Germany can afford to ban Russian gas completely, so why hasn’t it?

Right now, the country’s leaders insist that is simply unaffordable. The Chancellor Olaf Scholz pleads that it would cost too many jobs, while the finance minister Robert Habeck has warned of social unrest. 

Seriously? Germany would grind to a halt without Russian energy? Ministers can argue that if they want to, but the blunt truth is the claim does not stand up to serious scrutiny.

An analysis by the widely respected Bruegel Institute estimates, the oil shipped in from Russia could be replaced with supplies from elsewhere in six months. 

With prices above $110 a barrel, output, much as you would suspect, is starting to soar again. 

Some adjustments would need to be made for grades, and ports, but it is ridiculous to argue that Germany can’t afford to pay for all the oil it needs. 

Likewise, the coal can be replaced within a year. The supplies of gas are, without question, trickier. But they could be stopped as well. 

An analysis by Benjamin Moll, professor of economics at the LSE, draws a comparison with the closure of nuclear power plants in Japan following the Fukushima disaster (nuclear accounted for 30pc of Japanese electricity at the time, but went to zero in a year). 

Drawing on that, the analysis suggests the impact to German GDP could be in the region of 1pc. In fairness, that may be too low. In Germany, the estimates of the overall hit to GDP vary from 3pc to 5pc. 

The important point is this, however: it is significant, but hardly catastrophic.

And of course, you also have to take account of all the steps that the government could be taking to mitigate the impact of closing the pipelines. 

Germany has a huge, energy intensive chemical industry. Close that for a year and it would need a lot less gas. 

It could put the car factories on a three-day week (after all they won’t be selling so many Beamers or Mercs in Moscow this year). 

It could impose home working for non essential staff, or it could put a 50km speed limit on the autobahns. 

If you can make those kinds of drastic changes to control the spread of Covid then it is hardly unreasonable to ask that you do at least as much to keep Europe free and safe. 

Sure, it will cost some money. Workers will have to be furloughed, and companies offered grants to suspend production. But Germany has a debt to GDP ratio of only 70pc, one of the lowest in the developed world. If 10 points are put on that ratio so what? It hardly matters.

Germany made a huge error in allowing itself to become so reliant on Russian energy. 

Its industrial and political establishment allowed itself to believe that Russia could be tamed, and that it would never risk losing access to European markets. 

It was a terrible call. And yet it could correct that if it wanted to. There would be a hit to GDP, but it would recover in a year to 18 months. 

A country as wealthy as Germany is perfectly able to afford that. It is shamefully hiding behind the excuse that the cost is too high. Until it switches off the gas it doesn’t deserve to be taken seriously. 

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