"Direct attack on Europe and the United States" The German people will soon be frozen?

Russia continues to reduce its gas supply to Germany. Now, the maintenance of the Nord Stream No. 1 gas pipeline is out of service. No one knows if it will restore gas supply. It became a means of pressure on the Kremlin.

Recently, many tenants in Germany have received unpleasant emails. As energy prices soared, homeowners and property management companies increased their monthly flat heating bills. A Berlin-based housing company announced that it will double the heating costs of 31,000 apartments operated by it that use natural gas or fuel.

Whether the price increase ends here is far from clear. High energy prices have a lag effect, as advance payments are not finalized until the end of the year based on actual costs. According to a calculation by the German Housing Association (GdW), a group of 3,000 housing companies, each household will increase its energy bill by an average of up to 3,800 euros in the coming year.

Endanger social peace

The Saxony Association of Housing Cooperatives warns that it involves ordinary earners who "cannot make up for such price increases by forgoing one or two vacations." It endangers the livelihood of families. The political community should be clear about this. "

It's not just energy prices that are putting pressure on people along the way. Inflation has affected almost everything. German Chancellor Schoerz has also made it clear that no country in the world can stop the impending cost avalanche: "We can't provide enough subsidies to keep the price low." The Federal Economy Minister has repeatedly reminded Germans for weeks to save energy.

Use cold water and wear warmer

Vonovia, Germany's largest real estate company, plans to reduce consumption by 8 percent by reducing night-time heating temperatures to homes that use natural gas to 17 degrees. The company said that during the day, heating continued as usual; Hot water supply is also unaffected and there will be no restrictions on showers or tubs.

In Dippoldiswalde, Saxony, the situation is different. A local housing cooperative recently informed its tenants that in the future, there will only be hot water in the early morning, noon and evening, and the heating will continue to be turned off until September. The notice of the housing cooperative reads: "As announced at the members' meeting, we must now save for winter. "

"Ordinary people are ahead of Berlin politics"

Images of the notice appeared on social media, causing fierce controversy. Federal Building Minister Klara Geywitz is busy calling the restrictions illegal. The German Tenants' Association noted that in the absence of hot water, rents need to be reduced.

The housing cooperative disagreed. One director said the tenants showed great understanding. He said he was happy that even if the company was now being abused, it would spark a discussion. He told TAK: "The people are already ahead of Berlin politics. “

Nervous to look at North Stream

Can politics really not keep up with the dramatic change of circumstances? At the Federal Ministry of Economics, air conditioning was turned off a few weeks ago and there are plans to reduce heating in the fall. Minister Robert Habeck told the Bundesrat on Friday (July 8) that federal state ministries and public bodies could also take this step.

The truth is that berlin has underestimated the extent of its dependence on Russian gas for too long. Most of the natural gas used in Germany is fed directly through the Nord Stream 1 pipeline, which crosses the Baltic Sea. According to figures provided by the Federal Ministry of Economic Affairs, Russian gas will account for 55% of total German imports in 2021; It still stands at 35 per cent.

Is it just a repair or a shutdown?

Russia has slashed supplies, citing the fact that a Siemens Energy turbine overhauled in Canada is stranded because of sanctions against Russia. The German government has recommended to Canada that the turbines be shipped to Germany first and then to Russia.

On July 11, the Nord Stream Pipeline will be completely closed for maintenance. Will Russia re-inject gas after the scheduled 10 to 14 days? According to the Kremlin, "if the overhauled turbines arrive, the gas supply can be increased". It said Russia does not use gas as a political bargaining chip.

Prepare for the worst

And that's exactly what the German government is worried about. Berlin has accused Russia of carrying out "economic strikes" because of sanctions. The German government is looking forward to the best outcome, but at the same time preparing for the worst: passing laws and regulations one by one to mitigate the consequences and effects of energy shortages and rising prices.

The new Energy Security Law provides that more coal power plants can be temporarily used to replace natural gas power plants for heating in the future. To date, the use of coal power has been decreasing for climate protection reasons.

Inject 9 billion into Uniper?

On the other hand, the federal government has increased funding for energy companies that are on the verge of bankruptcy. Take Uniper, Germany's largest energy importer: An energy supplier that relies more on Russian gas than any other company says it has received only 40 percent of its contracted gas supply from Gazprom since mid-June and can only procure the shortfall at higher prices on the international market.

This put the company in financial trouble and demanded financial help from the state. At present, the amount of funds negotiated by the two sides is 9 billion euros. The federal government's stake in Lufthansa during the worst of the COVID-19 pandemic may be precedentary. After The situation of Lufthansa improved, the government sold its shares and even made a lot of profits.

A serious economic crisis is about to occur?

However, the number of financially troubled energy suppliers is increasing almost daily. How big can the financial umbrella for systemically important energy providers be without overburdening the country? In particular, the manufacturing industry has become almost unable to pay gas bills.

Friedrich Merz, president of the CDU, warned in the Bundestag: "We may be on the verge of the worst economic crisis since the establishment of the Federal Republic of Germany." He pointed out that inflation has hit the highest rate in 30 years, and for the first time in decades, import and export trade has exceeded, that is, imports are higher than exports. Meertz said German companies are facing the threat of eventually losing their international competitiveness.

The economy is down by twelve percent

At the end of June, the economic research institute Prognos studied the possible consequences of a complete halt to Russian gas supply. The study notes that once this happens, Germany will have to find ways to cope with supplies from other countries and gas stockpiled so far.

According to the study, within the first 4 weeks of the cessation of supply, natural gas may no longer be able to meet all aspects of demand, and given the legal requirement to prioritize households, social services and district heating, it will affect manufacturing first. Industries such as steel, pig iron, chemicals and glass will be most affected, with production cuts of up to 50%.

The study notes that, in effect, the entire economy will be affected. The research institute believes that if Russia suspends gas supply, German economic output could fall by 12.7% by the end of this year. For comparison: The "shutdown" caused by the COVID-19 pandemic in the spring of 2020 caused a historic decline in GDP in the second quarter of that year, a 9.7% year-on-year decrease.