There are already warnings about yellow vests like in France, and every driver can see the collateral damage caused by Vladimir Putin’s war of aggression from new record levels at gas stations every day. A 2 before the decimal point in the price per liter is historic, and the price of gasoline and diesel could soon exceed 2.50 euros. This puts the government of Chancellor Olaf Scholz (SPD) under pressure, while at the same time the historic mistake of becoming increasingly dependent on Putin’s energy supplies must be corrected at record speed.
Why doesn’t the government want a boycott?
Because he fears that Germany will not be able to resist without strong agitation. “I understand all those who demand an immediate embargo due to Putin’s brutal war of aggression,” Economy Minister Robert Habeck (Greens) told FAS. But it is not about sacrificing a little individual comfort, but about deep cuts, economic and social. “In the event of an immediate import disruption, we’re talking about supply bottlenecks next winter, economic downturns and high inflation, hundreds of thousands of people losing their jobs, and people for whom the path to work it is hardly affordable, heating and electricity too.” The sanctions must be such that they can be sustained. “When in doubt, not just three days.”
This problem is also seen in the Foreign Ministry. With the worst images expected from Ukraine, the pressure for a boycott will continue to mount. But on the one hand there is little hope that this will stop Putin and on the other hand China has already suggested taking more oil from Russia. And the upheavals and job losses could be dramatic for industry and domestic businesses in particular, while the savings would certainly make it easier for consumers to make ends meet.
Finance Minister Christian Lindner (FDP) also stresses that this may be about a new division of Europe. And the above sanctions would take effect. In particular, the freezing of central bank reserves would have sent the Russian economy into a tailspin, devaluing the ruble and driving Russian government bonds to junk levels. According to the Ministry of Economy, the share of Russian natural gas imports to Germany is about 55 percent, coal 50 percent, and crude oil imports about 35 percent.
What is checked instead?
According to Habeck, progress has already been made in reducing addiction. “Every day, in fact every hour, we say goodbye to Russian imports. If we’re successful, we’ll be independent of Russian coal in the fall and almost independent of Russian oil by the end of the year.” It’s more complicated with gas because we don’t have our own LNG import capacity yet, so the federal government should set up a new one at record speed with a €500 million-funded liquefied gas terminal to be built in Brunsbüttel to process gas that arrives there by ship.Habeck will now travel to several countries that produce LNG and hydrogen, from Norway to Qatar “It’s about expanding our import options, in the short term with LNG, in the medium term it has to be hydrogen.”
Lindner and Parliamentary Secretary of State for Economic Affairs Oliver Krischer are open to examining increased oil and natural gas production in the North Sea; in exchange, Krischer demands a speed limit of 130 km/h from the FDP on the motorways to curb consumption. . Measures that could be used to reduce consumption should be examined now. “Mostly, a speed limit,” says Krischer. The FDP blocked this in the coalition agreement.
What relief are conceivable?
There are repeated calls for a VAT reduction from 19 percent to 7 percent for petrol and diesel, and the Union in particular is insisting on this. With Mecklenburg-Western Pomerania, the first state government under the leadership of the SPD calls for the so-called fuel price brake on Sunday. “People rightly expect that action will now be taken quickly. That is why we need a fuel price brake now,” Economy Minister Reinhard Meyer (SPD) said after a conference call with Prime Minister Manuela Schwesig. He would support an initiative of the Federal Council.
There was already a temporary VAT reduction during the Corona pandemic. France, for example, also wants to stop the rise in fuel prices with a reduction of 15 cents per liter. This should apply from April 1 for four months and will cost the state two billion euros, Prime Minister Jean Castex said.
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Lindner has the problem that the budget for the current year will be approved by the cabinet next Wednesday and sees little room for manoeuvre, and it is not certain that a reduction will also reach the 1:1 consumer. The Finance Minister also contradicts the impression that the state makes a fortune on prices. If a higher proportion of a household’s disposable income is spent on fuel, VAT will be passed through, but income will not increase. “So people refrain from consuming elsewhere.” But it is becoming clear that the government will follow up again, immediately.
The leaders of the SPD, the Greens and the FDP had already decided on relief at the end of February for the increase in gas, electricity, oil and fuel prices. On the tax return, the basic allowance, the income-related expense flat rate and, limited to 2026, the commuter flat rate will be increased retrospectively at the beginning of the year: Anyone who lives more than 21 kilometers from the place of work You can indicate 38 cents per kilometer on your tax return for the one-way distance per business day.
The EEG tax for green electricity included in the price of electricity will be removed from the electricity bill in July and will be financed through the federal budget. The deputy head of the SPD parliamentary group, Matthias Miersch, insists on further relief. In his opinion, the heating subsidy for low-income households in particular should be increased, he told the “Rheinische Post”.
Can an energy money help?
The Greens had already called for “climate money” during the federal election campaign due to rising energy costs. Now, the leader of the Green Party, Ricarda Lang, wants the same instrument under the name of “energy money”. “Many people are suffering very acutely from rising prices, whether in heating, at the pump or in the supermarket,” Lang told “Bild am Sonntag.” The aid package that has been decided so far is not enough. “We need energy money as soon as possible, which is paid to all citizens. This means that everyone has more money in their account and people with little money benefit the most.”
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The green deputy from Berlin, Andreas Audretsch, considers social policy to be the most urgent problem in the current situation. “The social question must be at the center of the crisis policy,” he told the Tagesspiegel. In addition to energy money, standard rates for people with basic security would also have to adjust to rising prices.
Why do economists also warn?
In a guest article for “Spiegel,” economists Sebastian Dullien and Tom Krebs emphasize that claims like those made by Leopoldina that a short-term boycott of Russian natural gas deliveries are possible do not go far enough. “An abrupt stop in deliveries, the so-called cold turkey, is more likely to cause a new economic crisis. Similar to the Corona crisis, economic activity is likely to collapse and unemployment or at least part-time work will In addition, there would be a further increase in inflation with a further increase in the cost of living,” Dullien and Krebs write.
“In the short term, there are no alternative sources of supply, especially for Russian gas, but also for Russian coal, that even come close to fully offsetting the loss of supply.” or stop production. This would affect companies that need natural gas for process heat, for example, but also steel mills that burn Russian coal and large electricity consumers because natural gas and coal are used to generate electricity.
To this would be added the increase in inflation. “If private households face, in extreme cases, several hundred euros of additional spending on fuel, heating and electricity per month, people will reduce their spending on other things. This weakens the demand for goods and accelerates the economic recession.