The professor of international economics believes an energy embargo against Russia is more likely after Putin’s announcement.
(Photo: Imago Images)
Berlin According to economist Jens Südekum, the changeover to rubles in the payment method for gas deliveries to “unfriendly states” announced by Russia means an escalation of the economic conflict with the West. “This is an escalation of the economic war,” the member of the scientific advisory board of the Federal Ministry of Economics told the Reuters news agency on Wednesday. “Not many expected this broadside.”
For Südekum, the conversion represents a clear breach of contract. “There are long-term contracts for gas supplies that are denominated in dollars,” said the professor at the Institute for Competition Economics at Heinrich Heine University in Düsseldorf. “If Putin now declares that he only accepts rubles, he is breaking these contracts.”
The West will now have to react in some way. “An embargo on energy imports from Russia has now become more likely.”
If the West followed Russia’s request, it would have to circumvent its own sanctions over the war against Ukraine and take rubles from the Russian central bank. “But it was actually sanctioned,” said Südekum. “That’s why you can’t actually do that.”
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In the future, customers in Germany and other EU countries will have to pay in rubles for gas deliveries from Russia; payments in dollars or euros will no longer be accepted. That was ordered by Russian President Vladimir Putin on Wednesday.
Deliveries would continue to be fully guaranteed, the Kremlin chief assured in a government video conference that was broadcast on state television. Payment for Russian goods in foreign currency has lost its meaning.
Rubles promptly strengthened
The “unfriendly states” blacklisted by Russia are affected. This includes Germany and all other EU countries, but also the USA, Canada and Great Britain. The announcement promptly strengthened the Russian currency, which is under massive pressure.
The central bank and the Russian government now have a week to determine the modalities for switching from foreign exchange payments to ruble payments, Putin said. The West itself has devalued its currencies by freezing Russian assets abroad.
As a reaction to the Western sanctions, the Russian government had already decided at the beginning of the month that its own financial obligations to “unfriendly states” would only be settled in rubles. These include Ukraine, Switzerland and Japan.
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