Sunday, 10 April 2022

Ukraine & Gas: What Germany Does Next ...

These are extraordinary times.  Some weeks ago I was finding it hard to believe German politicians really understood how their energy economy worked when they blithely approved their initial wave of 'anti-Russian' measures - rearming themselves, "suspending" Nord Stream 2, rowing back on decommissioning coal plants etc etc - and that Putin probably misjudged, i.e. badly underestimated, their ignorance, to his cost.   Even the economy minister, a Green, lined up behind the coal decision and initially thought they might be able to throw their nuclear closures programme into reverse.     

Well, his civil servants disabused him of that one in a hurry - and probably several others of his green fantasies, like *we don't really need fossil fuels at all*.  Before the Bucha footage hit the meejah, it all rather looked as though Germany and France were quietly backsliding towards self-interested appeasement of Putin.  National self interest: it's what politicians are for.

Then Bucha.  Now the cry goes up again: stop buying Russian coal (easy) / oil (bit more difficult) / gas (bloody difficult!).  Now obviously some of these cries are from quarters, e.g. USA, that would be little affected.  Others come from deeply ignorant greens on the one hand, and outright warmongers on the other - Guardian Newspaper, this means you.  (Probably well-represented in both categories, actually.)  But yet others seem to be from the German populace at large.  Initially their newly-educated politicians were in "Easy, tiger..." mode; but now the cry seems fairly widespread, and people are seriously asking: could Germany really do this?  Well, that's indeed a serious question on a serious subject: and some apparently intelligent people are saying 'yes'.

Here's where the difficulty starts when trying to figure out what's going on.  There is definitely a 'war' party, as well as an utterly na├»ve green faction, but let's put them to one side.  Do the apparently more sober boycott advocates mean:

  1. ... but we know it'll be very difficult, to be phased over 3-4 years  - ?
  2.  Do it now: we know it'll be catastrophic for the German economy & people, but it's a price we must pay  - ?
  3.  Do it now: we think there are clever ways of doing this, albeit at some cost, but no worse than (e.g.) covid lockdown or re-unification of East Germany  - ?
There are probably folks to be found in each category.  For what it's worth, my assessment of these three lines is as follows.

1.  Yes, even 3-4 years won't be at all cost-free, neither for Germany nor for its EU brethren (nor indeed us in the UK, as gas prices will soar).  But yes, at that cost, it's doable.  PS, Germany had better look out for the interests of several other EU countries, for whom the hit may be worse.  They'll certainly be invited to pay up in support, via some euro-mechanism or other.

2.  'Catastrophic' is putting it mildly for the outcome of turning off the Russian gas prior to next winter.  And in the longer term, as noted here before, Germany's natural energy resources beyond coal & lignite are very meagre - not a fraction of the wind potential that we enjoy, and not much sun to speak of.  Plus, of course, Merkel purposefully omitted to build any LNG import infrastructure, as we've noted oft before.

3.  Of course one should always be as clever as possible; and maybe my imagination is lacking: but I can't see anything other than some really obvious, and somewhat limited mitigants for the pain, certainly if next winter is cold, but also economic pain extending many more years than the covid-related hit.

Can Germany take such a hit?  Can we?  Well, "there's a great deal of ruin in a nation", as the EU clearly forgot when it came to Brexit, assuming as they did that the UK couldn't do anything other than roll over.  But, of course, it applies symmetrically to Russia, which may be able to manage with even heavy sanctions for quite a while: (they outlasted Hitler, didn't they?) - a topic we'll return to next week.

If indeed Germany does propose to don a genuinely painful hairshirt in defence of Ukraine, the internal consequences will be extremely severe, and lasting.  And the knock-on won't be a joke either - particularly for Eastern Europe (except, ahem, Hungary ... unless Germany takes steps to block them off, too) but without doubt hurting everyone else in Europe, including ourselves.  For us, it will mostly be via price, as everyone bids into a much diminished gas supply, which can't leak out via cargo-laundering as oil can.  But the price pain will be quite bad enough.

Later next week, we'll turn to how things would play out in Russia following a doomsday oil & gas boycott.

