Germany Says G7 Reject Russia Demand to Pay for Oil and Gas in Rubles, Sort of


Posted originally on the conservative tree house on March 28, 2022

Behind the headline is a qualifier that most will miss. “We will urge the companies affected not to follow Putin’s demand.”  The problem for the G7 political leaders is that most of the transactions are between private companies.  The heads of the U.S, France, Germany, Italy, Japan, Canada and the U.K, can stake a position, but the ultimate decision around the transaction in the hands of the private company buyers.

Russia can set the terms.  Whether the G7 political leaders shout ‘breach of contract‘ is seemingly a moot point.  In the big picture, the politicians have already breached the terms of prior trade agreements with sanctions.  Russia can turn off the supply or demand payment in rubles as terms of sale.

BERLIN (AP) — The Group of Seven major economies agreed Monday to reject Moscow’s demand to pay for Russian natural gas exports in rubles.

German energy minister Robert Habeck told reporters that “all G-7 ministers agreed completely that this (would be) a one-sided and clear breach of the existing contracts” for natural gas, which is used to heat homes, generate electricity and power industry.

The energy ministers of France, Germany, Italy, Japan, the United States, the United Kingdom and Canada, as well as the European Union energy commissioner, met by videoconference and reaffirmed that contracts “must be respected,” with most stipulating payments be in euros or dollars, a G-7 statement said.

“Payment in ruble is not acceptable, and we will urge the companies affected not to follow (Russian President Vladimir) Putin’s demand,” Habeck said. (read more)

It seems odd the G7, who triggered the sanctions to hit Russia with financial damage and block SWIFT currency exchanges, would want to force Russia to accept euros or dollars for purchase.  After all, they didn’t want Russia to have euros and dollars.

Unless, of course, those G7 ministers realize that by not using euros and dollars to trade energy supplies, the value of those currencies will necessarily diminish.

One could look at this demand by the G7 as a larger realization of what might happen downstream if they lose the petro-dollar as a control mechanism.

Are they starting to realize the unintended consequences they and NATO have created?

India and China just made big chess moves by: (1) India agreeing to purchase in rupees/rubles exchange; and (2) Beijing saying they will not adhere to the western sanctions.

It’s shaping up to be G7 -vs- BRICS…

Keep watching.

[Left to Right] Xi Jinping (China), Vladimir Putin (Russia), Jair Bolsonaro (Brazil), Narendra Modi (India) and Cyril Ramaphosa (South Africa), the BRICS group.

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