🗜️ Germany's Gas Gamble

Just 5 months into Russia's invasion of Ukraine and Putin is starting to tighten the noose on Europe's energy supplies ahead of winter. This pinch is being felt most acutely in Germany — the EU's largest economy — where 55% of natural gas supplies come from Russia. Now, as Russia has announced that it will slow the flow of gas to the country through the Nord Stream 1 pipeline beginning this week, the German government is in full crisis mode, jumping in to save one of its biggest natural gas providers, Uniper. Last Friday, German Chancellor Olaf Scholz announced that the government would purchase a 30% stake in Uniper to keep the company from financial collapse.

• “We will do everything that matters, today and for as long as necessary,” the chancellor said in a statement, which outlined the bailout plus other emergency measures aimed to prepare for the energy crisis, reports The New York Times. “We will make sure that nobody is overwhelmed in the current situation.” 

• The purchase by the German government hurts some of Uniper's current shareholders, including Fortum, a Finnish state-owned energy company.

A Voluntary Cut

This gas shortage will hurt the rest of Europe, not just Germany. To prepare, the EU (led by Germany) is proposing natural gas rationing and supply sharing across the continent. “We will help each other with gas supplies,” Robert Habeck, the German Economics Minister told his Czech counterparts this month during a visit to establish an agreement, says Der Spiegel. Yet, not all Europeans are keen on this plan. “Where was Europe's energy solidarity and energy security when the Germans built Nord Stream 1 against the will of Poland and many others?” Joachim Brudziński, a member of the Polish parliament, asked before adding, “in the end, it's always about German or French interests.”

The Verdict

With the clock ticking down to winter's freeze, Europe as a whole (and northern Europe especially) is bracing for the calamity that awaits it. If Chancellor Sholz and the German government can secure a series of deals around the continent to ration and transfer supplies, it'll be a massive win for unity. However, Putin is betting that he can fracture any budding alliances.