noted. “Anyone who knows the history of the Druzhba oil pipeline, which was a tool of the Soviet empire over Eastern Europe, knows that giving up this dependence is not a simple thing, but it is something that we will achieve in a few months,” he emphasized.

Germany is rapidly preparing LNG import terminals to help cover the shortfall. However, Kukis pointed out that the US and Qatar together can supply Europe with only about 30 billion cubic meters of gas per year in the form of liquefied natural gas.

“We can’t just imagine that this problem doesn’t exist,” Kukis added. He noted that Germany is focused on the transition to net-zero emissions and has recently introduced laws aimed at accelerating the development of renewable energy projects, but gas will be essential to the change.

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