Live updates: follow the latest news on Russia-Ukraine
For years, the US warned Germany of building up a dangerous energy dependence on Russia, the source of more than half of its fossil fuel imports. Now that the war in Ukraine has shocked Berlin into the same conclusion, the government is finding that changing course might be too late.
Europe’s largest economy is facing up to the prospect that the bulk of its natural gas and coal supplies could get choked off, hitting its industrial base and sparking economic upheaval.
Companies including utility Uniper and chemical giant BASF are particularly exposed, and with gas reserves low, the damage would quickly spread to manufacturers and households already buckling under increasing bills.
“If either the Europeans no longer want to buy the gas or Russia cuts them off, that would be a very significant shock,” David Folkerts-Landau, the chief economist at Deutsche Bank, said in a Bloomberg TV interview this week. “You will have a very serious recession.”
Chancellor Olaf Scholz’s government said the country’s gas needs are covered until next winter. But Europe’s gas storage facilities are now less than a third full, well below the average for this time of the year.
To compensate for lost Russian gas, Germany would need deliveries from the world’s entire 600-vessel fleet of liquefied natural gas tankers, business lobby DIHK estimates.
For now, Moscow has given no indication that it may cut off supplies, while Germany opposes sanctions or political pressure that would prompt a full energy embargo. But already, Berlin is in crisis mode.
Highlighting the sense of urgency, the government has authorised a €1.5 billion ($1.7bn) ad hoc payment to secure LNG. At current prices, that is only about a week’s worth of gas, according to BloombergNEF estimates, and LNG is typically at least 10 per cent more expensive than supplies piped from Russia.
“I say this with great regret and without a smile on my face: Germany is dependent on Russian energy imports,” Robert Habeck, Germany’s Vice Chancellor and Minister for the Economy and Climate Policy, said this week.
In the event of a supply shutdown, Uniper would be likely to be one of the first companies to feel the fallout.
The Dusseldorf-based utility has more than half of its long-term gas contracts with Russia and faces a bleak future if those supplies are cut off. That would have a knock-on effect on consumers and factories dependent on its electricity.
The company is facing the crisis on shaky ground. Extreme price movements have forced it to borrow billions of euros to back up trading bets. Meanwhile, its investment in the Nord Stream 2 pipeline to Russia is likely to be lost after Germany put the gas link on hold.
“The situation at the Russian-Ukrainian border leaves us at Uniper profoundly unsettled,” chief executive Klaus-Dieter Maubach said a day before Russia started the military offensive.
German oil and gas producer Wintershall Dea also wrote down €1bn invested in the controversial $11bn project, which had long irked the US because of the Russian connection but was nevertheless nearing completion until the government halted certification.
The first Nord Stream pipeline, which bypasses Ukraine to connect Germany directly with Russian gasfields, was opened by former chancellor Angela Merkel in 2011, who called it a “remarkable achievement".
Mr Scholz also announced plans to fast-track construction of the country’s first LNG terminals, but that would still take years. In the short term, the government released a crisis plan, including building up coal reserves for power plants and forcing gas firms to keep minimum storage levels – nearly a third of that capacity is controlled by Russia’s Gazprom PJSC in a further sign of Germany’s dependence.
The ultimate fix is a shift towards renewable power, which will also take time and money. Germany has already retreated from nuclear energy after the Fukushima reactor disaster in Japan a decade ago – its final three reactors are scheduled to be shut down this year.
Insurers Euler Hermes and Allianz estimate that it would require €170bn in investment a year for the European Union to gain independence from Russian energy.
Mr Habeck, a former co-leader of the Green party, proposed legislation this week that would roughly triple the pace of adding wind and solar power.
“What was consciously built up in the last 10, 15 years – namely, making the dependence on Russian energy greater – can’t of course be completely changed in a few days or in three months,” Mr Habeck said on Thursday after convening with business leaders to discuss the crisis. “We will and need to remain open for energy imports from Russia.”
I say this with great regret and without a smile on my face: Germany is dependent on Russian energy imports
Robert Habeck,
Germany’s vice chancellor and minister for the economy and climate policy
The reason for concern is clear. Russia supplies more than half of Germany’s gas, half of its coal and roughly a third of its oil. BloombergNEF estimates that replacing Russian gas would require an additional 82 LNG tankers a month, more than the February output of Qatar, one of the world’s top producers.
Russia shutting down deliveries isn’t a far-fetched scenario, because gas only provides the government with a quarter of the revenue compared with oil, according to Stefan Ulrich, a BloombergNEF analyst.
