Putin should think before asking for energy payments in rubles

Germany has some advice for the Russian president Russian President Vladimir Putin: Consider the consequences of ordering energy payments in rubles.

Russia’s Putin said last week that “unfriendly” countries would be required to pay for natural gas in rubles – causing gas prices to soar in Europe.

By requiring payments in Russian currency — not dollars or euros, as is contracted — Putin is seeking to shore up the value of the ruble, which has sank in the wake of Russia’s invasion of Ukraine. The U.S. dollar It has risen nearly 13% against the Russian ruble since February 24, when Russia began its invasion of Ukraine, after having surged nearly 85% in early March.

However, German Finance Minister Christian Lindner said he would not be aggressively armed with Russian demands.

“We are totally against any kind of blackmail. These treaties are based on the euro and [U.S.] Therefore, we suggest that private sector companies pay [Russia] In euros or dollars,” Lindner told CNBC reporter Annette Weisbach on Monday.

“If Putin is not willing to accept this, he is open to thinking about the consequences,” he added.

German Chancellor Olaf Scholz said last week that paying for oil in rubles would be a breach of contract, and Italian officials also said they would not pay in rubles because that would help Russia avoid Western sanctions over its invasion of Ukraine.

However, tensions over future payments could disrupt the continued flow of natural gas from Russia to Europe. The region receives about 40% of its gas imports from Russia and this figure is even higher for some European countries, 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 – by contrast. White Housethat banned imports of Russian oil and gas.

The European Union has She said she would reform her approach to Russian energy and reduce its long-term dependence. A plan presented earlier this month proposed cutting Russian gas imports by two-thirds before the end of the year.

“We will find solutions. We are working to reduce dependence on Russian imports and whether [Putin] He decided to cut off his supplies, we will have to be faster until we are independent of Russia. ”

The area is now scrambling to get its energy from elsewhere. The United States, for example, Friday announced a new agreement with the European Union to supply the bloc with 15 billion cubic meters of liquefied natural gas this year.