Germany and the EU have made themselves dependent on Russia for trading energy raw materials. But that also applies to Russia. Time for some clarifications.
A lot has been written about Germany’s dependence on Russia in recent months. Including a lot of the irrational, a lot of fear and hate. A few clarifications:
Yes, in hindsight, Germany made a serious mistake by making itself largely dependent on Russia for the import of fossil energy raw materials since the reunification years. In 2020, the Russian dictatorship supplied more than half of our natural gas, 45 percent of our hard coal and coking coal and over 40 percent of our oil.
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And yes: the reliable and comparatively cheap import of fossil raw materials from Russia has contributed to the fact that Germany has frittered away the connection to the energy transition in the 16 years under Chancellor Angela Merkel. In the energy sectors of transport and heat, gas and oil continue to dominate unchallenged. Renewable energies do not even play a minor role here. When it comes to electricity, green energies still provide around 50 percent, but this is far too little for green electrification of cars and heating.
And no: nuclear power (aka nuclear energy) cannot get us out of the energy crisis. All the self-proclaimed nuclear power experts who now reflexively talk about extending the lifespan have to explain how they intend to use nuclear power to keep a gas heater in the basement or a combustion engine on the street running for a short time. And: The construction of a nuclear power plant would not be profitable for investors. Nuclear-powered steam turbines are a phased-out model, at most an overpriced status symbol for backward dictatorships.
And on the subject of responsibility: between the long-term chancellors Helmut Kohl and Angela Merkel, Gerhard Schröder’s seven-year intermezzo probably plays a more secondary role here – if you really want to pass the buck on to a federal government and not to German energy suppliers when it comes to security of supply.
And now to the doctrine of “change through trade”, which has failed – but especially for Russia: The dependence on energy resources is mutual. If you look at it differently, Putin’s Russia is more dependent on its trading partners and payments than European importers are on Russian commodities.
Over the decades, Putin has made a serious economic and strategic mistake here. Since the 1990s, Russia has degenerated into a pure raw materials economy. Two thirds of Russian exports are based on fossil fuels – gas, oil, coal. Technologically, Russia has completely lost touch with the rest of the world. No machine, no car, no computer from Russia is internationally competitive.
In the 22 years of his rule, Vladimir Putin reduced Russia to a pure mining nation.
Russia’s dependence on the sale of raw materials is evident in natural gas. An example: the state-owned company Gazprom is by far the largest company in Russia, ahead of Lukoil and Rosneft. According to the annual report of the Russian Gazprom AG, the company made sales of around 39 billion euros in 2020 with natural gas exports.
That is around half of the total turnover. 26 billion euros are allotted to business with the states of the EU and Turkey alone – this alone corresponds to ten percent of the total income of the Russian state budget.
If the EU and Turkey gave up not only Russian natural gas, but also coal and oil, Russia would be broke and could only survive for a few months on the reserves of its “prosperity fund”.
And without trade relations with the West, Russia now faces total dependence on its eastern neighbor: China. In 2021, Russia imported goods worth 68 billion euros from the communist Middle Kingdom – more than from Germany, France, Italy, Great Britain and the USA combined.
Putin and his oligarchs have never tried to catch up with the high-tech global economy and allow their country to prosper for broad sections of the population. It was too tempting for the kleptocrats to exclusively exploit the rich raw material stocks in order to make quick money. Today, Russia is an economically backward, largely impoverished country.
Russia ranks 52nd on the Human Development Index and 136th on the Transparency Corruption Index. The average life expectancy of Russian men is 67 years. A developing country with nuclear missiles – the dictum of former German Chancellor Helmut Schmidt for the USSR also applies to Russia today.
The West – including Germany – is now reorganizing its energy strategy. New trading partners for fossil energy raw materials, more green energy. That will take a few years. And energy will certainly become more expensive as a result for the time being.
Russia, on the other hand, can no longer diversify economically. But Russia has long since missed the boat. The Putin state can only sell energy commodities. The end of Russia is therefore in sight: a bankrupt in the clutches of China.
The only foreign policy question that arises here is: does the West want that?