Kiel Institute in the News

Europe has shaken off Putin’s gas embargo

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Weapons come in all shapes and sizes, from the Javelins that blow up Russian tanks to the F-16s Ukrainian aces may soon be flying. As his invasion of Ukraine got bogged down last year, Vladimir Putin, Russia’s president, reached for a weapon few imagined he would dare to wield: the throttling of deliveries from Russia’s vast gasfields to its main customers in Europe. Particularly for Germany and other countries that had piped the stuff straight into their homes and factories, doom-mongers predicted dire consequences—think double-digit falls in GDP, surging unemployment, not to mention freezing households. Yet Mr Putin’s weapon of mass economic destruction has turned out to be a dud. The crisis has all but passed, and far less harm came of it than expected. Once they are done breathing a sigh of relief, policymakers should reflect on what this means as they ponder their next geopolitical challenge: how to “de-risk” the continent’s trade with China. If Putin’s super-weapon fizzled, how much should Europe pay to rid itself of dependence on China for its imports of everything from rare earths to mobile phones? [...]

...How has Europe gone from running out of gas to wondering where it will store the stuff? Benjamin Moll, Georg Zachmann and Moritz Schularick, three economists, recently compared the doom-mongers’ vision with reality in Germany. Far from falling into an abyss, Europe...

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