ND

17 comments:

Sobers said...

I don't think Western politicians (or civil servants to that matter, they are all cut from the same PPE cloth) have any idea the extent to which their countries are reliant on fossil fuel energy to create the wealth that keeps everyone housed, warm and fed. They are all so far up their own alimentary canals that they haven't a clue how close to societal collapse they would be if they pulled the plug. They have lived in a world of 'If I say it, that makes it true' for so long now they are completely divorced from any reality they don't like the look of. We have political class now who genuinely think men can become women, so the idea that they can switch off the fossil fuels and renewable energy will somehow magically save the day with a puff of rainbow unicorn farts is hardly any more unbelievable.

Jan said...

Aside from the energy scenario, I for one am finding the constant war coverage is becoming (dare I say it) tedious and it's so obvious we are being primed by the meeja for a prolonged campaign which we are being gaslit(gaslighted?) into joining. I don't remember any previous war being so estensively covered and such an emaphasis on the destruction and devastation and wall to wall sob stories.

As far as I know it was/is as bad in Iraq/Syria/Libya and Yemen etc. War is always awful for anyone caught up in it and the effects are longlasting for several generations.

Putin had warned for years he didn't want NATO on his doorstep and also Russians in the east had been subjected to 8 years of attacks from Romanian forces/militia groups/thugs. The US industrial-military complex needs wars to justify its existence and as a way of making money.

People need to wake up and realise they are being played over and over again.

Don Cox said...

Putin doesn't want NATO on his doorstep because it's preventing him from reconquering Poland, Czechoslovakia, etc.

I have no sympathy with people who want to be Presidents-for-Life and change their countries' constitutions to allow the unlimited power.

Don Cox

Wildgoose said...

One of the reasons why Russia (along with Belarus and Ukraine) pulled the plug on the USSR is that they realised they were the ones having to bankroll the thing. (A bit like England being forced to bankroll the rest of the UK).

Why on Earth would they want to take on the costs of subjugating and forcibly reintegrating Poland, the Czech Republic, Slovakia, et al?

It doesn't make any sense.

What does make sense is clear red lines against any further aggression towards Russia, red lines which the West promptly and deliberately crossed.

Ukraine has been shelling Donetsk and Luhansk (which contain millions of what Ukraine claim to be their own citizens) for the last 8 years. The response to Russia finally recognising they were independent of Ukraine was for Ukraine to double the rate of shelling. It wasn't Russia who started a "hot" war.

And I see that Pakistan's refusal to toe the American line on Ukraine has caused the USA to attempt yet another "regime change". But the more times they do this, the more countries will choose to join a Chinese led alternative. The clowns in charge are doing permanent damage to our long term interests.

dearieme said...

If there were some way that Russia could take Paris, Berlin, and Brussels without harming the rest of us I'd vote for it in a shot (if you see what I mean).

I shall not forget that those fuckers threatened us with a restarted terrorist war in Ireland, which makes them mega-hypocrites on the subject of wars of aggression.

P.S Lest I forget, add Dublin to my little list.

Anonymous said...

One thing the Russian invasion of Ukraine has exposed, all the deep state operatives on any number of supposedly free market blogs. That is interesting.

This is too. Ukraine approves strategy to retake Crimea, risking all out war with Russia. March 2021.

Well, Ukraine might have been well served if it had taken on a little less risk.

Then only two months later we have the British meddling in affairs that don't concern them.

What a surprise!

Then we have the utter pillock Ben Wallace, unable to stop his mouth running. Fer christ sake - actually for the sake of the poor bastards sent out on his instructions. Ben, just keep your mouth shut, you self important little berk!

Nick Drew said...

@ all the deep state operatives on any number of supposedly free market blogs

Name names, *anon*!

Oh, ...

E-K said...

A reunited, armed and hungry Germany.

What's not to like ?

E-K said...

... and this time it's Blighty that's forced to splinter.

jim said...

