Posted on 03/30/2022 5:02:54 AM PDT by blam
Now that Moscow has doubled down on its demands that its European “partners” pay for its oil and gas in rubles instead of euros (which, as the bloc already demonstrated, can be easily confiscated in the name of “sanctions”), the German government is digging in its heels as the payment dispute threatens to precipitate problematic energy shortages in Europe’s largest economy.
The FT reported Wednesday that German Energy Minister Robert Habeck has activated the “early warning phase” of Germany’s gas emergency law, which was adopted to help ration supplies in the face of a severe shortage.
Too bad President Biden and the US will take years to reroute their promised LNG exports (and even so, they will likely never be able to fully compensate for Russian supplies).
Habeck issued the warning for fear that Moscow would swiftly move to cut off energy exports to one of its biggest customers in Europe over its refusal to make payment in rubles, which Habeck has insisted would be a violation of the two sides’ contract.
The move was triggered by German concern that Russia might cut supplies to the country and its neighbors because they are rebuffing Moscow’s efforts to force payment for gas imports in rubles.
After demanding last week that “hostile states” pay for its gas and oil in rubles (although it hinted that gold and cryptocurrency might also be considered), Moscow said it wouldn’t share its resources “for free” after the G-7 aggressively repudiated the Russians’ request.
“We will definitely not supply oil and gas for free, that’s for sure. It’s hardly possible and reasonable to engage in charity in our situation,” Putin spokesman Dmitry Peskov said earlier this week.
As Germany scrambles to address a looming shortfall in energy supplies, analysts are warning that the government’s refusal to meet Moscow’s request for payment in rubles could create a “substantial” risk.
During the early warning phase – the first of three stages in Germany’s emergency response – a crisis team from the economics ministry, the regulator and the private sector will monitor imports and storage.
If supplies fall short, and less draconian attempts to lower consumption do not work, the government would cut off certain parts of German industry from the grid and give preferential treatment to households.
Volker Wieland, a professor of economics at Frankfurt University and a member of the German council of economic advisers, on Wednesday warned that a halt in Russian energy supplies would create a “substantial” risk of a recession and bring Europe’s largest economy “close to double-digit rates of inflation.”
Already, the German economy is facing its most brutal inflation in decades, with an annual headline inflation rate that could top 6% by the end of the year. The dire situation has already prompted the government to subsidize citizens’ energy costs with a round of energy stimmies.
Further restrictions on Russian supply could have even more dire consequences.
As a reminder, Russia dominates gas and oil exports to the EU:
Source: FT
Of course, if Berlin doesn’t play ball, gas won’t be the only commodity in short supply. The Kremlin said on Wednesday that demanding ruble payments for exports of oil, grain, fertilizers, coal, metals and other key commodities in addition to natural gas was a good idea, Russia’s top lawmaker Vyacheslav Volodin said on Wednesday, per Reuters.
“If you want gas, find rubles,” Volodin, the speaker of the lower house of parliament, said in a post on Telegram.
Peskov, meanwhile, said the dollar’s global reserve currency was already diminishing, and that pricing Russia’s biggest exports in rubles would be “in our interests and the interests of our partners.”
Now, if the leaders of Europe don’t play ball, then President Biden’s prediction of devastating food shortages could become a self-fulfilling prophecy.
You can say that again...
President Trump warned them about relying on Russia.
My Grandma always said this strange thing in an instance like this. “Well, you can’t have your cake and eat it too”.
How is the global warning crowd going to keep themselves from freezing and how much more frozen will they have to get before reality sets in and they come up with some rubles?
There are no fossil fuels. The words have been a gaming of reality.
There are hydrocarbons aplenty formed and continuing to be formed through geologic processes to help make life better and more productive. Atmospheric CO2 is not a pollutant, and the only men who think mankind are a "cancer on the earth" are the globalist Left and corporatists, who want to rule, profit and decimate at the same time.
Modern technology creates "cleaner" use of energy, and the US has reduced its pollution in many metrics.
“Congratulations. You Sanctioned Yourself”
Disclose.tv
@disclosetv
JUST IN - Germany triggers the first stage of the gas emergency plan to secure supplies. Vice-Chancellor Habeck appeals to consumers: save energy.
3:20 AM · Mar 30, 2022
JUST IN - Kremlin says the switch of payments for Russian gas to rubles will not take effect on Thursday, “will take more time,” BILD reports.
8:04 AM · Mar 30, 2022
JUST IN - Inflation in Germany jumped to 7.3% in March, the highest level since 1981.
8:19 AM · Mar 30, 2022
English translation: FOR THE TIME BEING, GAS CAN CONTINUE TO BE PAID FOR IN DOLLARS AND EUROS Kremlin buckles in ruble dispute
If Germany does engage with the ‘petroruble’ then the Ruble will go up.
Putin has placed a floor on the price of Gold of 5000 Rubles per gram. I say a ‘floor’, as 5000 Rubles per gram works out lower than the current market price.
But if the Ruble does go up due e.g. to the ‘petroruble’ then the price of Gold will be supported by arbitrage.
That is extraordinary news. Looking for confirmation.
Trump told you so, but you were just too smart and sophisticated to listen. You thought it was a joke.
Better ditch the Gaia worship fast. You can’t worship Gaia and have security + a functioning economy at the same time. You have to choose one.
In the meantime get used to paying in Roubles.
Oh right, there’s a delay setting up the payment mechanism.
For a minute there I thought Russia had given up the idea, which would have been very strange.
This is a catch-22 for Russia.
They can take this stand, but for how long? They cannot go a month without the income from selling gas and it’s the same for wheat, fertilizer, etc.
Russia will collapse without this daily inflow of money, whatever form it takes.
Germany and the rest of the EU should call their bluff.
Who would give in first? EU from lack of gas, grain and fertiilzer? Or Russia for lack of income?
Only God knows.........
Much of the problem are the idiotic sanctions against Russia, which to me look like war. We (our government, along with Europe), wants to destroy the Russian Ruble, economy and government.
It's a good question to ask. The sort of question that should have been asked before Sanctions were applied.
I read some claim on Zerohedge that - at the current prices of Oil and NG - Russia's income is higher than it was before February. Not all of Russia's customers pay in Euro or USD you see, and the German contracts were at a steep discount to today's prices. I need to confirm this of course.
Hmm, now that force majeure has been applied, I wonder if the ruble price of these long term contracts is being offered to Germany, or if the old contracts will just be torn up. The most sensible course would be for Russia to honor the contracts as far as possible.
I don’t know if it was officially sanctioned or something some German YouTubers made, but last Fall I saw a German PSA video that was basically “how to not freeze to death in your unheated apartment”. I wish I had bookmarked it. I was hoping your comment link was it, but alas, no. Had old folks all bundled up in an apartment, multiple candles burning, etc.
Energy policy by an autistic Nordic teenager is not a good look for an economic titan. It is not ending well. And Trump warned of German over-reliance on Russian energy, and was poo-pooed, when he was trying to force Germany and the rest of the NATO countries to ante up on their military spending obligations.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.