Senior political and banking figures in Germany have rejected pressure for the country to accept a ban on Russian gas imports saying that the move would bring a “steep recession” and inflict more damage on ourselves than on them.”
Last year, more than half of all the natural gas used in Germany – and about a third of all the oil – for purposes from home heating to powering factories, came from Russia. While Berlin has now agreed to a ban on Russian coal, senior figures argue that a similar measure in regard to oil and gas is impossible.
Business leaders have also warned that cutting off the main supply of gas and oil would grind production to a halt. Such a measure would cause “irreversible damage,” Martin Brudermüller, the chief executive of BASF, a giant chemical producer said this week, adding that moving from Russian gas to alternative energy sources would take years, not weeks.
German Finance Minister Christian Lindner, while calling for a continued move to cut economic ties with Russia, told his EU colleagues in Brussels that “gas cannot be substituted in the short term. We would inflict more damage on ourselves than them”.
German banks also warned of a “steep recession” if imports of Russian oil and gas were frozen.
“A steep recession in Germany would then be difficult to avoid,” President of the Association of German Banks (BdB), and Deutsche Bank CEO, Christian Sewing, warned on Monday at a virtual event.
He said that the economy was already being significantly impacted by the Ukraine war. “The chief economists of the private banks have halved their forecast compared to the estimates before the outbreak of the war,” he said, pointing to forecasts of 2% now expected for 2022. Even this forecast is subject to change. Because significant risks, such as energy prices first and foremost, have not yet been included in the calculation.
The debate has focused attention on plans to shut down Germany’s last nuclear power plants this year. Markus Soeder, the premier of the state of Bavaria, said the war in Ukraine should prompt a rethink of government policy, especially its reliance on wind and solar.
“We need five nuclear power stations for another five years and a pipeline from southern Europe to southern Germany,” he said. “We need to look into fracking.”