Putin is not a subtle operator. He has cut off the option of allowing the West to sell Ukraine down the river and he has failed to achieve any sane military objective. Even if he falls back behind the Crimea and Donbass, objectives he already possessed de facto he has now built up a decade or twos worth of completely unnecessary opprobrium - for nothing. He can't really be allowed to walk away scot-free however much the diplomats obfuscate. We may even feel obliged to chuck him out of Donbass and Crimea.

Making noises about cutting off the need for Russian gas may be a useful tactic in a strategy to get rid of Putin. Russia is a one-trick pony and cutting off a couple of legs will do it no good at all. Still, the Russian people are used to rubbish government all the way back to the Tsars and are not in much of a position to oust Putin. So it will have to get pretty bad before Putin is pushed.

Putin is well entrenched and it may be necessary to go all the way to starting construction of a gas terminal or two before his oligarchs get the message - that their poverty is a long term threat. Even so Russia does have other but less lucrative markets in Asia and China but they will be looking at the competitive position. In particular being dependant on poor-ish nations to sell one's gas and oil is not a good look. But once those gas terminals are built Russia is boxed in forever.

Still, the game now is to make it all look good for the May Day celebrations - appearance is all.

Wildgoose said...

> less lucrative markets in Asia and China

And yet only this morning I was reading that Russia is selling its hydrocarbons to Asia for 3 or 4 dollars more per barrel than it was getting in the West?

And I see they are now going with the "false flag" of a so-called "chemical attack". Just like they did when Russia finally stepped in to deal with ISIS and the West acted to support ISIS by bombing Assad over a false "chemical attack" outrage.

At what point do people finally understand that we are ruled by our very own corrupt oligarchy and that these people are most definitely not the Saints they claim to be?

Anonymous said...

Reuters.
Today.

“India, the world's third-biggest oil importer, has increased purchases of Russian crude in recent months because Moscow has been forced to sell its oil at a steep discount since invading Ukraine.”

And has been heavily discounting since sanctions imposed.

Wildgoose said...

> forced to sell its oil at a steep discount

Yes, I've seen that as well, (not today, but the exact same wording was used around a fortnight back). So how do we reconcile these contrasting news stories?

Simple.

We're being lied to.

Constantly.

About everything.

Nick Drew said...

Wildgoose: "We're being lied to. Constantly. About everything."

That, of course, is what Russia has long been encouraging everyone to believe, in order to sow fear, doubt & (on the other hand) apathy & disengagement

the strategy has a name but I've momentarily forgotten what it is

Wildgoose said...

@ Nick Drew

I believe "Maskirovka" is the word you are looking for.

However I believe it is being applied by our own governments against us, as much as by the Russians.

Nick Drew said...

no no no, that's something very specific & quite different

no, it's a modern coinage, meaning the way in which, when faced with unpalatable facts, Russia blasts out a barrage of lies and distractions to leave the ordinary punter saying just what you said.

I'll find it in a bit.

visc said...

I am sure there is a Russian phrase for misdirection. I think the point Wildgoose was indicating is that it is hardly a Russian only game.

Lets take Bucha as an example, Nick Drew - are Reuters and the Pentagon being Russia disinformation agents?

https://www.reuters.com/world/pentagon-cant-independently-confirm-atrocities-ukraines-bucha-official-says-2022-04-04/

Talking of lies, propaganda and agenda pushing, the barrage of Ukrainian propaganda is interesting to observe. There do though seem to have been a few cock ups recently in the crafted messages to Parliaments and Assemblies.

Telling the Israeli's that the Ukrainians were suffering was comparable to the Holocaust was not a great move.
https://www.timesofisrael.com/israeli-lawmakers-tear-into-zelensky-for-holocaust-comparisons-in-knesset-speech/

And bringing an Azov Nazi to accompany Zelensky on the speech to the Greek Parliament another misstep of outrage.
https://greekreporter.com/2022/04/07/greek-azov-fighter-zelensky-speech-greek-parliament/

Talking of propaganda an agenda pushing, it is interesting to see our brain dead supply teacher of a Foreign Sec accepting at face value any claims of chemical weapons use that fit her agenda, whist even the is sceptical.
God help us if Andrew Neill is right and she is the next Tory leader, another disaster in the making.