Putin’s demand last week that “unfriendly countries” pay for Russian natural gas in rubles was aimed at blunting the effectiveness of sanctions over the invasion of Ukraine.
And, of course, the sanctions by the West and Europe were aimed at undermining the value of Russia’s currency, and in turn, creating economic hardship in Russia.
Basically, requiring buyers to pay in rubles would mean an increase in the demand for the currency, which, in turn, would help prop up its value. This has led to a standoff between Putin and European nations that could be called a game of chicken.
On Monday, energy ministers from the Group of Seven industrialized nations rejected Putin’s demands that Russian natural gas shipments be paid for using rubles.
“All G7 ministers have agreed that this is a unilateral and clear breach of existing contracts,” Robert Habeck, who is the German economy and climate protection minister, told reporters after a virtual conference with G7 energy ministers.
And as the G7 group points out, demanding payment in rubles is a clear breach of the contracts, rendering them null and void, reports whec.com.
“What we have learned so far boils down to the fact that there are fixed contracts everywhere, where the currency in which payment is made is also part of the contract,” said German Chancellor Olaf Scholz. “Those are the starting points that we have to work from.”
The Russian threat is potent since the EU imports 90 percent of the natural gas used to generate electricity, heat homes, and supply industry, with Russia supplying close to 40 percent of the bloc’s gas.
As Habeck told reporters, “Putin’s attempt to divide us is obvious, but – as you can see from this great unity and determination – we will not be divided.”
