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 Russia Will Suffer Most From Gas Dispute, German Experts Say

Experts of Germany's biggest bank analyzed the possible consequences of stopping the transit of Russian gas through Ukraine and the complete cessation of Gazprom’s supply.

DB Research Analytical Center in its baseline scenario states that in the end Russia will stick to threats and a long interruption in the supply of Russian natural gas to Europe (including through Ukraine) will not happen, as the revenues from it are too important for the Russian budget, Censor.NET reports citing Deutsche Welle.

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At the same time a pressure drop in pipelines coming from Russia more than once observed in the last days was not accidental and not caused by technical reasons, the authors of the review warn. They assume that the events of the recent months will force the EU to reconsider its earlier import policy, which in the medium term "will weaken the economic position of Russia."

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Thus, the current uncertainties in gas supply will in any case negatively affected Russia itself, DB Research is convinced. If Russia decides to "abuse gas as a weapon" and completely stop its exports to Europe, it will "lose credibility for many years, perhaps, decades" according to the study. However, it stresses that the "extreme" scenario of the total cessation of supply is unlikely.

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But if, contrary to expectations, the developments will go according to this scenario, the "euro-zone economy will be up for a big drop", and a new recession in Europe, including Germany, will lead to a marked deceleration of the world economy. In the context of increasing purchases of liquefied natural gas (LNG), the German gas stocks under favorable conditions will last about until April 2015, however, gas prices could rise by 75 percent, causing a general rise in the cost of energy by about 50 percent, DB Research experts suggest. In this situation, the rate of inflation in Germany may hike by five percentage points, while the real incomes of the population will be respectively reduced.

 
 
 
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