In the German cities and in the countryside, the smoke is in full swing at the beginning of summer. A whole prosperity based on cheap energy goes up in smoke. For the first time since 1991, the country’s trade balance, a national pride, has plunged into the red and the government is expected to submit legislation to parliament this week authorizing it to help the country’s energy companies. At the top is the company Uniper, one of the most important importers of gas across the Rhine. The state could advance him almost 9 billion euros and get into his capital, as it did with Lufthansa at the height of the health crisis.
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Don’t be mistaken, as Economics Minister ecologist Robert Habeck said on Sunday: “We are not facing erratic decisions, but a completely rational and very clear economic war. In the face of rising prices and falling supplies, he speaks openly about energy rationing. Unheard of since World War II.
With its trade deficit of almost 85 billion euros (excluding services), France obviously cannot offer advice, let alone rejoice over the situation since Germany is its first partner. Over the past 12 months, Berlin still has a surplus of more than 170 billion, but the trend is not good. In May, overseas sales fell 0.5% while imports rose 2.7%. The main culprit, of course, is inflation, with import prices up 30% yoy in May while export prices are up just 16%.
Achilles heel
As the beating heart of happy globalization with its extremely sophisticated logistics chains, Germany seems to be the first victim of the current new situation. His model was based on cheap Russian gas, tight industrial organization and unlimited Chinese outlets. These three well-oiled machines are suddenly struck by the war in Ukraine, logistical chaos and bottlenecks in China.
First short-term observation: European sanctions have not only failed to bring Russia to its knees, they have had the opposite effect. By announcing restrictions that will come later, the West has caused an immediate increase in gas prices, which will fully benefit Russia. Its currency has stabilized and its budget is even in surplus. As the economist Philippe Martin suggests, it might have been necessary to introduce tariffs or a maximum price immediately. Not easy. Secondly, the extreme dependence of our national economies, and Germany in particular, on imported gas. Unlike the United States, Europe’s energy sovereignty is Europe’s Achilles’ heel, and regaining it will be long and painful.