Thursday

22nd Feb 2024

MEPs tell Germany's Scholz to cut Russian gas

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Dozens of European lawmakers from across the political spectrum are pressuring Germany to stop its Russian gas imports.

In a letter sent over the weekend to Germany's chancellor, Olaf Scholz, the MEPs argue that the economic fallout from a Russian energy embargo is manageable.

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"The effects to the German economy, despite its dependency on Russian energy imports, are likely to be substantial but manageable," they said.

They cite figures suggesting a GDP growth decline in the range of 0.5 percent to three percent, compared up to 40 percent drop for Russia by the end year.

"Germany, and the EU, should not prove themselves vulnerable to Putin's blackmail," they said.

But the Bundesbank, Germany's central bank, says the figure is closer to five percent, around €165bn in lost output, and would trigger a sharp domestic recession.

Germany's reliance on Russian gas over the past decade, by its leadership under former chancellor Angela Merkel, has now left it politically and economically tethered to Moscow.

One of its top pro-Kremlin lobbyists is former SPD chancellor Gerhard Schröder, who presides over the board of Russian oil company Rosneft.

Schröder has refused to resign, despite mounting pressure from Germany's Social Democratic party.

Ukraine's president Volodymyr Zelensky has since ecalled Germany's resistance to cut off Russian energy as "blood money."

Although the EU will ban Russian coal as of August, the gas will likely continue to flow until 2027, according to Austria's federal minister for climate, Leonore Gewessler. The EU is set to discuss the issue at its next EU summit.

"At the moment, we in the EU do not have a unified position on this question," Josep Borrell, the EU's foriegn policy chief, told German newspaper Die Welt.

Russian gas made up 42 percent of Europe's gas imports.

Currently, EU states collectively send some €800m daily into Moscow's coffer, money then used to finance its war in Ukraine.

This represents around a three-fold increase when compared to Russian energy prices last year.

It also undermines the impact of international sanctions on Moscow, whose economy and currency appears to be so far cushioned.

The EU is possibly preparing a sixth round of sanctions against Russia, set to be announced this week.

Meanwhile, Berlin says it would take until 2024 to wean itself off Russian energy.

Germany currently buys around 25 percent of its oil and 40 percent of its gas from Russia.

Threat of EU oil ban already costing Russia

Russia is already losing oil income due to the threat of a future EU embargo and there is no evidence of large-scale sanctions evasion, the EU Commission has said.

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Finland is expected to kick off a debate on the country's potential Nato membership. But Russia has clearly voiced opposition towards any potential enlargement of the western military alliance.

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