Cutting Imports of Russian Gas Would Hit the EU Much Harder than Russia
One factor tends to be forgotten in the ideologically heated debate now raging in the European Union over whether to implement a total embargo of Russian gas: the repercussions on the Russian economy would be less draconian than here. Of course, 73% of Russian gas exports go to Europe, but they only make up 11% of Russia’s total exports. So the Russian economy can probably live with the consequences of a ban, while the vital gas-dependent industries of Europe, and Germany in particular, cannot. They will be forced to shut down.
That reality has led to severe warnings by leading German industries, including just last week from the chemical giant BASF and Siemens Energy. As for the head of the German Industrial Federation BDI, Siegfried Russwurm, he stated outright on March 31, despite protests, that the backbone of the German economy – its industry — would collapse in the event of an embargo.
The CEO of BASF, Martin Brudermüller, for his part told the FAS that it “could send the German economy into its most serious crisis since the end of World War II,” particularly jeopardizing the existence of medium and small sized enterprises. An “experiment” like this would be “irresponsible” he said, although most people are unaware of the consquences it would have. For instance, even if only 50% of gas deliveries were cut, the BASF factory in Ludwigshafen, which employs tens of thousands, would have to be shut down.
The CEO of Siemens Energy, Christian Bruch, confirmed to Handelsblatt (April 1) that the negative impact on Germany would be greater than the effect on Russia. In the short term, he said, the volumes now supplied by Russia cannot be replaced.
Due to the sanctions imposed by the West, Moscow has decided that the exports to “unfriendly” countries must now be paid in rubles. Under the system proposed, gas importers would open a bank account at Gazprombank for continued payments in euros, which would then be converted to rubles in a separate account. That method seems practicable and would avoid disruptions, but the German government is hesitant to accept it, because of pressure from the Anglo-American fanatics out to destroy the Russian economy, no matter what the cost to Europe. At the same time, suspending all Russian gas and oil imports plays into the “green deal” scenarios for reducing energy consumption to stop growth.
On the other hand, the government of Slovakia, which otherwise is strictly following EU sanctions, announced on April 3 that it was ready to pay in rubles if that’s what it takes to keep the commodity flowing, as clarified by Slovak Economy Minister Richard Sulik on national television. Since Russian imports account for roughly 85% of the country’s total demand, “we cannot be cut off from gas.” Another EU member country, