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Monday, March 20, 2023

German Business Leaders Jointly Oppose Boycott on Russian Gas

Employers and labor unions in Germany have banded together to oppose an immediate European Union embargo on natural gas imports from Russia in response to Russia’s invasion of Ukraine, claiming that such a step would result in industrial closures and job losses in the bloc’s largest economy.

“A rapid gas embargo would result in a loss of production, shutdowns, further de-industrialization, and long-term job losses in Germany,” said Rainer Dulger, chairman of the BDA employer’s group, and Reiner Hoffmann, chairman of the DGB trade union confederation, in a joint statement published Monday by Germany’s dpa news agency.

“In the present conversation, we don’t see that,” they said, arguing that EU penalties should be tailored to put pressure on Russia while limiting harm to the nations applying the sanctions.

Following a resolution on April 7 to restrict Russian coal imports beginning in August, European leaders are debating possible additional energy penalties against Russia. Ukraine’s authorities claim that income from Russia’s energy exports is funding Moscow’s destructive war against Ukraine and that it must be stopped.

That isn’t going to be easy. Russia supplies roughly 40% of natural gas and 25% of oil to the EU’s 27 member states. Natural gas would be the most difficult to go without, according to energy analysts, because the majority of it comes from Russia via pipeline, and liquefied gas supplies, which can be ordered by ship, are limited due to high demand worldwide.

Germany, a key manufacturing hub and a Russian gas importer, has so far resisted an abrupt cutoff, instead announcing plans to phase out Russian oil by the end of the year and most Russian gas imports by the middle of 2024. The EU’s executive commission has proposed measures to reduce Russian gas use by two-thirds by the end of the year by utilizing more pipeline gas from Norway and Azerbaijan, importing more liquefied gas, speeding up the deployment of wind and solar projects, and stepping up conservation efforts.

“An immediate gas embargo would damage social harmony in Germany,” German Vice-Chancellor Robert Habeck stated in an interview with the Funke media group.

Even as EU nations condemn the war in Ukraine, the EU continues to pay roughly $850 million per day to Russia for oil and gas despite sweeping economic penalties against Russian banks and people. Glass, metals, ceramics, and chemical manufacturers are among the gas-intensive businesses.

Natural gas would be difficult to replace in many circumstances, according to industry authorities, and groups representing food processing, metal galvanizing, and glass industries, as well as the president of the chemical sector union, have all spoken out against a sudden stoppage of Russian gas supplies.

According to energy professionals, a total Russian gas shutdown may trigger a recession and force several EU governments to ration gas. The government would choose which enterprises are less critical, and their supply would be cut off or limited to spare families and hospitals, which are protected under EU legislation. In any event, a shutdown like this would raise already high petrol prices even further.

Analysts believe that while Russian crude oil would be simpler to substitute than gas for the EU, a boycott would still result in higher energy costs, affecting consumers who are already dealing with 7.5 percent EU inflation.

Cedric Blackwater
Cedric Blackwater
Cedric is a journalist with over a decade of experience reporting on local US news, and touching on many global topics. He is currently the lead writer for Bulletin News.

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