A dispute with Russia over Vladimir Putin’s demand for gas payments in rubles has set off the first alarm bells in Germany. Berlin is preparing for possible gas rationing in the event of a supply disruption from the Eurasian country. The government has taken the first formal step, which includes activating the early warning phase of its emergency legislation designed to tackle the fuel shortage on which its powerful industry and the heating of its 83 million people depend. ,
Berlin believes the Russian president’s ultimatum poses a very real threat. Last week, Putin announced that Russia was going to demand payment in rubles from “hostile countries” including the European Union, which had so far relied on 40% of Russian gas imports. The German government’s first response was to claim that the demand was a breach of contract, indicating that it would not succumb to Putin’s challenge.
Confirmation came two days later. Following a meeting of G7 ministers, the seven most industrialized countries on the planet on Monday unanimously decided to refuse payment for imports in roubles. German concerns escalated when Putin’s spokesman assured that Moscow would not supply “free” gas to Europe, that is, after directly threatening to cut supplies if the Kremlin did not pay as demanded.
The announcement of an early warning level means the Ministry of Economy and Climate, led by Greene Robert Habeck, deploys a crisis team that continuously analyzes and evaluates the supply situation. This working group also has the right to cut off certain consumers from the network, if necessary, ie to order, for example, some companies to avoid gas consumption and the right to stop their production to give priority to households Is. This situation would only be reached in the third phase of the National Emergency Plan, which stipulates that large industrial customers will receive small amounts of gas, or no delivery, if an alert situation occurs.
No one knows what decisions Moscow might make before Europe, but Habek assured Germany should be prepared “in the event of an escalation by Russia”. Precautionary measures are necessary even if supplies are flowing normally through the various gas pipelines that supply fuel to the country, the minister assured during a press conference in Berlin. The decision, in any case, is firm: “Germany will not accept any breach of supply contracts,” Hebeck said.
German industry is heavily dependent on gas, so cutting Russian supplies would be a major blow. Chemical plants, steel mills, which produce aluminum, consume large amounts of gas in their processes. Industry union representatives predicted the shutdown would have disastrous consequences, the most damaging since World War II.
He knows all the sides of the coin deeply.
Hebeck insisted on several occasions that this is a preventive decision, that supplies are guaranteed and that gas and oil are reaching Germany in compliance with existing contracts. He also called on companies and households to reduce their energy consumption as much as possible. “Every kilowatt hour of energy saving makes a contribution,” he said.
Putin’s demand is interpreted as an attempt to inflame rifts between the allies and respond to their sanctions, but also as a way to strengthen the ruble and boost the Central Bank of Russia’s response to Western sanctions. The reason is practically isolated from international markets. , If Europe decided to submit to demand, it would have to turn to the Russian central bank for the large sums needed to pay its gas bill, thus breaking its own sanctions.
Western companies often have long-term supply agreements for Russian gas imports. The payment currency is specified in the clause. Most contracts are in euros or dollars. Some importing companies, such as French Engie or Austrian OMV, have assured that they have no intention of changing the payment method.
The European Union has so far avoided imposing sanctions on energy imports from Moscow, as have the United States and the United Kingdom, which are much less dependent on Russian oil and gas. Washington last week made a commitment with Brussels to expedite closing the Russian tap to increase its shipments of liquefied natural gas (LNG) to the European Union. The deal is part of Brussels’ effort to reduce dependence on Russian gas by two-thirds before the end of the year. That is, more than 150,000 to 50,000 million cubic meters have to go.
Germany, for its part, is accelerating the construction of regasification plants in its region and negotiating contracts with other suppliers to obtain liquefied natural gas. Berlin, which so far imports 55% of the gas it consumes and a third of its oil from Russia, will be “virtually independent” of the latter by the end of this year and promises to give up gas completely by the middle of 2024. Hebek noted that Germany has already managed to reduce the percentage of Russian gas by 40% in recent weeks, thanks to new contracts to become an energy independent from Moscow.
The Gas Emergency Plan is based on a 2017 EU regulation that defines a series of measures to ensure supply. It consists of three levels, early warning, warning and emergency. The first announcement is made when there are concrete and serious signs of a possible deterioration in gas supply conditions. Germany now believes this to be the case and has therefore already informed Brussels of its decision.
Russia threatens to sell all its raw materials to “unfriendly countries” in rubles
The president of the State Duma or Russia’s Chamber of Deputies, Vyacheslav Volodin, proposed this Wednesday to expand the list of goods and raw materials exported to “unfriendly countries” (those imposing economic sanctions on the regime) in rubles. Will go Vladimir Putin) and don’t limit this measure to the sale of natural gas. “It would be appropriate, where it is appropriate for our country, to expand the list of goods that are exported in rubles and include fertilizers, grain, oil, petroleum, coal, timber…” Volodin said in his According to Reuters, wrote on the Telegram account.. The legislator has insisted that European countries have all the market mechanisms for payments in rubles: “This is not a tragedy. It is much more dreadful when there is money, but there is no material.”
Meanwhile, Kremlin spokesman Dmitry Peskov on Tuesday called on European companies to embrace new realities arising amid tensions between Russia and the West. “Companies should understand that the situation has changed, there has been a complete change in the situation created by the economic war that started against Russia,” he said.