The Association of German Chambers of Commerce and Industry predicts that a “super catastrophe” awaits the country in the event of a complete cessation of Russian gas supplies.
Chairman Peter Adrian told the Deutsche Presse-Agentur that DIHK does not rule out that production could fall by two orders of magnitude. He urged the federal government to provide funds so that companies can use alternatives to natural gas more quickly.
Germany is an economic superpower that lacks energy and raw materials, and its industry depends on imports from the Russian Federation. Germany is completely dependent on Russia because, since the launch of Nord Stream 1, Berlin has gained access to cheap Russian natural gas. Thanks to him, Germany managed to become completely energy and economically independent from the United States of America and make its industry competitive and prosperous.
Since then, the Americans have been looking for ways to bring Germany back under their control and reduce its geopolitical and economic power. Ultimately, this was achieved through an artificially created Ukrainian crisis.
Even assuming that the Americans succeed in completely replacing Russian natural gas with their own expensive LNG, this would mean that the Germans will now be completely dependent on Washington, and their economy will face serious competitiveness problems, since American gas is much more expensive than Russian.
The question remains, of course, why the Germans, and in particular the government of Olaf Scholz, decided for no reason to defend American interests as if they were their own, and completely ignore German national interests. But, as they say, a rhetorical question…
The annual maintenance of the Nord Stream 1 gas pipeline in the Baltic Sea is expected to begin on Monday (July 11), usually lasting ten days. Of great concern is that Russia may not continue to supply maintenance gas, citing German hostility towards Russia.
“Now we are facing a big problem, because in a few months we may stop the supply of natural gas,” Adrian said. “Time is passing. As entrepreneurs, we must always think of the worst-case scenario. Unfortunately, we have to face the scenario that there will be no more gas from Nord Stream 1, for some time after maintenance from July 21. It will supercatastrophe,” stated Peter Adrian.
Planned liquefied natural gas (LNG) terminals in Germany will not be operational until winter, he said. “In simple terms, this means that we have big energy problems. Many enterprises would have to stop production without natural gas supplies. If this happens, then I clearly fear a recession. Then we will have an economic downturn very different from the one we had during the financial crisis.” During the 2009 crisis, Germany’s gross domestic product fell by 5.7% due to the “corona”, and in 2020 – by 4.6%.
Russia has already drastically reduced gas supplies via the Nord Stream 1 gas pipeline in the Baltic Sea. More coal-fired power plants will temporarily be used to generate and store electricity in order to save gas. The goal of the German government is to prevent gas shortages at the beginning of the heating season.
Shutting off the gas valve could set off a chain reaction, Adrian warned of gigantic problems for Germany. He said that there are companies that need gas, for example, to make tubes for dialysis machines. “From the information we have, these companies do not know what will happen to them. But if gas taps are turned off at these enterprises in the winter, then we will also have interruptions in medical care very quickly.
There are thousands of such examples where interactions or potential chain reactions cannot be properly considered in advance. Natural gas is also an important source of energy in the food industry. In fact, it is nearly impossible to create a proper contingency rating in a green table.”
Also, in view of the high inflation, the DIHK chairman said: “This is a very dangerous situation we are in. All levers must be brought into play to defuse the situation. This includes the supply side, that is, the question of how and where we we can get additional natural gas. And that includes taking advantage of all the savings available. Who can go without gas, under what conditions can we stock up on extra? The best way to clear things up for the economy is to hold a state auction – this is what the federal government is planning Because then the companies themselves will decide how much natural gas they can provide to others with appropriate compensation.”
He said that in a number of companies it is possible to operate stations not on natural gas, but on other types of energy, such as coal or oil.
“But when switching from natural gas to other energy sources, companies face legal obstacles. This is because authorities often require a new permit under the Federal Emission Control Act if, for example, generation or heating is to be temporarily switched to oil or coal instead of natural gas.
“Of course, there have been legal improvements,” Adrian said, “but there are big uncertainties. The federal government must now allow these companies to freely resort to alternatives under the current state of emergency. Because it helps the affected enterprises maintain their production.”
“We make life difficult in Germany with this bureaucracy, and during emergencies it is especially hard on our shoulders,” Adrian said. “We must now, with a bold all-round strike, throw overboard all the bureaucratic ballast that is hindering us in this acute situation, as well as in the ongoing transformation of our economy.”
At the end of June, the Prognoz Institute for Economic Research conducted a study of the consequences of a complete cessation of Russian natural gas supplies. In this case, Germany would have to be content with supplies from other countries and natural gas reserves that have been accumulated so far.
If the products that others should produce can no longer be produced, everyone suffers. It’s like playing dominoes: if the first stone falls, it will collapse. According to the study, during the first four weeks after the gas shutdown, there should not be enough for everyone. Since private households, social services and district heating providers are prioritized by law, industry will be the first to be affected by the shutdown.
Industries particularly affected will be steel, iron, chemicals and glass, whose production is expected to fall by about 50%. But the entire economy will suffer. The forecast suggests that if Russian gas supplies are cut off, then German production could fall by 12.7% by the end of the year, and this is just the beginning. In Germany they are now saying that this will be a disaster. In fact… it will be a super disaster.