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Moscow’s invasion of Ukraine has exposed just how much Germany’s industrial backbone relies on Russian gas, hitting Europe’s top economy where it hurts most and threatening its ability to compete as alternative supplies won’t come cheap and fast.

While supply chain disruptions have been one of the more immediate consequences for German industry, nowhere is the impact of the war more visible than on the gas market, where prices have risen more than five-fold on concerns about oversupply.

That is putting immense pressure on Germany’s “Mittelstand” belt of small and mid-sized firms, ranging from steelmakers to chemicals producers, that are seen as the foundation of the country’s economy and account for more than half of all jobs.

Kelheim Fibres, one of the world’s biggest makers of viscose fibres, is a case in point.

“We are suffering from the very large increase in gas prices and the daily threats that gas could maybe no longer be delivered,” Kelheim Fibres Managing Director Craig Barker told Reuters on Wednesday (March 30).

“Without gas,” Barker added, “we have to shut the plant down. That’s clear.”

The employer of 600, whose fibres end up in everything from tea bags, textiles and banknotes to wipes and tampons, expects its gas bill alone to increase more than five-fold this year to 100 million euros ($110 million).

That eats up more than half of the up to 180 million euros in annual sales it gets from its customers, including global heavyweights Procter & Gamble and Kimberly-Clark.

According to another member of the firm’s management team, if the situation does not change soon Kelheim would have no choice but to ask clients to accept longer production breaks as the first line of defence.

Kelheim Fibres entirely depends on gas for its energy-intense production because it operates a gas-fired power plant onsite and cannot use other, cheaper sources, leaving it with no alternative but to pay up.

Claudia Kemfert, the head of the DIW economic institute’s energy department, said Germany could turn to other countries “should less gas arrive here.”

“The best way is to do everything to get away from natural gas, assist the industry and save energy,” Kemfert told Reuters.

In Frankfurt, shoppers at an outdoor fruit and vegetable market had mixed reactions to a possible disruption of Russian gas supplies.

One expressed concern while another said of rapidly rising prices: “when you think of what is necessary to put this aggressor in his place, then it’s something I believe we can live with” in reference to Russian President Vladimir Putin.

Published : March 31, 2022

By : Reuters

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https://www.nationthailand.com/international/40014019

Russia has started to reposition less than 20% of the forces arrayed around Ukraine’s capital Kyiv, the Pentagon said on Wednesday (March 30), but cautioned Russia was expected to refit and resupply them for redeployment, and not bring the forces home.

Pentagon spokesman John Kirby said at a news briefing that some of the Russian forces may have already moved into Belarus, as opposed to their home garrisons.

“If the Russians are serious about de-escalating, cause that’s their claim here, then they should send them home. But they’re not doing that,” Kirby said.

Military analysts say Russia has reframed its war goals in Ukraine in a way that may make it easier for Moscow to claim a face-saving victory despite a woeful campaign in which his army has suffered humiliating setbacks.

Russian contractor Wagner Group had deployed about 1,000 contractors into Ukraine’s Donbas region, which Moscow has declared a priority, Kirby said.

We have seen indications that the Wagner Group is recruiting in places like Syria in places like northern Africa, Libya,” Kirby said.

Kirby also told reporters that he agreed with reports that Russian President Vladimir Putin was misled by advisers who were too scared to tell him how poorly the war in Ukraine is going and how damaging Western sanctions have been.

Russia’s Feb. 24 invasion of its southern neighbour has been halted on many fronts by stiff resistance from Ukrainian forces who have recaptured territory even as civilians are trapped in besieged cities.

White House and European officials said on Wednesday that Russian President Vladimir Putin was misled by advisers who were too scared to tell him how poorly the war in Ukraine is going and how damaging Western sanctions have been.

“We have information that Putin felt misled by the Russian military, which has resulted in persistent tension between Putin and his military leadership,” Kate Bedingfield, White House communications director, told reporters during a press briefing.

“We believe that Putin is being misinformed by his advisers about how badly the Russian military is performing and how the Russian economy is being crippled by sanctions because his senior advisors are too afraid to tell him the truth,” she said.

The U.S. was putting forward this information now to show “this has been a strategic error for Russia,” she said.

The Kremlin made no immediate comment about the assertions after the end of the working day in Moscow, and the Russian embassy in Washington did not immediately reply to a request for comment.

Bedingfield also said now is clearly not the time to scheme with Putin, when asked about former President Donald Trump’s calling on Putin to release information about Hunter Biden, the son of President Joe Biden.

“What kind of American, let alone an ex-president, thinks that this is the right time to enter into a scheme with Vladimir Putin and brag about his connections to Vladimir Putin? There is only one and it’s Donald Trump,” she told reporters.

Published : March 31, 2022

By : Reuters

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https://www.nationthailand.com/international/40014018

In a small corner of southeast England, vast greenhouses stand empty, the soaring cost of energy preventing their owner from using heat to grow cucumbers for the British market.

Three generations of Tony Montalbano’s family have farmed cucumbers at Roydon in the Lea Valley, northeast of London. Montalbano has been growing for the past 24 years; his family for five decades.

While last year it cost about 25 pence to produce a cucumber in Britain, that has now doubled and is set to hit 70 pence when higher energy prices kick in, trade body British Growers say.

“Normally you would see, at this stage, fully grown plants, cucumbers harvesting, we would have staff working away here,” Montalbano told Reuters as he walked around the empty greenhouses.

All 30,000 square metres of the glasshouse at his Green Acre Salads business, which supplies supermarket groups including market leader Tesco, Sainsbury’s and Morrisons are currently empty.

