Gas dispute with Russia: the economy warns of a serious crisis

Status: 04/01/2022 12:14 p.m

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Against the background of the gas dispute, German companies are concerned: an import stop or long-term failure of gas supplies from Russia could cause major economic damage.

In the German economy there are fears that the Federal Republic could plunge into a serious crisis if Moscow stops gas supplies or if the West imposes an energy embargo on Russia.

BASF CEO Martin Brudermüller warned of unprecedented economic damage in the event of an import freeze or long-term failure of gas and oil supplies from Russia. “That could bring the German economy into its worst crisis since the end of the Second World War,” said Brudermüller of the “Frankfurter Allgemeine Sunday newspaper”. The construction and energy expert Lamia Messari-Becker, who advises the federal government, warned of the devastating consequences of a stop in Russian gas supplies. If raw materials industries came to a standstill, there would be a domino effect that would be unstoppable and difficult to repair,” she told the dpa news agency.

“Without natural gas, no production of steel”

At the Salzgitter steel group, it was said: “Without natural gas, there can be no production of steel.” Politicians must be clear that the energy supply and the energy transition depend on production, said a company spokesman.

Siemens Energy boss Christian Bruch told the “Handelsblatt” that a short-term boycott would have a greater negative impact on Germany than on Russia. For some industries, the gas supply is existential. “Just take the glass industry. Once the plants go cold, they’re gone.”

Glass manufacturer Wiegand is preparing for a shutdown scenario. “We are currently working on how, in the worst case, we can shut down the furnaces ourselves in a controlled manner,” said Managing Director Nikolaus Wiegand. In eleven such furnaces, the company on the border between Bavaria and Thuringia keeps thousands of tons of glass at a temperature of around 1600 degrees Celsius around the clock. If the flow of gas dried up overnight, the glass would get cold and harden. The melting tanks could then no longer be saved – a loss of millions.

Payments are to go through Gazprombank

According to the Russian statement, Western countries such as Germany must open accounts with Gazprombank as of today in order to continue receiving gas. Otherwise, deliveries to “unfriendly countries” would be stopped, President Vladimir Putin had announced. The states must therefore ensure payment in Russian currency via accounts that have an area for currencies – i.e. euros or dollars – and one for rubles. According to the decree signed by Putin, these accounts can be funded in euros or dollars. Gazprombank then exchanges the money for rubles and transfers the amount to Gazprom.

The federal government insists that payments must be made in euros or dollars, as agreed. The exact impact of the changed modalities is unclear. Analysts in Moscow assume that the system will not be fully effective until April and May.

The Federal Ministry of Economics announced the early warning level of the gas emergency plan on Wednesday, the first of three levels. This is intended to strengthen the provision for a delivery stop. The appeal went to consumers and companies to save energy.

According to the Federal Network Agency, the gas supply in Germany is currently stable. There are no impairments to deliveries to Germany.