If Germany won’t stop buying Russian gas, it should face sanctions too

 Anyone buying German goods right now is effectively funding Putin’s war

Source - daily telegraph 19/04/22

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The gas is still flowing through the pipelines across Europe. The oil is still being unloaded at the refineries. And €800m a day is being sent straight to Moscow. 

Germany and to a lesser extent Italy are effectively funding Vladimir Putin's brutal assault on Ukraine. Shelling of innocent civilians, mass rapes, and the destruction of whole cities is being financed by European consumers and industry. 

True, Germany is debating cutting off the gas. It is setting targets for winding up the payments to Russia and exploring alternative supplies that would keep the lights switched on. 

And yet for now it has decided the cost to German industry would be too high. That is completely unacceptable. If the Germans don't want to make that sacrifice, it is up to them. Yet there is no reason why the rest of the world should tolerate that. The moment is surely close for sanctions to be imposed on Germany. 

Anyone buying German goods is funding the war – and while stopping energy imports would not end it immediately they would make it a lot shorter and save tens of thousands of innocent lives. 

In response to the invasion of Ukraine, the UK, the United States, and of course the European Union have imposed round after round of sanctions. Yachts belonging to Putin’s corrupt gang of cronies have been seized in the ritzier resorts around the Mediterranean.

Football clubs have been put into trust to be sold to more acceptable owners. Some, but not all, of the Russian banks have been frozen out of the financial system, and, with a handful of shameful exceptions, most Western companies have closed down their operations in the country. 

All of that will have a significant impact on the Russian economy. Its GDP is estimated to drop by 10pc to 20pc this year. That is going to cause real pain. 

 There is a gaping hole in the package, however, and it hardly takes a microscope to see it. Europe is still importing vast quantities of Russian gas, and to a lesser extent oil, with most of it flowing into Germany and Italy. 

Even worse, the soaring price of natural gas since the invasion means the amount paid to Moscow has doubled in the last year. Europe is sending Putin a cheque for €800m (£662m) a day.

We can sequester yachts and cut off Netflix if we want to. And yet the blunt truth is that the regime in the Kremlin can simply shrug all that off. 

There is still plenty of money to keep the economy going, and to finance even the catastrophic losses of men, machinery and ammunition suffered by an inept, poorly led Russian army. Only an immediate ban on Russian gas would make a real difference. 

Here’s the problem, however. Germany has decided that would cause too much economic pain. There would be “social unrest”, according to the economy minister Robert Habeck.

There could be a catastrophic loss of competitiveness, according to the German chemicals industry, with major manufacturers warning that they might have to close plants for months.

An “emergency gas plan” drawn up in Berlin warns of potential rationing, and return to working from home, and offices and factories switching to three days a week. It is not, the government has concluded, worth the pain it would cause.

In reality, that is debatable. Plenty of independent assessments have concluded that even closing down Russian gas completely would cause only a mild recession. It might amount to 2pc or perhaps 3pc of output lost, and even that would be recovered in a year or so. 

Germany is one of the richest societies in the world, and, at 60pc, has one of the lowest debt-to-GDP ratios, and could add 10 points to that to pay for the damage without anyone really noticing. 

It would be less expensive than dealing with Covid-19. It is simply that the German government and its industrial leaders have decided it is not a price worth paying. 

Germany is free to make that decision if it wishes, but there is no reason why the rest of the world should accept it. In effect, anyone buying German cars, chemicals, machine tools, or electrical equipment is paying for Russian gas. And that Russian gas is paying the soldiers shelling cities in Ukraine. 

The solution? It is not hard to figure out. As more and more atrocities by Russian soldiers are uncovered, surely the moment has arrived to put sanctions on Germany as well. 

That could work in a variety of different ways. There could be temporary tariffs imposed on Germany exports, with the money sent to Ukraine to pay for its war effort and to help the millions of refugees (admittedly, that would be illegal under EU law, but there would be nothing to stop the UK, US, Canada, Australia and many others). 

We could impose a six-month ban on German exports, and keep extending it until the war was over, or the gas pipelines closed down. Alternatively, we could organise consumer boycotts. After all, anyone buying a new BMW or Volkswagen is indirectly paying for Putin’s army – a point worth keeping in mind when choosing a new car.

There wouldn’t be much of a cost. Sure, Germany is one of the world’s leading manufacturers. But we can buy cars from France, or Japan, and chemicals from South Korea or the US. 

There is nothing it makes that can’t be relatively simply sourced elsewhere. The impact in Germany, however, would be dramatic. Cutting off the gas would hurt its industries. But so would not cutting off the gas. 

In fact, the hit from keeping the pipes open would probably be worse. The equation would change dramatically. 

True it wouldn't end the war overnight. Putin might struggle on with his failing campaign for a while. But it would shorten the war, save thousands of Ukrainian lives – and that is surely a step worth taking.