Germany can waste a good energy crisis

Germany is facing a sudden acceleration of its gas crisis. The 60% drop in Russian supplies since the beginning of the month threatens to plunge it into a serious crisis. But Berlin’s confused response and its attempts to delay the impact of the power surge may make matters worse.

Whatever its controversial causes, the sudden slowdown in Gazprom’s contractual deliveries has forced the government to raise the level of emergency. Economy Minister Robert Habeck, leader of the Greens, has ordered increased use of coal. Liberal Finance Minister Christian Lindner has suggested delaying the planned closure this year of the three remaining nuclear reactors. The foreign minister’s advisers immediately contradicted him.

For now, Germany is slightly short of its gas storage target, with 59% capacity restored since the winter. His goal is 90% by December. Putin’s latest interruption calls that into question. Germany’s dependence on Russian gas has already been reduced in these months. Only 35% of its imports come from Moscow, compared to 55% before the war. In the worst case, a total disruption could hit as much as $220 billion in 2022 and 2023, or 6% of GDP this year, according to estimates. think tanks Germans.

The crisis casts a harsh light on the government’s economic policy. This has raised the level of alarm, but has refused to allow energy producers to pass on price increases to industry and households, thus depriving themselves of a powerful incentive to reduce consumption.

The government could do the sensible thing and let price signals work, while using its budget to initiate transfers to lower-income households or struggling SMEs. But his dogmatic adherence to strict budget discipline, even in the midst of a major crisis, could prevent him from doing so. Germany was already on track to have one of the slowest growth rates and highest inflation rates in the OECD. Now you run the risk of wasting a good crisis.