Newsletter German Politics - November 2022
Wednesday, 30 November 2022
Wednesday, 30 November 2022
Dear friends, colleagues, customers, and clients,
German and European politicians are currently dealing with many urgent topics that directly affect the people in our countries. But before talking about the ongoing Russian war of aggression against Ukraine, that pushes Germany (and many other countries) to fundamentally rethink their energy supply, I would like to address another topic that lately has been very present in the public and political discussion in Germany: The discussion about the access of the Chinese state-owned shipping company COSCO (Chinese Ocean Shipping Company) to a container-terminal in the port of Hamburg.
COSCO in Hamburg
Under the roof of the new silk road that started in 2013, the Chinese government spins international networks for business and trade with over 100 states from Asia, Africa, and Europe. The new silk road aims to secure orders and to open new markets for Chinese products. Critics fear too much dependence on China because of this project – a fear that was also the cornerstone of the discussion about COSCO and the port of Hamburg.
The Chinese state-owned shipping company COSCO wanted to buy a stake in one of the four container terminals of the port of Hamburg and thus, increase their influence and power over the largest seaport of Germany. The company already owns significant shares of many ports in Europe (in total about 10%). In Hamburg, a minority share of up to 35% was planned, which would have given the Chinese a say in decision making processes of the terminal. However, due to a broad discussion in politics and society about not wanting to become dependent on a single country again, (similar to Germany becoming dependent on Russia in relation to Gas in the past) the terms of the deal were changed. The new and final share for COSCO is now 24,9 %.
The HHLA (Hamburger Hafen und Logistik AG), which is the owner of the terminal in question, views the deal in a positive light as it has the potential of strengthening supply chains, increasing job security and the promotion of value creation in Germany. Furthermore, the port of Hamburg hopes to become the favorite harbor for Chinese goods in Europe because of this agreement.
Long debates were argued out as concerns were and are still huge that Germany becomes more dependent on China and that China could take advantage of this. Six federal ministries, first and foremost the Federal Ministry for Economic Affairs and Climate Action, were against the deal. In the end, the Chancellor`s Office took the matter into their own hands. Chancellor Olaf Scholz pushed the agreement through, despite the afore mentioned resistance. On November 3rd, COSCO agreed to the 24,9% share and accepted the restrictions. Nevertheless, the deal is not finalized yet. On the same day- before flying to China - Chancellor Olaf Scholz explained the new German strategy regarding China in an interview, mentioning that “the German economy must not be unilaterally dependent [on China]”. We will see what the future holds.
The Russian war of aggression in Ukraine and its consequences for Germany
Due to a supply stop of Russian gas to Germany via the Nordstream 1 pipeline, all European countries had and still must find new solutions for their prospective energy supply and its diversification.
Germany approaches the challenges with a variety of different measures. One solution to diversify the energy supply and to become more independent from Russian energy, is the supply of LNG from Canada, the USA, the UAE, and other countries with the help of swimming LNG-terminals alongside the German coasts of the Baltic Sea and the North Sea. Having not had LNG-terminals in the past, Germany’s government invested in building terminals as fast as possible. The first of these terminals to be finished is in Wilhelmshaven and could start its duty before Christmas 2022. The other three planned terminals in Lubmin, Brunsbüttel and Stade will follow in 2023. Furthermore, a privately operated fifth terminal will start its duty in Lubmin very soon.
Becoming independent from Russian gas is not the only key challenge for German politics. Russia’s war and its consequences have led to a price increase in both the energy sector and industry. Many small and medium-sized companies are at risk. For the end consumer, the whole issue means higher costs for energy and services and potentially less products in the shopping cart. The German government has adopted several relief measures. Three packages with an entire scope of 95 billion Euros have already been adopted. A further 200 billion Euros strong financial defense shield has been passed by the parliament on 21st of October. It should cushion the increasing energy prices for end consumers and companies. Many observers are critical about whether the measures will prove sufficient.
Another discussion flared up around these discussions is the issue of keeping the last three German nuclear power plants online longer than planned in order to lower the amount of gas used for production of electricity and to keep costs as stable as possible. In 2011 (after the nuclear catastrophe in Fukushima), the German Bundestag decided to get out of nuclear power. Currently, the last three nuclear power plants still produce electricity. Initially, they should have been shut down on 31st of December 2022. Because of the energy crisis, the FDP and CDU/CSU advocated for an extension of their runtime even beyond 2023. That would have meant that new fuel rods would have had to be ordered. The SPD and foremost the Greens stood in opposition to that plan for a long time. After lenghty discussions, Chancellor Olaf Scholz made use of his directive authority. In a letter addressed to the ministers affected by this topic from the Greens, Robert Habeck (Economic Affairs and Climate Action) and Steffi Lemke (Environment, Nature Conservation, Nuclear Safety and Consumer Protection), and from the FDP, Christian Lindner (Finance), he decreed that the last three nuclear power plants of Germany should run until 30th of April 2023 the longest.
Let´s hope that this will be enough for Germany to come through the winter.
For now, I wish you a contemplative Advent season and a wonderful Christmas with your loved ones. Come well into the new year 2023. Who knows what it holds in store for us?
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