Germany suffers from wrong energy policy of the last 20 years



The previous government (Merkel government), which made Germany’s dependence on Russian gas as high as 55 percent, is being heavily battered in the country these days.

Minister of Economy and Climate Robert Habeck, who mentioned that they were able to reduce this dependency by only 40 percent in the first quarter of 2022, with the latest measures taken, is one of those who criticize the decisions taken in the past.

Habeck expressed his feelings for those responsible for the difficulties they experienced today, saying, “Energy policy is always a policy of power. It is always a policy of interest. Therefore, it is always a security policy. And when we look back, it is impossible to understand how we overlooked it.” reveals anger.

The other co-chair of the Greens and German Foreign Minister Annalena Baerbock is also a strong critic of the old policies. “Germany knew the risks of Russian gas, but did nothing. And now we are experiencing the consequences of this in the most brutal way.” Baerbock states that they are looking for ways to quickly implement the diversification strategy in energy imports.

The danger of a complete cut-off of Russian gas

Putin’s statement last week that “we will now accept gas payments from unfriendly countries only in rubles”, especially It shocked Germany. The German government, which flatly rejected this request, stepped up the work to be ready for a possible full interruption.

Stating that it will not be possible for Germany to completely get rid of its dependence on Russian gas until the middle of 2024, Robert Habeck announced to the public that they have put into effect the first leg of a 3-stage emergency energy action plan.

What does the action plan entail?

In the first phase, called the early warning phase, everyone, from industry to residences, is asked to reduce their energy use as much as possible. In the second stage, market actors will be expected to take reassuring measures.

The third stage is called the emergency level, where market-based measures fail to address the shortcomings. At this stage, Germany’s grid regulator, Bundesnetzagentur, will decide how to distribute the gas resources available throughout the country. In such a case, since the priority will be in health centers and residences, the industry side will risk stopping the wheels.

Payment contract in rubles

Currently, the fill rate of Germany’s gas stocks is at the level of 25 percent. Authorities emphasize that there is no problem in security of supply at the moment and they state that the measures taken are only a preparation for the future.

It is expected that Putin will receive information from the Russian Central Bank and Gazprom officials about the payment in rubles and then determine a road map. However, the statements from the Kremlin such as “no payment, no gas” seem to be proof that the mutual showdowns will continue for a while.

Expectations are getting worse in the economy

These developments in the energy markets and the disaster scenarios that have been revealed naturally affect the economy of Germany, the industrial power of Europe. . Inflation does not slow down, growth expectations are constantly revised downwards.

Annual inflation broke a record again in March and rose to 7.6 percent. The German government’s economic advisory council cut its growth forecast from 4.6 percent to 1.8 percent. The Council predicts that inflation rates will remain high throughout the year and the average inflation rate will be 6.1 percent in 2022.

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