Russia’s demand for gas payments in rubles is ‘blackmail’

Germany on Tuesday warned Russian President Vladimir Putin against “blackmailing” Berlin by forcing it and other “unfriendly” nations to pay for its country’s oil and natural gas in rubles.

Federal Finance Minister Christian Lindner said his country would not be intimidated by Putin’s demand that Russian currency be used to pay for energy imports.

The Russian leader is trying to strengthen the value of his national currency after heavy economic sanctions were imposed on Moscow in retaliation for invading Ukraine.

The United States has banned Russian oil and natural gas imports, but Germany and other European countries depend on Russia for their energy needs – complicating efforts to create a Western united front in favor of tougher sanctions.

The ruble’s value plummeted after sanctions were imposed on Russia following its invasion of Ukraine.

Lindner said his country has no plans to pay for Russian energy in rubles. He accused Putin of violating the terms of already signed contracts denominated in either euros or dollars.

Wladimir Putin
Putin has been looking for a way to prop up the ruble’s value after economic sanctions hit Russia.
SPUTNIK/AFP via Getty Images
Firefighters at the scene of a Russian shelling in Kyiv.
Firefighters at the scene of a Russian shelling in Kyiv.
Anadolu Agency via Getty Images

“We are strictly against any kind of blackmail,” he said Treasury Secretary to CNBC.

“These contracts are based on euros and [US] Dollars and so we propose that private sector companies pay [Russia] in euros or dollars.”

“If Putin doesn’t want to accept that, he’s free to think about the consequences.”

Lindner’s boss, Chancellor Olaf Scholz, rejected the possibility of paying for Russian electricity in rubles last week.

“What we have learned so far is that there are fixed contracts everywhere, in which the currency in which payment is made is also part of the contract,” said Scholz.

“These are the starting points we have to work on.”

oil refinery
Europe imports 40% of its natural gas from Russia, making it largely dependent on the Kremlin for its energy needs.
dpa/Picture Alliance via Getty I

Janez Jansa, Prime Minister of Slovenia said: “I don’t think anyone in Europe really knows what rubles look like. Nobody will pay in rubles.”

Italian Prime Minister Mario Draghi, the former head of the European Central Bank, simply said that if Putin goes through with the plan, “we will consider it a violation of existing treaties.”

Europe relies on Russia for around 40% of its gas imports. Hungary alone gets 95% of its gas from Russia.

The crisis in Eastern Europe has prompted European leaders to look for ways to reduce energy dependence on Moscow.

“We will find solutions,” Lindner told CNBC.

“We are working towards less dependency on Russian imports and if [Putin] decides to reduce its supplies, we would have to move even faster to be independent from Russia.” Russia’s demand for gas payments in rubles is ‘blackmail’


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