After vetoing the decision of a united price cap on gas, Germany decides to follow suit and do it nationally. A move that angered many inside the European Union.
Germany announced a massive indebtment of €200 billions in order to finance a price cap of natural gas. The decision obviously comes in the wake of winter, when the absence of Russian gas imports will be felt on the average consumer. As we all know, after the war in Ukraine started Russia slowly but surely closed the tap of natural gas, a resource vital for European heating and energy.
Germany was one of the most vulnerable countries, as decades of bad decisions suddenly made them deprived of natural gas. Now, they are determined to act in favor of the average German citizen, borrowing a whopping €200 billions in foreign debt. In comparison, that’s half as the overall German federal budget for 2022.
This decision was also likely influenced by the dangerous gas leaks in the Baltic after the sabotage of Nord Stream 1 and Nord Stream 2 pipelines.
“Prices have to come down, so the government will do everything it can. To this end, we are setting up a large defensive shield,” were the words of German chancellor Olaf Scholz. And indeed, this will shield them for the moment, but will come down as a hammer in the following months and years.
Following the decision, German Finance Minister Christian Lindner pointed out that Germany already took a significant amount of debt this year. After the invasion started, Berlin announced a significant increase in the military budget. Adding this to the new debt, it comes down to €386 billions, basically as much as the entire national budget for this year. A move that, Lindner fears, will halt Germany’s growth for many years to come.
A sign of European disunity
But Lindner is not the only vocal critic of this measure. The rest of the European Union watches in shock: Germany was one of the major opponents for the price cap on European gas.
Indeed, now the EU will face a cold winter without a price gap on gas because of Germany’s veto. And Germany herself made many European nations dependent on Russian gas with her strong influence over the Union. For the record, the Netherlands, Denmark and the ECB were also against a united price gap on gas, claiming that low prices would drive suppliers away.
In any case, many see this move by Germany as another step towards disunity. Italian Prime Minister Mario Draghi, who will soon leave office, expressed disappointment towards this decision.
Germany has apparently decided to fight this crisis alone, but how far will it go without the rest of the Union to support her?
