European Commission President Ursula von der Leyen warned companies not to bend to Russia’s demands to pay for gas in rubles, as the continent scrambles to respond to Moscow’s move to start switching off supplies.
Gazprom PJSC turned off the taps to Poland and Bulgaria on Wednesday in a dramatic escalation of the standoff between Russia and Ukraine’s European allies. Moscow was making good on a threat to cut supplies if payments weren’t made in local currency, and attention now turns to how Germany and Italy — the biggest European buyers of Russian gas — will respond.
Europe is trying to maintain a united front, but according to a person close to Gazprom, some European companies are taking steps that would allow them to comply with Moscow’s new rules. Uniper SE, a large German buyer of Russian energy, has said it believes it can keep up purchases without breaching sanctions.
Reports are circling that the Biden Administration has begged Germany to hold off on banning Russian oil until after the midterm elections. The Democrats are so desperate to win amid their record-low popularity that they are openly asking other nations to alter major policies at the expense of the people. Biden has banned Russian energy imports, but the EU, which is more reliant on Russian energy, must wait.
Banning Russian energy will backfire on Europe and send aftershocks throughout the market. German Foreign Minister Annalena Baerbock initially announced that Germany would cease purchases from Russia but quickly changed her stance. Finance Minister Christian Lindner said that Germany would support Ukraine but not at the expense of the German people. “It was a mistake that Germany became so heavily dependent on energy imports from Russia,” she admitted after avoiding warnings years ago.
Germany is the #1 importer of Russian energy, with 34% of its total petroleum coming from Russia. Nearly half of Germany’s coal is tied to Russia, and one-third of homes are heated with Russian imported oil. Germany purchased 27 billion tons of crude from Russia in 2021 alone.