Germany has some advice for the Russian president Vladimir Putin: Think about the consequences of asking for energy payments in rubles.
Russia’s Putin said last week that “unfriendly” nations would be asked to pay for their natural gas in rubles, prompting a spike in gas prices in Europe.
By requesting payments in the Russian currency, instead of dollars or euros, as agreed, Putin is seeking to shore up the value of the ruble, which sank after Russia’s invasion of Ukraine. the American dollar it has risen nearly 13% against the Russian ruble since February 24, when Russia began its invasion of Ukraine, after rising 85% in early March.
However, German Finance Minister Christian Lindner said he would not be intimidated by Russian demands.
“We are completely against any kind of blackmail. These treaties are based on the euro and [U.S.] dollar, so we suggest that private sector companies pay [Russia] in euros or dollars,” Lindner told CNBC’s Annette Weisbach on Monday.
“If Putin is not willing to accept this, it is open to him to think about the consequences,” he added.
German Chancellor Olaf Scholz said last week that paying for the oil in rubles would be a breach of contract, and Italian officials also said they would not pay in rubles as doing so would help Russia avoid Western sanctions over its invasion. from Ukraine.
However, tensions over future payments could disrupt the continued flow of natural gas from Russia to Europe. The region receives around 40% of its gas imports from Russia and this figure is even higher for some European nations, notably Hungary, which got 95% of its gas imports in 2020 from Russia.
The region’s dependence on Russian energy has prevented the bloc from imposing an oil embargo on Moscow as part of its sanctions regime, in contrast the White Housewhich has banned Russian imports of oil and gas.
The European Union has said it will review its approach to Russian energy and reduce your long-standing dependency. A plan unveiled earlier this month suggested cutting Russian gas imports by two-thirds before the end of the year.
“We will find solutions. We are working on less dependence on Russian imports and if [Putin] decides to cut off their supplies, we would have to be even faster to be independent from Russia,” Lindner said.
The region is now struggling to get its power from elsewhere. The United States, for example, announced on Friday a new agreement with the European Union to supply the bloc with 15 billion cubic meters of liquefied natural gas this year.