Energy Idiocy.

• Author: Engelen, Klaus C.

This "Letter from Berlin" is written under the dark clouds of Germany's worst economic and political threats of the post-World War II era. Russian President Vladimir Putin's invasion of Ukraine has exposed Germany as Europe's largest, strongest, and most globally connected economy in its dangerous dependence on the flow of Russian gas. Russia reduced gas supplies in June for the main pipeline Nord Stream 1 to below 40 percent, before cutting them altogether on July 11 to allow for routine annual ten-day maintenance. Gas resumed flowing through the end of July and August, but it was throttled to barely 20 percent of the previous amount. And in early September, the Kremlin stopped the flow entirely in order to pressure Europe to remove sanctions on Russian oil.

Chancellor Olaf Scholz interrupted his summer vacation in Bavaria for a Berlin press conference on July 22 to assure the nation that his government would do "what is necessary and as long as it is necessary" to help keep the country functioning. He promised that there will be further relief measures on a permanent basis to protect citizens from increasing energy prices caused by Russia's war on Ukraine. "You never walk alone," Scholz said in English, repeating in a way the promise of then-Chancellor Angela Merkel at the height of the 2015 refugee crisis, "Wir schaffen das" (We can do it).

To meet the challenge, Scholz announced that his government would acquire 30 percent of Uniper, Germany's major gas importer, provide [euro]7.7 billion in government support, and expand a credit line from [euro]2 billion to [euro]9 billion. Concerned over Russian "blackmail," the German government raised this year's required gas level for storage operators to 95 percent capacity by November 1. In early September, the level stood at 87 percent.

"As food and fuel crises start to pinch, governments will come under pressure from poorer, hungrier, colder voters. Soak up the summer rays while you can--a full-blown Russian winter is heading towards Europe," according to Politico. "Even as fighting continues to rage in Ukraine, the war is already making itself felt across the Continent in the form of rising food prices, fears of gas shortages, and worries about the economy. And with Russian President Vladimir Putin showing readiness to use food, fuel, and fertilizers as weapons of war against Western democracies who are arming Ukraine and sanctioning Moscow, things could get rapidly worse."

At the same time, Germany, like other Western countries, is being hit hard by the highest inflation in two decades. At 8.8 percent in August 2022, inflation was at its highest level since German reunification more than three decades ago. There is a real threat of a wage-price spiral, as prices increase as a result of higher wages.

The euro has reached parity with the dollar, falling to its lowest level in twenty years. Many experts in the nineteen European countries using the currency view this development with foreboding as Europe struggles with an energy crisis caused by Russia's war in Ukraine, explains the Associated Press. "A currency's exchange rate can be a verdict on economic prospects, and Europe's have been fading. Expectations that the economy would see a rebound after turning the corner from the Covid-19 pandemic are being replaced by recession predictions."

The news on the energy front in Germany is particularly alarming. As reported by Deutsche Welle, Klaus Miiller, the head of Germany's Federal Network Agency for Electricity, Gas, Telecommunications, Post, and Railways, or Bundesnetzagentur, warned that "consumers may see their gas bills increase by two or three times as Germany faces the prospect of Russian...