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Putin should think before asking for energy payments in rubles

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Germany’s advice to Russia’s President Vladimir PutinThink about what it means to ask for energy payments using rubles.

Russia’s Putin said last week that “unfriendly” nations would be asked to pay for their natural gas in rubles — causing a spike in European gas prices.

By asking for payments in the Russian currency — rather than in dollars or euros, as is contracted — Putin is seeking to prop up the value of rubles, which sank in the wake of Russia’s invasion of Ukraine. This is the U.S. dollarSince February 24, Russia’s invasion of Ukraine began, the Russian ruble has increased almost 13%. This is after it spiked around 85% in March.

Christian Lindner (German Finance Minister) said that Russia’s demands would not force him to be more assertive.

We are against all forms of blackmail. These treaties were based upon euro [U.S.]dollars, and we propose that companies from the private sector to pay [Russia]Lindner explained Monday to CNBC’s Annette Weisbach that she was unsure if the dollar is in euros or dollars.

He said, “If Putin doesn’t want to accept it, it is open for him to consider consequences.”

Olaf Scholz, Germany’s Chancellor, stated last week that Russia would have to pay for oil in rubles. Italian officials said the same thing.

However, future tensions could affect the flow of natural gas between Russia and Europe. This region imports approximately 40% of its natural gas from Russia, and the figure for certain European countries is higher, such as Hungary.

The region’s dependency on Russian energy has prevented the bloc from imposing an oil embargo on Moscow as part of its sanctions regime — in contrast the White HouseRussian oil and gas imports have been banned in the state of.

The European Union said it will overhaul its approach to Russian energyIts long-standing dependence. An earlier month plan proposed to reduce Russian gas imports by two thirds before the year ends.

We will solve the problem. We will work to lessen our dependence on Russian imports. [Putin]Lindner explained that if Russia decides cut its supplies, it would be necessary to get independent of Russia even more quickly.”

Now, the region must find energy sources from other countries. For example, the United States announced Friday that it had reached a deal with the European Union for 15 billion cubic meters worth of liquefied gas.

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