Zelensky slams Germany for not doing enough for Ukraine
Hans-Olaf Henkel said the situation was piling huge pressure on countries which, like Germany, are members of the Eurozone, as was what he called the “timid reaction” of the European Central Bank (ECB). Russia is Germany’s top supplier, delivering Europe’s largest economy with just under a third of its gas.
As for the euro, the continent’s single currency, which is used by 19 or its 27 member states, fell below the value of the dollar for the first time in two decades this week, in a development which will doubtless have spooked ECB President Christine Lagarde.
Mr Henkel is a former MEP who was President of the Federation of German Industries, BDI, the rough equivalent of the CBI, between 1995 and 2000.
He told Express.co.uk: “Both the US and the EU suffer from similar inflation concerns. In fact, today inflation is higher in the US.
Angela Merkel is partly to blame for Germany’s dependence on Russia gas, said Mr Henkel
Russia’s President Vladimir Putin
“However the weakness of the euro compared to the US dollar has structural and political reasons.
“First, the war in the Ukraine creates investors’ insecurity also in other European countries.
For these, the US is a haven, safer than EU countries, which are closer to the battlefields in the Ukraine.
“Secondly, the possibility of ‘no more gas from Russia’ threatens mainly the euro countries economically, especially Germany.”
JUST IN: EU caves to Putin as bloc say sanctions don’t apply to rail transit
Christine Lagarde, President of the European Central Bank
Mr Henkel added: “The US is practically self-sufficient. Against warnings by Eastern Europe, the US and myself as President of the BDI, both Chancellors Schroeder and Merkel made Germany dependent on Russian gas.”
To compound matters, the ECB was unable to react in the way that the Federal Exchange was in the United States, Mr Henkel pointed out.
He said: “While the ECB is managing a ‘one-size-fits-all-currency’ and must try to accommodate totally different fiscal environments, the Fed can focus on only one.
Eurozone warning as Germany ‘on brink of recession’ [ANALYSIS]
Russian wives are begging Putin to allow husbands home from war [REPORT]
Putin edges one step closer to utterly eradicating Ukraine from map LATEST]
Hans-Olaf Henkel is a German former MEP
Gerhard Schroeder’s relationship with Vladimir Putin has been controversial
“For instance, while the Germans need and want a strong interest hike by the ECB to fight inflation, Italians, French and Greeks want low interest rates in order not to have to pay high interests for their much higher public debts.
“Hence, the expected reaction of the Fed (higher interest hikes) supports the dollar, the timid reaction by the ECB (late and lower hikes) hurts the euro.”
Even more striking than the weakness of the euro compared to the dollar was the deterioration of both currencies against the Swiss franc, Mr Henkel stressed.
Russia vs Ukraine in numbers
He explained: “One Swiss franc is now worth even more than both, one euro and one US dollar. 20 years ago the Swiss currency was valued below both.
“This shows three things: First, Switzerland demonstrated much more responsibility towards future generations by not piling up public debts as much as the US and the EU did.
“Secondly, the Swiss followed better economic policies.
Maria Zakharova, Russia’s Foreign Ministry spokeswoman
“Thirdly, and that is aimed at the euro and not the dollar, a ‘one-size-fits-currency’ fits no one.”
Russian Foreign Ministry spokeswoman Maria Zakharova today said the future of the Nord Stream 1 gas pipeline to Germany would depend on gas demand in Europe and Western sanctions against Russia.
The pipeline from Russia to Germany is undergoing annual maintenance until July 21 but European governments are worried Moscow could extend that in order to restrict European gas supply, disrupting plans to build up storage for winter.
Germany will completely stop buying Russian coal on August 1 and Russian oil on December 31, Joerg Kukies, state secretary in the German federal chancellery, said at a conference in Sydney on Wednesday.