The Minister of Economy describes the German economic model as “dependent”

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Robert Habeck dismisses the German economic model as dependent on cheap energy imports from Russia.

  • Robert Habeck, German Minister of Economics. (Bloomberg)

German Economy and Climate Action Minister Robert Habeck on Monday lamented the country’s entire economic model, dismissing it as dependent on cheap energy imports from Russia that will never come back. never.

His remarks accompany his announcement of a new special natural gas tax that he says will redistribute the impact of energy shortages on businesses as well as the general public.

“Germany has developed a business model largely based on dependence on cheap Russian gas,” Habeck told reporters in Berlin, calling the business model dependence on an “enemy” of international law, “liberal democracy and its values”.

“That model failed and it’s not coming back,” he said.

Because Russia has “arbitrarily” stopped gas supplies to the European Union, as Habeck claimed, Berlin must “rescue companies that have had difficulties and have to bear this as a national economy”, calling it “bitter medicine”.

Read more: German factories weigh on falling production, recession on the horizon

“This tax is the fairest way to distribute and bear the additional costs that have accumulated among the population,” said Habeck.

He then claimed that the options Germany has are not taxation or no taxation, but rather “the collapse of the German energy market and with it large parts of the European market. Energy”.

An association of gas pipeline operators on Monday set a tax of 2.4 euro cents per kWh, which will be implemented in October, until April 2023. According to estimates published by Reuters Previously, the tax would cost the average household about €500 ($507.8) per year.

The economy minister further revealed that 12 importers have applied for aid so far and will receive 34 billion euros ($34.7 billion), representing 90% of their additional costs.

Read more: Germany’s claim to “protect European unity” – Analysis

“All measures have consequences and some of them are also impositions. But they lead us to be less sensitive to blackmail and therefore to be able to decide on our energy supply independently of Russia. And so, in the end, we can also act sovereignly in matters of foreign and security policy,” he told reporters.

Germany is largely dependent on Russian natural gas for manufacturing and life. However, since NATO launched its war against Russia, Europe’s largest economy has suffered major repercussions.

Moscow did not militarize its gas supply – however, to maintain its deteriorating currency at the start of the war, it demanded that payments be made in Russian rouble, which many European countries refused to do.

Additionally, Berlin also refused to certify Nord Stream 2, a pipeline that crosses the Baltic Sea that could have doubled the volume of direct Russian imports.

Millions of low-income German households will struggle to pay their energy bills this winter amid sharply rising gas prices, according to Lukas Ievenkotten, head of the German Tenants’ Association last week.

“We’re talking millions,” Siebenkotten told the Tagesspiegel daily, warning that those most at risk are those earning just enough to qualify for state subsidies.

He noted that the government needed to raise the income threshold to €5,000 ($5,078) a month for housing benefit claimants and improve job protection.

A shortage of Russian gas exports to Germany has pushed up prices for local suppliers. The German government wants to split this burden between suppliers and consumers, who would be charged a tax of up to €0.05 ($0.05) per kWh from October 1 to April 1, 2024. This equates to an additional €1,000 for a four- person family, excluding standard EU value added tax of 19%.

Read next: German MP urges end to gas use for power generation

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