The Biden administration must put the hammer on Germany over its reliance on Russian energy, former US Ambassador to the UN, Nikki Haley, urged on Wednesday, stressing it was Berlin that pushed everyone into this mess by getting all cozy with Russia.
Noting that record gas prices meant a windfall for Russia, Haley also called for direct US sanctions for the Russian energy companies although Washington halted all Russian imports of oil in early March, in response to the war. She believes that the Biden administration has not gone far enough to cut off Russia from global energy markets.
Germany stopped the construction of the Nord Stream 2 pipeline shortly after Russia’s invasion of Ukraine but has also been more hesitant than other US allies to back stiff sanctions against Russia since it continues to rely heavily on Russia for domestic energy needs.
Berlin even opposed initially blocking Russia from the SWIFT international payments system.
Haley now believes that Germany should be doing more to end dependence on Russian oil and natural gas despite the warnings from the top economic institutes that should it stop Russia’s energy supplies immediately, Berlin might lose €220 billion in GDP in two years and have the highest inflation in its modern history as a result.
The report prepared by five of the nation’s top economic research centers, including the Munich-based Institute for Economic Research (IFO), warns that Germany’s cumulative GDP loss in the event of Russian energy deliveries’ cut would be around €220 billion in 2022 and 2023 alone – more than 6,5% of the annual economic output.
Unlike the 2021 forecast of a 4.8% GDP rise, German GDP is now expected to increase by only 2.7% in 2022 and that’s only in absence of further economic escalations. The projected GDP growth in case of an abrupt halt to Russian gas supplies is just 1.9% in 2022, which would mean a recession.
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