BERLIN (AP) — The Group of Seven major economies has agreed to reject Moscow’s demand to pay in rubles for Russian natural gas exports.the German energy minister said on Monday.
Robert Habeck told reporters that “all G7 ministers were in complete agreement that this (would be) a unilateral and clear breach of existing contracts” for natural gas, which is used to heat homes, generate electricity and the energy industry.
He said that officials from France, Germany, Italy, Japan, the United States, the United Kingdom and Canada met on Friday to coordinate naturally and that representatives of the European Union were also present.
Habeck said that “payment in rubles is not acceptable and we will urge the affected companies not to follow (Russian President Vladimir) Putin’s demand.”
Putin announced last week that Russia will require “unfriendly” countries to pay for natural gas only in Russian currency from now on, and instructed the central bank to draw up a procedure for buyers to purchase rubles in Russia. Demand pushed already high gas prices even higher amid fears it could herald a natural gas cut, which could disrupt Europe’s economy and hurt Russia’s finances.
Economists said the move appeared designed to try to support the ruble.which has collapsed against other currencies since Putin invaded Ukraine on February 24, and Western countries responded with far-reaching sanctions against Moscow. But some analysts expressed doubt that it would work.
Asked by reporters Monday whether Russia could cut off natural gas supplies to European customers if they reject the demand to pay in rubles, Kremlin spokesman Dmitry Peskov said in a conference call that “clearly we are not going to supply natural gas.” free”.
“In our situation, it is almost impossible and feasible to engage in charity work for Europe,” Peskov said.
Asked what would happen if Russia turns off the taps now, Germany’s energy minister said: “We are prepared for all scenarios.”
“Putin’s demand to convert contracts into rubles (means) that he has his back to the wall in that sense, otherwise he would not have made such a demand,” Habeck said, adding that Russia needs rubles to finance its war at home. . , such as payments to troops.
European governments have refused to impose a ban on energy imports from Russia for fear of the impact it would have on the economy. Europe gets 40% of its gas and 25% of its oil from Russia and, since the war, has been quick to come up with proposals to reduce its dependence.. Russia is equally dependent on Europe, with oil and gas as its dominant sector and paying for the government.
Estimates of the impact of a gas boycott or embargo in Europe vary, but most imply a substantial loss of economic output, especially as the war and the resulting rise in energy and commodity prices are already weighing on the economy. European economy. US sanctions allow exceptions for oil and gas payments, although it has banned imports of Russian energy.
Putin’s ruble payment proposal prompted Germany’s public services association, BDEW, to call on the government to declare an “early warning” of an energy emergency.
A spokeswoman said Monday that the government does not see the need for an early warning declaration at this time.
Pressed by journalists for the statement, German Chancellor Olaf Scholz said that “the contracts we know of establish the euro as the currency of payment and companies will pay according to the contracts they have signed.”
Which currency is used to buy Russian energy “doesn’t really matter,” said Robin Brooks, chief economist at the Institute of International Finance, a trade group for the world’s banks.
“What matters is that energy exports give Russia purchasing power, which it can convert into foreign goods,” he said.
Putin’s demand for payment in rubles “is mainly window dressing. It doesn’t change the underlying transactions,” Brooks said. “At the margin, I would call this another ‘own goal’ from Putin, as it increases the focus on gas purchases by Western Europe and could increase the odds of an import disruption.”
AP economics writer Paul Wiseman contributed from Washington.