On Monday, Germany got more bad news. The Russian state-owned gas company Gazprom cut even further the supply of natural gas that flows through its Nord Stream 1 pipeline directly to Germany — to 20 percent of its total capacity. Gas prices surged. Germany, more than most countries in the European Union, relied on Russian fossil fuels for its energy needs. At the beginning of this year, just over half of its natural gas was cheaply and reliably provided by Russia. After Russia invaded Ukraine, Germany started to wean itself off Russian energy. However, it still heavily depends on Russian gas for manufacturing and home heating.
But Germany has been getting less sympathy from southern countries in the E.U. than it would like. German politicians lectured these countries for their recklessness when they were dealing with the debt crisis in 2010-2012. Now these countries are lecturing back, pointing to Germany’s own reckless behavior in depending on Russia despite knowing that it was an untrustworthy autocratic country.
Europe is facing an energy crisis
The fear that Russia will turn off gas supplies has led to a political crisis. Germany and some other European countries suspect that Russian President Vladimir Putin will turn off the taps this winter, leaving them in the freezing cold.
The European Commission, the E.U.’s executive body, drew up emergency plans, including a possible 15 percent cut in gas consumption for all E.U. countries for the next two years, to share the pain. Member states just finished debating how to implement those plans.
Germany, the Netherlands, Austria and Luxembourg all supported the initial proposals, but they provoked protests from many other corners of Europe, including southern and Eastern Europe. Some of the protesting countries didn’t rely on Russian gas for energy. Others said that they couldn’t participate, because they weren’t properly connected to the European electricity grid.
Old fights reemerge
The Spanish minister for ecological transition, Teresa Ribera, said that the commission’s proposal was “not necessarily the most effective, the most efficient, nor the fairest.” She emphasized that “contrary to other countries, Spain hasn’t been living beyond its means in energy terms.”
Those were fighting words. Ribera was turning Germany’s decade-old criticism of Spain against it. As Kate McNamara and I have explained, when southern E.U. member states were faced with financial crises in 2010-2012, Germany turned their dire situation into a “morality tale” of “Northern Saints” and “Southern Sinners.”
Back then, Germany and a few other northern countries claimed that southern European countries had been fiscally reckless and were paying the price. Greece and other Mediterranean E.U. members had broken E.U. rules and lived beyond their means, racking up debt through unsustainable public spending. The rich northern countries refused to issue joint debt through Eurobonds, which would have distributed the burden more equitably. Instead, they bailed out the Mediterranean countries but demanded harsh austerity measures in return.
The German finance minister at the time, Wolfgang Schäuble, became the face of the harsh medicine of austerity that debt-afflicted countries were forced to swallow. In 2017, then-Dutch Finance Minister Jeroen Dijsselbloem doubled-down on that logic by claiming that southern European countries had “wasted money on alcohol and women.”
Now the tables have turned
Back then, Germany and other northern countries wanted to avoid “moral hazard.” In other words, they believed that giving easy money to southern European countries would just encourage them to behave badly again. Now southern European countries such as Spain and Portugal have turned that same logic against Germany and some of its “frugal” northern allies.
They point out that German Chancellors Gerhard Schröder and Angela Merkel’s policy of cozying up to Putin in return for cheap energy made Germany dependent on an authoritarian regime. Even worse, Germany’s highhanded behavior during the debt crisis was enabled by its economic success. The problem is that Germany’s export-led model of economic growth was possible only because of cheap energy from Russia.
Back then, Germany said that austerity had to come hard and fast if it was to result in real political change. Now, influential Germans are saying that they want a gradual transition away from Russian energy to ease the political pain. Southern European countries, not unreasonably, see this as a hypocritical double standard.
When the E.U. energy ministers met, they watered down the commission’s controversial plans, providing exemptions for countries that don’t have gas or energy connections to the rest of the E.U., and for critical industries. There was little real solidarity, in part because southern European countries had little motivation to ride to Germany’s rescue.
As the Brookings Institution’s Constanze Stelzenmüller put it, Germany has “outsourced its security to the U.S., its export-led growth to China, and its energy needs to Russia.” Depending on other countries might have seemed reasonable in an earlier economic era, but it is a big source of risk for Germany today. If Germany wants to rebuild its growth model on a more sustainable footing, it is going to have to figure out what it needs to give to get more solidarity from its fellow E.U. member states.
Matthias Matthijs is associate professor of international political economy at Johns Hopkins University’s School of Advanced International Studies and a senior fellow for Europe at the Council on Foreign Relations. Follow him on Twitter @m2matthijs.