Germany activates gas ‘alarm stage’ amid Russian ‘economic attack’

Germany's measure is the latest escalation in a standoff between Europe and Moscow since the Russian invasion of Ukraine on Feb. 24.

Germany triggered the “alarm stage” of its emergency gas plan on Thursday in response to falling Russian supplies but stopped short of allowing utilities to pass on soaring energy costs to customers in Europe’s largest economy.

The measure is the latest escalation in a standoff between Europe and Moscow since the Russian invasion of Ukraine that has exposed the bloc’s dependence on Russian gas supplies and sparked a frantic search for alternative energy sources.

The decision is largely symbolic as a way of signalling to companies and households that painful cuts are on the way. But it marks a major shift for Germany, which cultivated strong energy ties with Moscow stretching back to the Cold War.

Lower gas flows sparked warnings this week that Germany could fall into recession if Russian supplies halted altogether. S&P Global’s flash Purchasing Managers’ Index (PMI) on Thursday showed the economy losing momentum in the second quarter.

“We must not fool ourselves: The cut in gas supplies is an economic attack on us by (Russian President Vladimir) Putin,” Economy Minister Robert Habeck said in a statement, adding Germans would have to reduce consumption.

Gas rationing would hopefully be avoided but cannot be ruled out, Habeck said and warned:

“From now on, gas is a scarce commodity in Germany … We are therefore now obliged to reduce gas consumption, now already in summer.”

Russia has denied the gas supply reductions were premeditated, with state supplier Gazprom blaming a delay in return of serviced equipment caused by Western sanctions. Kremlin on Thursday said Russia remained a reliable energy supplier and “strictly fulfils all its obligations” to Europe.