Germany and Europe are ready to deal with the fallout should Russia decide to completely halt gas deliveries, the country’s Chancellor Olaf Scholz said in a statement on Saturday.

Germany has been preparing ‘for Russia to largely cut off the gas supply due to the war against Ukraine,’ Scholz said, adding that his country had set up terminals on the coast. northern Germany to import liquid gas.

The Chancellor’s assertion that the country is ready has, however, been disputed by the German Association of Towns and Municipalities, which represents around 14,000 municipalities and towns across the country, as well as the economic think tank DIW.

Europe’s largest economy is at the center of the continent’s energy crisis as Russian President Vladimir Putin cuts supplies in retaliation for war-related sanctions in Ukraine. Concerns are growing that Germany could face a wave of bankruptcies as a result of the crisis.

“We saved gas. We are once again using the production capacities of coal-fired power stations. At the beginning of next year, we will have the possibility to use the remaining nuclear power plants in southern Germany if necessary,” said the Chancellor.

Yet the government’s power promise was thrown into question on Saturday, when the president of the Association of Towns and Municipalities said the country was at risk of an energy crisis.

“A hacker attack and/or an overload of the electricity network” could cause a serious power outage, Gerd Landsberg, president of the association, told the Welt am Sonntag newspaper. Such an overload could be triggered if too many households plug in electric heaters instead of gas heaters, he said.

Germany has acknowledged that the situation is serious, but is not yet doing enough to prepare, Landsberg said, according to the newspaper.

Marcel Fratzscher, chairman of German think tank DIW, told media network RND on Saturday that he expects a longer slowdown in Germany.

Recession is inevitable, we’re already in recession,” Fratzscher said, adding that he fears the economy will recover quickly and contract instead in 2023. “2024 won’t be such a good either. year,” the economist said and warned that Germany may have to live with a few years of stagflation.

Fratzscher predicted that “many companies will go bankrupt” because the government cannot save them all. He suggested that the government limit energy costs and provide processing assistance.

Earlier this week, the German government received a blow for its plan to keep some nuclear power plants online as an emergency reserve. The plan, unveiled by Economy Minister Robert Habeck, was rejected by one of Germany’s nuclear power plant operators, who said it “is not technically feasible and therefore not suitable as a means of securing the part of the supply of these power stations”.

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