Russia’s demand to pay for gas in rubles was compared to a race to the cliff

Western media: “The question of who will be the first to lose self-control in the gas dispute”

The conflict between Russia and the European Union over the transfer of gas payments in rubles continues. Moscow insists on its demands, European countries, starting with Germany and France, call ruble settlements a breach of contract. German Economy Minister Habek has activated an early warning mode for emergencies in the event of a supply disruption – a crisis team will gather to analyze the situation. And we looked at how the Western media assess the situation.

The Guardian: “Germany, Europe’s largest economy, is particularly dependent on Russian natural gas. German Economy Minister Robert Habeck called on citizens and businesses to reduce consumption, telling them that “every kilowatt-hour counts.” While supplies are secure, “we must step up precautions to be prepared for escalation on the part of Russia.”

Russia’s transition to ruble settlements appears to be largely politically motivated, although it may also help support Russia’s currency, which has fallen to a record low since Western sanctions. Since then, the ruble (partially) recovered and traded this morning at 83.73 per dollar, which is 2% higher, and at 92.6 rubles per euro, which is 1.5% higher.

Spiegel: “Europeans and G7 countries are still refusing to respond to the Kremlin’s new request. Payments in rubles are “unacceptable,” said German Federal Economy Minister Robert Habeck.

Why does Russia insist on ruble payments? Two advantages for the Kremlin are obvious: first, the obligation to pay in rubles will further strengthen its own currency. Because companies that want to continue buying gas in Russia will have to stock up on rubles in the future – this creates more demand and thus supports the exchange rate … Second, the Kremlin can use this move to force the West to circumvent its own sanctions. As the number of rubles on the world market is limited, companies may have to buy foreign currency from Russia’s Central Bank, whose foreign assets have been frozen by Western countries.

But it is also possible that Moscow would like to provoke the cessation of supplies with a commitment that the West has so far avoided.

Western politicians have urged companies not to pay in rubles. Of course, this is not yet a ban on transactions with energy in rubles. Many companies are hiding their plans. In the energy companies Uniper and EnBW, for example, it sounds only “no comment.” Other companies refer to current contracts that are denominated in euros or dollars.

The question of who will be the first to lose composure in the gas dispute: Russia or the West. Both sides are playing big. Game theorists call the situation “Chicken Game” – as in the Hollywood movie “Rebel Without a Cause”, where James Dean and his rivals arrange car races to break. The loser is the one who surrenders first. But if both sides persist in their course, both lose. “If signs continue to point to a confrontation,” said Thomas Meissner, an LBBW expert, “a halt to supply seems inevitable.”

Welt: “The Russian side has two options: either it concedes, accepts contractual payments in euros and dollars and supplies agreed volumes of oil and gas. Or decides to escalate the ruble dispute and interrupts supplies to Europe. For the EU, and especially for Germany and Italy, the suspension of gas supplies will have serious economic consequences.

The German Institute for Economic Research (DIW) expects a recession in Germany if supplies are cut. Social upheavals in the EU are likely. Higher prices for oil, gas, gasoline and other energy sources will cause a further surge in inflation.

But this will not necessarily happen, says Russian expert Gerhard Mangott. He believes that the Kremlin’s spokesman Peskov rhetorically reacted sharply to the G-7 statement, but in his reaction deliberately left open the possibility that supplies to Europe will continue.


About the author


Leave a Comment