“Industry production in Germany would be extremely affected in such a case,” said Volker Treier, head of the foreign trade board of Germany’s industry lobby group DIHK, adding that compensating for the loss of Russian gas in the short term “borders on the impossible".
A gas shortage could prompt BASF to halt some factories, dealing a blow to supplies of materials used in cars, fertilisers and medicines across Europe.
Some energy-intensive companies are starting to inquire about alternative fuels in the event of a gas cut-off, according to Wolfgang Hahn, owner of Energy Consulting, which advises hundreds of companies in Germany.
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Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
EA Sports FC 26
Publisher: EA Sports
Consoles: PC, PlayStation 4/5, Xbox Series X/S
Rating: 3/5
Essentials
The flights: You can fly from the UAE to Iceland with one stop in Europe with a variety of airlines. Return flights with Emirates from Dubai to Stockholm, then Icelandair to Reykjavik, cost from Dh4,153 return. The whole trip takes 11 hours. British Airways flies from Abu Dhabi and Dubai to Reykjavik, via London, with return flights taking 12 hours and costing from Dh2,490 return, including taxes.
The activities: A half-day Silfra snorkelling trip costs 14,990 Icelandic kronur (Dh544) with Dive.is. Inside the Volcano also takes half a day and costs 42,000 kronur (Dh1,524). The Jokulsarlon small-boat cruise lasts about an hour and costs 9,800 kronur (Dh356). Into the Glacier costs 19,500 kronur (Dh708). It lasts three to four hours.
The tours: It’s often better to book a tailor-made trip through a specialist operator. UK-based Discover the World offers seven nights, self-driving, across the island from £892 (Dh4,505) per person. This includes three nights’ accommodation at Hotel Husafell near Into the Glacier, two nights at Hotel Ranga and two nights at the Icelandair Hotel Klaustur. It includes car rental, plus an iPad with itinerary and tourist information pre-loaded onto it, while activities can be booked as optional extras. More information inspiredbyiceland.com
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
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Various Artists
Habibi Funk: An Eclectic Selection Of Music From The Arab World (Habibi Funk)
Defence review at a glance
• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”
• Prioritise a shift towards working with AI and autonomous systems
• Invest in the resilience of military space systems.
• Number of active reserves should be increased by 20%
• More F-35 fighter jets required in the next decade
• New “hybrid Navy” with AUKUS submarines and autonomous vessels
How Voiss turns words to speech
The device has a screen reader or software that monitors what happens on the screen
The screen reader sends the text to the speech synthesiser
This converts to audio whatever it receives from screen reader, so the person can hear what is happening on the screen
A VOISS computer costs between $200 and $250 depending on memory card capacity that ranges from 32GB to 128GB
The speech synthesisers VOISS develops are free
Subsequent computer versions will include improvements such as wireless keyboards
Arabic voice in affordable talking computer to be added next year to English, Portuguese, and Spanish synthesiser
Partnerships planned during Expo 2020 Dubai to add more languages
At least 2.2 billion people globally have a vision impairment or blindness
More than 90 per cent live in developing countries
The Long-term aim of VOISS to reach the technology to people in poor countries with workshops that teach them to build their own device
SPEC%20SHEET%3A%20APPLE%20M3%20MACBOOK%20AIR%20(13%22)
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COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
Try out the test yourself
Q1 Suppose you had $100 in a savings account and the interest rate was 2 per cent per year. After five years, how much do you think you would have in the account if you left the money to grow?
a) More than $102
b) Exactly $102
c) Less than $102
d) Do not know
e) Refuse to answer
Q2 Imagine that the interest rate on your savings account was 1 per cent per year and inflation was 2 per cent per year. After one year, how much would you be able to buy with the money in this account?
a) More than today
b) Exactly the same as today
c) Less than today
d) Do not know
e) Refuse to answer
Q4 Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”
a) True
b) False
d) Do not know
e) Refuse to answer
The “Big Three” financial literacy questions were created by Professors Annamaria Lusardi of the George Washington School of Business and Olivia Mitchell, of the Wharton School of the University of Pennsylvania.
Answers: Q1 More than $102 (compound interest). Q2 Less than today (inflation). Q3 False (diversification).
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
RESULT
Huddersfield Town 2 Manchester United 1
Huddersfield: Mooy (28'), Depoitre (33')
Manchester United: Rashford (78')
Man of the Match: Aaron Mooy (Huddersfield Town)
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now
Zayed Sustainability Prize
The Florida Project
Director: Sean Baker
Starring: Bria Vinaite, Brooklynn Prince, Willem Dafoe
Four stars
The five pillars of Islam
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
MORE ON TURKEY'S SYRIA OFFENCE
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
UAE currency: the story behind the money in your pockets
