Germany and Europe Must Prepare for Energy ShortagesPublic Events
#ZEWlive on the Economic Impact of the Ukraine War
This year, 8 May, Victory in Europe Day, celebrating the end of the Second World War, was more symbolic than ever. The Russian invasion of Ukraine triggered a serious humanitarian crisis. The consequences of the war are being felt around the world. But what impact does the war in Ukraine have on the economy? This was discussed by U.S. Consul General Norman Thatcher Scharpf and ZEW President Professor Achim Wambach on 10 May 2022 as part of the digital event series #ZEWlive. The event was moderated by journalist Jessica Sturmberg.
Major geopolitical challenges lie ahead for the European and global economy. Policymakers will now need to reconsider notions of sovereignty, international cooperation and security of supply in their decision-making. The direct consequences of war are already being felt.
Ways to free ourselves from our dependence on Russian energy
The biggest problem is the dependence on Russian gas and oil supplies. While the United States has already imposed an import ban on Russian oil, Germany and many other countries are far more dependent on Russian supplies. The USA is therefore planning to support the G7 countries in phasing out Russian oil exports. “This will drive the Western economy’s shift away from dependence on Russian oil and gas and, in the long run, accelerate the transition to a green economy,” says U.S. Consul General Norman Thatcher Scharpf. He believes that growing popular support will also contribute to the acceleration of the transition from fossil fuels to renewable energy. In addition, bureaucratic hurdles are increasingly being removed to facilitate the changeover. According to ZEW President Achim Wambach, Germany is not yet sufficiently prepared for the consequences of an energy shortage, so action must be taken quickly.
Western opportunities and cohesion in the crisis
Cooperation with other countries is therefore more important than ever. ZEW President Achim Wambach sees not only trade agreements but also technological cooperation and the setting of standards as a key strength of the Western world: “We know how standards in industry drift apart. Once they are set, they can no longer be circumvented. This is a really important issue and it is very good that we are working more closely together on this.” The ZEW president stressed the importance of supply chains becoming more diversified and that trade relations with transatlantic partners should be further developed in the future.
Both interlocutors emphasised that the war in Ukraine has strengthened cohesion in Europe. The relations of the Western alliances and NATO are also becoming increasingly important for the continuation of democratic values. Only together can the challenges of the future be mastered. From an economic perspective, however, a paradigm shift is necessary, according to ZEW President Achim Wambach. Economics and foreign policy are closely intertwined and the new geopolitical framework conditions must be taken into account: “We do not yet have economic models to deal with these situations, so there is still a lot to do,” Achim Wambach concluded the discussion.