German chancellor blames Ukraine conflict for economic woes

Olaf Scholz has also claimed the previous government failed to address difficult issues

Germany’s economy outlook is marred by uncertainty brought on by the Ukraine conflict and the fallout of the Covid-19 pandemic, German Chancellor Olaf Scholz has said. While acknowledging a widespread sense of concern among Germans, he insisted that his government’s course of action has largely been correct.

Last week, Vice-Chancellor and Economy Minister Robert Habeck told legislators that “Germany is indeed in a particularly difficult situation” after abandoning Russian gas supplies. He admitted that the decision had led to the country losing its “competitive advantage.”

In an interview with Die Zeit published on Wednesday, Scholz described the current atmosphere in Germany as “unsettled.”

“One feels the economic and political upheaval at home that the Russian attack on Ukraine has caused,” the chancellor said. He went on to claim that Russian President Vladimir Putin counts on public discontent in Western nations, which is due to high inflation, amid the ongoing fighting.

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The chancellor also defended his traffic light coalition government, claiming that it does not walk the “easy way” by shying away from conflicts.

“In the previous 10-15 years, too much has been left dormant because governments avoided conflicts,” Scholz said when asked about ever-growing discontent among Germans with his own cabinet’s performance.

He insisted that Germany is going through a major transformation to adjust to changing economic realities – a process which is bound to lead to feelings of uncertainty.

Last month, Scholz accused Russia of halting gas deliveries to the EU – a claim described by Russian President Putin as “complete nonsense.”

“The fact that Europe does not receive enough gas is their problem. Oddly enough, they have tried to blame it on us, that we weren’t selling or something,” the Russian leader said in December.

Prior to the imposition of anti-Russian sanctions over the Ukraine conflict, Germany received 40% of its gas imports from Moscow. In 2022, the European economic powerhouse began increasing the share of liquefied natural gas (LNG) delivered by tankers as well as fuel from Norway and the Netherlands. These imports, however, come at considerably higher prices than Russian gas, adversely affecting the country’s industrial sector.

According to a recent report published by Bloomberg, which cited data from Germany’s Federal Statistical Office, the country has likely entered a recession.

Despite the country’s grim economic outlook, Chancellor Scholz pledged last week to shell out more than €7 billion ($7.6 billion) on military aid for Ukraine this year.