The Institute of International Finance expects the surplus to rise this year to as high as $US240 billion ($317 billion) due to higher energy prices and the compression of internal demand. That will probably surpass the entire surplus of China in 2022.

The Russian finance ministry says the country sold its Urals crude at an average $US89 a barrel in March, which amounts to bumper prices even after offering a sanctions discount. The Kremlin is in trouble on the battlefield but it is not yet running out of money.

Eyewash sanctions against oligarchs and the seizure of yachts will no longer suffice. This has unpredictable consequences for the global economy. Equity markets have not yet priced in the political escalation.

Germany’s corporate elites are fighting a rearguard action to head off further sanctions, warning of a dangerous chain reaction if governments succumb to the mood of the moment. “Emotionally, one can understand an embargo. But if it comes, it will very probably tip the whole European economy into a recession with long-lasting consequences. We mustn’t let this out of our sight,” said Christian Sewing, president of the German banking federation (BdB).

Martin Brudermüller, head of the chemical giant BASF, predicted a catastrophic wave of bankruptcies. “If gas supplies from Russia were cut off overnight, it could push Germany into the worst crisis since the end of the Second World War. Do we really want to destroy our whole economy?” he told the Frankfurter Allgemeine.

Chancellor Olaf Scholz has stuck closely to the script, bowing to the great industrial combines much like his predecessors. He has lashed out at German academic economists for suggesting that a full embargo is manageable if the country is willing to accept some contraction of GDP, angrily calling them “irresponsible”. The academics are right. There is by now a small literature on how it can be done, by the Bruegel think tank, by the IEA and by the University of Bonn.

The winter is over and Europe has enough gas to muddle through until next November. It all comes down to whether Europe is willing to give up its comfortable status quo. For the German coalition it means recognising that its position is untenable, and risks frittering away 70 years of hard-won moral and diplomatic credibility.

Two thirds of the population wants an end to business-as-usual appeasement. They back the Polish plan for a full cut-off of energy purchases, a full ban on Russian ships entering EU ports, and a full expulsion of all Russian banks from Swift. A splash across the front of Die Welt accused the German government of “joint guilt for the massacres of Bucha and Mariupol”. This is the new mood.

Former chancellor Gerhard Schröder, now a paid Kremlin agent, has become a pariah. This week it is the turn of president Frank-Walter Steinmeier to explain his actions, after the Ukrainian ambassador refused to be in the same room and accused him of “creating a spider’s web of contacts with Russia for decades”.

Steinmeier is the architect of Germany’s pro-Putin policy. He approved the Nord Stream 2 pipeline in 2015 months after the illegal annexation of Crimea, against the vehement protest of Ukraine, Poland and the Baltic states. It was a message to Putin that Berlin was willing to acquiesce in the violent redrawing of borders in return for a sweetheart deal on discount gas.

Steinmeier this week began a delicate mea culpa. “My adherence to Nord Stream 2 was clearly wrong. My judgment was that Vladimir Putin would not bring about the economic, political and moral ruin of his country for his imperial lunacy. But I was wrong, like many others,” he said. He will survive but his policy will not.

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Wolfgang Münchau, from Eurointelligence, says Germany (and Italy) is objectively “the financial sponsor of Russian war crimes” and risks paying an exorbitant reputational price the longer it goes on. The fate of the European project is itself in question this week. “If Germany resists, I expect at least some member states to question the wisdom of aligning themselves strategically with a country that keeps pursuing its self-interest at the expense of others,” he said.

Münchau said the EU has a bad record of standing up to Germany, but strategic collusion with the Kremlin is becoming too much to swallow.

“Forget the platitudes about the EU showing unity. We Europeans like to congratulate ourselves on the half-measures we take in response to every crisis. If we fail again, as we did so many times in the past, the moral case for European integration can no longer be made,” he said.

Germany is going to have to decide where its priorities lie.

Telegraph, London

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