Germany says it won’t buy Russian gas with rubles: ‘We won’t be blackmailed’

Germany on Tuesday warned Russian President Vladimir Putin against “blackmailing” Berlin by forcing it and other “unfriendly” nations to pay for his country’s oil and natural gas with rubles.

German Finance Minister Christian Lindner said his country would not be cowed by Putin’s demand to use Russian currency to pay for energy imports.

The Russian leader is seeking to bolster the value of his national currency after Moscow was hit with severe economic sanctions as retaliation for the invasion of Ukraine.

The United States has banned Russian oil and natural gas imports, but Germany and other European countries are dependent on Russia for its energy needs — complicating efforts to create a united Western front in favor of harsher sanctions.

The value of the ruble nosedived after Russia was hit with sanctions in the wake of its invasion of Ukraine.

Lindner said his country has no plans to use rubles to pay for Russian energy. He accused Putin of breaching the terms of already-signed contracts which are denominated in either euros or dollars.

“We are completely against any kind of blackmailing,” the finance minister told CNBC.

“These treaties are based on euro and [US] dollar and so we suggest that private sector companies to pay [Russia] in euro or dollar.”

“If Putin is not willing to accept this, it’s open to him to think about consequences.”

Lindner’s boss, German Chancellor Olaf Scholz, last week dismissed the possibility of paying for Russian energy using rubles.

“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 Scholz.

“Those are the starting points that we have to work from.”

Janez Jansa, the prime minister of Slovenia, said: “I don’t think anybody in Europe really know how rubles look like. Nobody will pay in rubles.”

Italian Prime Minister Mario Draghi, the former head of the European Central Bank, simply said that if Putin pushed through the plan, “we consider it a violation of existing contracts.”

Europe relies on Russia for some 40% of its gas imports. Hungary on its own gets 95% of its gas from Russia.

The crisis in Eastern Europe has prompted European leaders to look for ways to reduce energy dependence on Moscow.

“We will find solutions,” Lindner told CNBC.

“We are working on less dependency on Russian imports and if [Putin] decides to cut his supplies, we would have to be even faster to be independent from Russia.”