Germany's gas crunch and a geopolitical blunder in the making

When a memorandum comes round to Spanish civil servants advising that the air-conditioning can’t be set lower than 27ºC this summer, just one small facet of Europe’s energy crisis will be played out. From Donegal in Ireland to Thessaloniki in Greece, all across Europe cuts are being rolled out to meet consumption cutbacks of 15 per cent. There is one main culprit in this predicament and that is Russia, which has steadily reduced gas flows and is on a glidepath to stopping exports altogether. Germany is bearing responsibility, however, and if it is going to get through the winter, it has been forced to rely on the belief that it is too big to fail. But how many ordinary Europeans, like the clerks in the Spanish civil service sweltering through the heatwave, will appreciate the need to cut back on fuel to get Berlin out of its hole? When the welter of measures bite, the solidarity that Brussels likes to exhibit will certainly be more in theory than in practice. For a start, Germany has only itself to blame. The biggest manufacturing country in Europe was hooked on the idea of cheap gas. And as it poured billions into ever-bigger pipelines to the east, it brusquely shook off the pleas and cajoling of Washington and others, as it embarked on a geopolitical blunder. The Europeans reflected Germany’s dominant power in the EU and could barely bring themselves to make the same protests. In short, having seen the way Germany was standing up to the US, they could not break cover for better treatment for themselves. Take one small example from Spain again. For years, Madrid has talked about a trans-Pyrenees gas pipeline to improve the position of the Iberian peninsula. The move would have competed an extensive cross-EU pipeline network, something that the Europeans are normally keen to promote. Indifferent, Berlin quashed the proposal on the grounds of value-for-money and now Spain can only protest at its isolation. There is another aspect to the crisis that is brewing. Germany is facing this crunch while determined to close yet more nuclear power plants. At a time when it is effectively asking others to make cutbacks on its behalf, this sacrifice is not only consequential for Germany but for its neighbours as well. The well of sympathy is low as this realisation spreads. Small wonder that the German opposition party, the Christian Democratic Union, is now pushing for the plants to extend their productive lifespan so that there is a reserve production to draw on. Instead, Germany is ramping up its domestic warnings that households and municipalities must slash energy consumption. Under its plans, a Spartan summer from the 80 million strong population could go a long way to help it build reserves to a point that insulates it from a Russian cut-off. But the rhetoric of making sacrifices and sharing the burden from Berlin risks a big domestic backlash. With market prices high, the government is running a huge risk on taxing consumers with plans for a €1,000 per household levy on supplies. Once those bills start landing, Germans themselves will be wondering, like the rest of the Europeans, what exactly they are sacrificing for once again. The political balance of Europe is unsustainable under these pressures. This is mainly because the leadership resolve to stand up to the Kremlin is not directly connected to intolerable conditions. A change of leadership is already the consequence in the UK. While the British leadership race is not showing any chink of weakness on Russia, look to the Italian election in September. In contrast to 2008, Italy is in relatively good shape. Thanks to the bounce back in tourism, the Italian economy is growing where peers are shrinking. Its connectors with Libya and Algeria are standing it in good stead for supplies. For once, Germany is just as reliant on Rome as the Italians are on Berlin’s tolerance for rising public debt. The campaign could quickly turn into a bidding war, not over-imposing the pains to stand up to Russia, not even on diplomacy with Russia, but on dialling back the confrontation. Observers of the Kremlin believe Russian President Vladimir Putin thinks his psychology could reach all the way to Berlin. It is already possible to discern an influence campaign around this objective. Former German Chancellor Gerhard Schroder, who built the latest pipeline, was in Moscow last week. Olaf Scholz, his successor, would like to think himself as wily. In reality he could yet be history’s sitting duck. The German post-Cold War gambit was that trade and energy supply deals would give it leverage over Russia. But Russia has shown it holds the cards and is far more ruthless about its interests. The confounding thing is that a country as big, historic and significant as Germany is so becalmed in the face of its weaknesses. Fiddling with its energy mix and relying on its goodwill with its western European neighbours may, in fact, be the riskiest option of all.