Economy minister slams Germany's economic model as 'dependent'

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German Economy and Climate Action Minister Robert Habeck lamented the entirety of the country's business model on Monday, dismissing it as reliant on cheap energy imports from Russia that will never return. 

His comments come in tandem with his announcement of a new special tax on natural gas, which he believes will redistribute the repercussions of energy shortages on companies as well as the population in general. 

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

“This model has failed and it is not coming back,” he said.

Because Russia has "arbitrarily" halted gas deliveries to the European Union, as Habeck claimed, Berlin needs to “rescue companies that have got into difficulties and have to bear that as a national economy,” calling it “bitter medicine."

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“This tax is the fairest possible way to distribute and bear the additional costs that have accrued among the population," Habeck argued.

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

An association of gas pipeline operators on Monday settled a tax of 2.4 euro cents per kWh, which will be put to work in October, running through April 2023. According to estimates published by Reuters earlier, the tax will cost the average household some €500 ($507.8) a year. 

The economy minister, furthermore, revealed that 12 importers have applied for aid until now, and will receive €34 billion ($34.7 billion), which makes up 90% of their additional costs.

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

Germany is largely reliant on Russian natural gas for manufacturing and living. However, since NATO launched its war against Russia, Europe's largest economy has been suffering major repercussions. 

Moscow has not been weaponizing its gas supply - however, to uphold its currency which was deteriorating at the beginning of the war, it has requested payments to be made in the Russian ruble, which many European countries have been refusing to do. 

In addition, Berlin has also refused to certify Nord Stream 2, a pipeline that runs through the Baltic Sea which could have doubled the volume of direct Russian imports.

Millions of German lower-income households will find it hard to pay their energy bills this winter amid a sharp rise in gas prices, according to Lukas Ievenkotten, head of the German Renters' Association last week.    

"We are talking about millions," Siebenkotten told the Tagesspiegel daily, warning that the people most at risk are those who earn just enough to not qualify for state subsidies.

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

A shortage in Russian gas exports to Germany has raised prices for local suppliers. The German government wishes to divide this burden between suppliers and consumers, who would be charged a levy of up to €0.05 ($0.05) per kWh from October 1 to April 1, 2024. This is equivalent to an extra 1,000 euros for a four-person family, excluding the EU's standard value-added tax of 19%.

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