Montalbano, whose grandfather emigrated from Sicily in 1968 and started a nursery to provide local stores with fresh cucumbers, decided not to plant the first of the year’s three cycles in January.

He had wanted to plant cucumbers later this year in the hope gas prices would drop, but in March, gas was around five times more than what he was paying in 2021.

Last year he paid 40-50 pence a therm for natural gas. Last week it was 2.25 pounds a therm, having briefly hit a record eight pounds in the wake of Russia’s invasion.

Fertiliser prices have tripled versus last year while the cost of carbon dioxide and hard to attain labour have also shot up.

Montalbano is not the only British producer having problems.

Further afield growers have also failed to plant peppers, aubergines and tomatoes after a surge in natural gas prices at the end of last year were exacerbated by Russia’s invasion of Ukraine, making the crops economically unviable.

The hit to UK farms, which need gas to counter the country’s inclement weather, is one of the myriad ways the energy crisis and invasion has hit food supplies around the world, with global grain production and edible oils also under threat.

In Britain, it is likely to push food prices higher, at a time of historic inflation, and threaten the availability of goods such as the quintessentially British cucumber sandwich served at the Wimbledon tennis tournament and big London hotels.

Jack Ward, the CEO of British Growers, said growers have been feeling the pressure for years.

“These, albeit small businesses are a strategically important part of our food supply because in the season the majority of the products that we buy through retailers will come from UK farms,” Ward told Reuters.

For the industry it means a massive contraction, threatening Britain’s future food security, and further price rises for UK consumers already facing a bigger inflation hit than other countries in Europe.

UK inflation hit a 30-year high of 6.2% in February and is forecast to go close to 9% in late 2022, contributing to the biggest fall in living standards since at least the 1950s.

In winter, the UK has typically imported around 90% of crops like cucumbers and tomatoes but is nearly self-sufficient in the summer.

Growers in the Netherlands, one of Britain’s key salad suppliers, face similar challenges and have cut exports.

Spain and Morocco do not heat their glasshouses to a large extent, but delivery in chilled lorries adds time and cost.

Growers want help from the government. They have lobbied for tax and levies on gas to be removed, but finance minister Rishi Sunak did not mention it in his spring budget last week.

Despite the dismal backdrop and after much soul-searching, Montalbano will plant a crop next month, fearing the loss of future contracts if he does not. He may gamble on the British weather, and grow “cold”, with little or no heat.

Published : March 31, 2022

By : Reuters

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https://www.nationthailand.com/international/40014017

Chinese President Xi Jinping on Thursday called on the neighbouring countries of Afghanistan to do their best to support the Afghan people to create a brighter future when delivering written remarks at the third Foreign Ministers’ Meeting among the Neighboring Countries of Afghanistan.

Xi pointed out that having gone through so much in the past, Afghanistan is in urgent need of development in many areas. The country has come to a critical point of transition from chaos to order.

“Afghanistan is a common neighbour and partner of all participating countries, and we form a community with a shared future linked by the same mountains and rivers who would rise and fall together,” said Xi.

A peaceful, stable, developing and prosperous Afghanistan is the aspiration of all the Afghan people. It is also in the common interests of regional countries and the international community, Xi said.

Xi underscored that amity and good neighbourliness are invaluable to a country. China has always respected Afghanistan’s sovereignty, independence and territorial integrity, and has been committed to supporting its pursuit of peace, stability and development.

Since its launch last September, the coordination and cooperation mechanism among neighbours of Afghanistan has endeavoured to bring into play the strengths of neighbouring countries, thus playing a constructive role in promoting the smooth transition in Afghanistan, Xi said.

Xi concluded his remarks at the meeting held in east China’s Anhui Province by stressing that the neighbouring countries of Afghanistan should do their best to build consensus and coordinate efforts to support the people of Afghanistan in building a brighter future.

Published : March 31, 2022

By : Reuters

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https://www.nationthailand.com/international/40013987

Germany on Wednesday (March 30) an “early warning” that it could be heading for a gas supply emergency and said the measure was designed to prepare for a possible disruption or stoppage of natural gas flows from Russia.

The move comes ahead of Moscow’s plan to present a new mechanism under which gas payments will be switched to roubles, a move that has been rejected by the G7 nations, including Germany, but stoked fears of supply disruptions. Read full story

Under Germany’s existing gas emergency plan, the early warning is the first of three stages and does not yet imply state intervention.

Economy Minister Robert Habeck said in a statement that supplies were safeguarded for the time being and that Germany was closely monitoring supply flows with market operators.

“We are taking this step today because it was announced that tomorrow Russian officials will present legal changes which for us signifies a clear breach of contract, by making payment in roubles the law. We obviously don’t know what will be in the legal changes yet. It likely will come down to the details but we want to be prepared for this,” Habeck told a news conference.

Habeck said that the team, which includes members of his ministry, the German network regulator, and network operators, would closely monitor the situation “so that – if necessary – further measures could be taken to increase supply security.”

The head of German network regulator Bundesnetzagentur, Klaus Mueller, in a tweet said the early warning aimed to avoid a deterioration of supply and urged consumers and industry to prepare for “all scenarios.”

If there is a gas supply disruption and Germany does not secure enough gas, the industry will be hit first. It accounts for a quarter of German gas demand.

Private households will have priority over the industry, while hospitals, care facilities, and other public sector institutions with special needs would be the last to be affected by the disruption.

Published : March 30, 2022

By : Reuters