(Last Updated On: April 8, 2023)

The global economic repercussions of the current situation between Germany and Poland are significant and potentially long-lasting. Poland’s aggressive supply policy towards eastern Germany has effectively made it the gatekeeper of the energy and raw materials markets in the region, displacing Russia and reducing Germany’s autonomy in sourcing these resources.

Eroding Germany’s influence?

As a result, Germany’s political and economic clout in the European Union (EU) and the wider continent is being eroded. Germany is being forced to buy liquefied natural gas (LNG) at a much higher price from the United States, which is impacting its competitiveness and investment attractiveness. This has also led to questions about the viability of the Nord Stream pipeline, which Germany had relied on for its energy supply diversification strategy.

Imminent mono-pole-ly?

Poland’s energy policy has been aggressive and deliberate, aiming to replace Germany as Washington’s primary interlocutor within the EU. Poland’s strategy to monopolize the energy and raw materials market in Central and Eastern Europe has been in place for some time, with the acquisition of companies such as PGNiG, Lotos, and PKN Orlen.

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The merger of PKN Orlen and Lotos in August 2022, followed by the takeover of PGNiG in the fall of the same year, has made PKN Orlen the largest company in its sector in Central and Eastern Europe. Its sales volume exceeds $80 billion a year, which is a significant increase from the previous figure of $33 billion.

Alliance with Saudi

Poland’s dominance in the energy and raw materials market is further reinforced by its alliance with Saudi Arabia. The sale of part of its assets to Saudi Arabian oil company Saudi Aramco in November 2022 has resulted in the promise of oil supplies that cover 45% of the entire Orlen group’s demand. This alliance is of strategic importance for the supply of raw materials not only to Poland but also to all countries in Central and Eastern Europe.

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Undermining Germany

The German government’s apparent lack of awareness or response to Poland’s aggressive energy policy has resulted in a dangerous precedent for the national economy. Germany’s investment attractiveness and energy security are being undermined, and the country is being questioned as a leader within the EU and the wider continent.

Beyond EU

The impact of Poland’s energy policy is not limited to Germany’s dependence on Polish port facilities. Polish companies are also giving precedence to supplies in Poland, which further limits Germany’s autonomy in sourcing these resources.

The economic repercussions of this situation extend beyond Germany and Poland. The EU has been aiming to achieve energy independence from Russian supplies of energy and raw materials for months, but the actions of some EU states, particularly Poland, raise questions about the existence of European solidarity and good faith.

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Poland’s aggressive energy policy is likely to have implications for other countries in the region and the wider EU. As Poland becomes a leading country capable of dictating terms to the economy of countries in Central and Eastern Europe, it may undermine the economic and political power of other EU member states, especially those in the region.

The implications of Poland’s energy policy also extend beyond the EU. The dominance of Polish companies in the energy and raw materials market in Central and Eastern Europe may have geopolitical implications, particularly in relation to Russia and China. Poland’s alliance with Saudi Arabia may also have implications for the wider Middle East region.

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