Russia demands payment for natural gas in rubles, and it could push Germany – Europe’s largest economy – into an economic crisis

Russian President Vladimir Putin.Mikhail Svetlov/Getty Images

  • Germany has activated an emergency plan to deal with disruptions to its natural gas supply.

  • Europe’s largest economy is heavily dependent on Russia for natural gas.

  • The Germans would have to ration natural gas if supplies ran out.

Germany – Europe’s largest economy – has activated a contingency plan to deal with disruptions to its natural gas supply after Russian President Vladimir Putin demanded payment in rubles.

Russian gas accounted for 55% of Germany’s gas imports in 2021 and 40% of its gas imports in the first quarter of 2022, per Reuters.

Germany is now in the “early warning phase” of its emergency plan, with Berlin calling on all consumers – from industry to households – to save energy and reduce consumption. If the situation worsens, the country could start rationing gas in the latest of the three-step plan, as outlined by the German Ministry of Economics.

“There are no supply bottlenecks at the moment. Nevertheless, we need to strengthen our preventive measures in order to be ready for any escalation from Russia,” he said. he added. German Economy Minister Robert Habeck said in a statement Wednesday.

Monday, the Group of Seven rejected Putin’s demands for gas supplies to be paid for in rubles, citing a violation of existing agreements. But on Thursday Putin signed a decree obliging countries importing Russian gas to pay in rubles from April 1 and threatened to cancel existing contracts of those who do not comply with it, Reuters reported.

Putin’s decree came a day after he told German Chancellor Olaf Scholz the country could pay for gas in euros, Reuters reported, citing a German government spokesperson.

“Scholz did not agree to this procedure in the conversation, but requested written information to better understand the procedure,” the spokesperson said, according to Reuters.

Imposing petrol rations would hit the German economy hard.

under the country emergency plan, the industry will be on the front line for supply cuts. The move could devastate the economy and lead to job losses, business leaders and unions have said The German media DW.

A union leader at BASF – the world’s biggest chemical maker – told DW that all 40,000 workers at the key production site in the western town of Ludwigshafen would have to cut their working hours or be made redundant.

“The consequences would not only be a reduction in working hours and job losses, but also the rapid collapse of industrial production chains in Europe – with global consequences,” said Michael Vassiliadis, president of the German Workers’ Union. chemicals IG BCE and a supervisory board of BASF. member, by DW.

Last week, Germany pledged to end the use of Russian gas in 2024, Reuters reported, citing Habeck.

Read the original article at Business Intern

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