Germany prepares for possible gas rationing after dispute with Putin over payment in rubles | Economy
The dispute with Russia over Vladimir Putin’s demand for gas payment in rubles has sounded the first alarm bells in Germany. Berlin is preparing for a possible gas rationing in case deliveries from the Eurasian country are interrupted. The Government has taken a first formal step, which consists of activating the early warning phase of its emergency law, created to deal with the shortage of this fuel on which its powerful industry and the heating of its 83 million depend to a large extent. population.
Berlin believes that the Russian president’s ultimatum is a very real threat. Last week, Putin announced that Russia was going to demand payment in rubles from “hostile countries”, including the European Union, which until now depended on 40% of Russian gas imports. The German government’s first reaction was to claim that the demand was a breach of contract, indicating that it would not bow to Putin’s challenge.
Confirmation came a couple of days later. After a meeting of the G7 ministers, the seven most industrialized nations on the planet decided unanimously on Monday to stand down and reject payment of imports in rubles. German concern is greater after Putin’s spokesman assured that Moscow will not supply “free” gas to Europe, that is, after directly threatening a supply cut if it is not paid in the way the Kremlin demands.
The declaration of the early warning level means that the Ministry of Economy and Climate, led by the green Robert Habeck, deploys a crisis team that constantly analyzes and evaluates the supply situation. This working group is also empowered to cut off certain consumers from the network if necessary, that is, to order, for example, certain companies to stop their production to avoid gas consumption and prioritize that of households. This situation would only be reached in the third phase of the national emergency plan, which establishes that large industrial clients would receive reduced amounts of gas, or no delivery, if an alert situation occurs.
No one knows what decision Moscow can make in the face of Europe, but Habeck assures that Germany must be prepared “in the event of an escalation by Russia.” Precautionary measures are necessary, even if the supply is flowing normally through the different gas pipelines that supply fuel to the country, the minister assured during a press conference in Berlin. The decision, in any case, is firm: “Germany will not accept any breach of supply contracts,” said Habeck.
German industry is heavily dependent on gas, so a Russian supply cutoff would be a huge blow. Chemical plants, steel mills, those that produce aluminum, consume large amounts of gas in their processes. Industry association representatives have predicted that the consequences of a shutdown would be devastating, the most damaging since World War II.
He knows in depth all the sides of the coin.
subscribe
Habeck stressed on several occasions that it is a preventive decision, that supply is guaranteed and that gas and oil are reaching Germany in compliance with current contracts. He also called on companies and homes to reduce their energy consumption as much as possible. “Every kilowatt hour of energy saved makes a contribution,” he said.
Putin’s demand is interpreted as an attempt to provoke fissures between the allies and respond to their sanctions, but also as a way to strengthen the ruble and prop up the Central Bank of Russia, practically isolated from international markets due to Western sanctions. . If Europe decided to submit to the demand, it would have to turn to the Russian central bank for the large sums of rubles needed to pay its gas bill, thereby breaking its own sanctions.
Western companies often have long-term supply agreements for Russian gas imports. The payment currency is specified in the clauses. Most contracts are in euros or dollars. Some importing companies, such as the French Engie or the Austrian OMV, have assured that they have no intention of changing the payment method.
The European Union has so far avoided imposing sanctions on energy imports from Moscow, as have the United States and the United Kingdom, which are much less dependent on Russian oil and gas. Washington made a commitment last week with Brussels to increase its shipments of liquefied natural gas (LNG) to the EU to speed up the closure of the Russian tap. This agreement is part of Brussels’ effort to try to reduce dependence on Russian gas by two thirds before the end of the year. That is, to go from more than 150,000 to 50,000 million cubic meters.
Germany, for its part, is accelerating the construction of regasification plants in its territory in order to receive liquefied natural gas and is negotiating contracts with other suppliers. Berlin, which until now imported 55% of the gas it consumes and a third of its oil from Russia, will become “virtually independent” of the latter by the end of this year and has pledged to completely abandon gas by mid-2024, Habeck noted. that Germany has already managed to reduce the percentage of Russian gas in recent weeks by up to 40% thanks to new contracts to become energy independent from Moscow.
The gas emergency plan is based on a 2017 European Union regulation that defines a series of measures to ensure supply. It consists of three levels, early warning, alert and emergency. The first is declared when there are concrete and serious indications of a possible deterioration in the gas supply situation. Germany believes that this is the case now and has therefore already informed Brussels of its decision.
