Name? Olaf Scholz
Westphalian identity? German
Age? 63
Why is he in the news? German Chancellor Olaf Scholz has been very nervous about Russian President Putin’s announcement today that “unfriendly” countries have to pay for gas in rubles. In a call yesterday, Putin told Scholz nothing would change for European partners; but he said the same about invading Ukraine.
Why do we care? After a historic announcement a few weeks ago that Germany would invest an additional 100 billion euros into its military following Putin’s invasion of Ukraine, Scholz has maintained a low profile. While he supports Western sanctions, Scholz has to balance these actions against Putin, because of the historical interdependence between the German and Russian economy.
Why should you care? If gas supplies fall short, Scholz has to ration gas, with industry first in line. The German chemical industry is home to some of the biggest chemical producers in the world. Chemical products stand at the beginning of every supply chain, hence, a disruption there means disruptions everywhere. Just to illustrate, there are two German companies responsible for the production of the majority of syringes and vials needed for Covid-19 vaccines, and they have no competitors. If Russian gas transits were to be disrupted, their production would be disrupted as well … ! So you should care 11/10 about the global problems following a lack of Russian gas.
Who else cares? Russian President Vladimir Putin. His decision to no longer accept euros for payments shows one thing: The sanctions are working. With the ruble trading at such low value, Russian exports bring in less money to subsidise state services and fund the war.
Any further comments? Scholz has said he is prepared to ration energy supplies rather than pay for gas in rubles to deny Putin the extra cash. BUT, given the impacts of this decision, questions arise as to how long the German population and economy would tolerate this decision.
