Germany and France react to Russia’s gas-for-ruble demand — Analysis

Finance ministers say they should buy Russian gas with euros, say they’re prepared for a cutoff

French Finance Minister Bruno Le Maire and German Economy Minister Robert Habeck said on Thursday that their countries won’t buy Russian gas with rubles, insisting that gas contracts in euros “must be observed.”Russian President Vladimir Putin stated earlier that euros payments would be changed to rubles on arrival in Russia. 

Habeck stated that Europe wouldn’t be a “free market” when he spoke at Berlin’s press conference. “blackmailed”Russia to use Russian currency for gas purchases. Putin has made it clear that he will not allow Russian currency to be used for gas purchases as of Friday “unfriendly” countries – those who “illegally” sanctioned Russia’s central bank in response to the conflict in Ukraine – will have to pay for Russian gas in rubles or have their supply cut off.

Habeck said that gas agreements between European countries and Russia were still in place, but they had been negotiated using euros. “must be observed.”Habeck reaffirmed an earlier statement by the Group of Seven major economic economies. “We will under no circumstances accept paying for gas deliveries in a currency other than the contractually agreed currency.”

Moscow’s new gas payment scheme explained

Putin spoke by phone with German Chancellor Olaf Scholz and French President Emmanel Macron on Wednesday, and outlined a system whereby both countries would continue to pay in euros, which would then be converted to rubles by Russia’s Gazprombank – which has not been sanctioned by the EU – upon receipt. “Scholz did not agree to this procedure in the conversation, but asked for written information to better understand the procedure,”A German official stated, and a French official claimed. “France is against paying in rubles.”

It is unclear whether Habeck and Le Maire’s insistence that the original contracts in euros be honored extends to an outright rejection of the euros-to-rubles deal proposed by Putin on Wednesday. As Putin’s deal would involve interacting with Russia’s central bank, European leaders have been reluctant to agree. 

Habeck stated that Germany was ready for Russia to cut off gas flow if a deal is not reached. Russian newspaper Kommersant reports that Gazprom, the largest energy company in Russia is at present being rebuffed by countries refusing to pay rubles. “considering the possibility of a complete halt in gas supplies … and is assessing the consequences of such a step.”

Germany relies heavily on Russian energy. Russia provides more than half of Germany’s gas supplies and about a third of Germany’s oil imports. France relies on Russia for around one-third of its natural gas supplies and about 10% of its oil. Habeck, who has been urging citizens to limit their consumption due to the increasing likelihood of rationing this week, told ZDF on Wednesday that Germans were being urged by Habeck. “will be poorer”As a consequence of sanctions placed upon Russia. 

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