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Germany Greenlights Uniper Bailout by Sven R. Larson

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Germany Greenlights Uniper Bailout

The German government is moving forward with a multi-billion euro bailout for Uniper, one of Germany’s largest energy companies. ABC News reports that the acquisition is “part of a rescue package prompted by surging prices for natural gas and reduced Russian deliveries.”

As we reported on July 18th, the initiative for the de facto bailout came from Uniper. ABC News adds:

Uniper, which has been Germany’s biggest importer of Russian gas used to fuel industry, generate electricity, and heat homes, asked for a bailout two weeks ago. German officials quickly pledged that they would help, but thrashing out the details took time. 

Germany’s chancellor, Olaf Scholz, pushed the bailout forward by emphasizing Uniper’s central role in supplying German customers with natural gas. According to the chancellor, quoted by ABC, some “60% of gas imports … are ultimately organized” by Uniper. 

CNN Business reports that in addition to buying the 30% stake in the company, 

Under the rescue deal, the government has committed to provide €7.7 billion ($7.8 billion) to cover potential future losses, while state-run bank KfW will increase its current credit facility by €7 billion ($7.1 billion). 

According to multiple sources, the Uniper bailout will not prevent a rise in energy prices, specifically on natural gas. 

The uncertainty on the energy market is one factor behind the decline in business confidence in Germany. From Deutsche Welle:

Morale among German businesses has fallen as rising prices for goods and fuel dampen growth prospects, according to a survey by the German ifo institute think tank published on Monday [July 25th].

The decline in business confidence increases the likelihood of a downturn for the German economy as a whole.

Sven R. Larson is a political economist and author. He received a Ph.D. in Economics from Roskilde University, Denmark. Originally from Sweden, he lives in America where for the past 16 years he has worked in politics and public policy. He has written several books, including Democracy or Socialism: The Fateful Question for America in 2024.