Zelensky accuses Germany of not doing enough for Ukraine
Hans-Olaf Henkel said the situation put enormous pressure on countries that, like Germanyare members of the Eurozone, as well as what he called the “timid response” of the European Central Bank (ECB). Russia is Germany’s main supplier, supplying Europe’s largest economy with just under a third of its gas.
As for the euro, the continent’s single currency, used by 19 or its 27 Member States, has fallen below the dollar’s value for the first time in 20 years this week, in a development that will no doubt lead to ECB President Christine Lagarde To scare. †
Mr Henkel is a former MEP who chaired 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 problems. Today inflation in the US is even higher.
Angela Merkel is partly responsible for Germany’s reliance on gas from Russia, Mr Henkel said (Image: GETTY)
Russian President Vladimir Putin (Image: GETTY)
“However, the weakness of the euro against the US dollar has structural and political reasons.
“Firstly, the war in Ukraine is creating uncertainty for investors, including in other European countries.
For them, the US is a refuge, safer than EU countries, which are closer to the battlefields in Ukraine.
“Secondly, the possibility of ‘no more gas from Russia’ threatens the euro countries especially economically, especially Germany.”
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Christine Lagarde, President of the European Central Bank (Image: GETTY)
Mr Henkel added: “The US is practically self-sufficient. Against warnings from Eastern Europe, the US and myself as president of the BDI, both Chancellors Schroeder and Merkel have made Germany dependent on Russian gas.”
To complicate matters further, the ECB was unable to react to the way the Federal Exchange was in the United States, Mr Henkel noted.
He said: “While the ECB operates a ‘one-size-fits-all currency’ and must try to accommodate completely different fiscal environments, the Fed can focus on just one.
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Hans-Olaf Henkel is a former German MEP (Image: GETTY)
Gerhard Schroeder’s relationship with Vladimir Putin is controversial (Image: GETTY)
“For example, while the Germans need and want a strong interest rate hike by the ECB to fight inflation, Italians, French and Greeks want low interest rates so as not to have to pay high interest on their much higher government debt.
“Hence, the expected response from the Fed (higher rate hikes) is supporting the dollar, and the ECB’s timid response (late and lower rate hikes) hurts the euro.”
Even more striking than the euro’s weakness against the dollar was the deterioration of both currencies against the Swiss franc, emphasized Mr Henkel.
Russia vs Ukraine in numbers (Image: Express)
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 showed much more responsibility to future generations by not piling up sovereign debt as the US and the EU did.
“Second, the Swiss followed better economic policies.
Maria Zakharova, spokeswoman for the Russian Ministry of Foreign Affairs (Image: GETTY)
“Third, and that is focused on the euro and not the dollar, nobody fits a one-size-fits-currency.”
Russian Foreign Ministry spokeswoman Maria Zakharova said today that the future of the Nord Stream 1 gas pipeline to Germany will depend on demand for gas in Europe and Western sanctions against Russia.
The pipeline from Russia to Germany undergoes annual maintenance until July 21, but European governments are concerned that Moscow could extend it to limit European gas supplies, disrupting plans to build storage for the winter.
Germany will stop buying Russian coal completely on August 1 and Russian oil on December 31, Joerg Kukies, state secretary at the German Chancellery, said at a conference in Sydney on Wednesday.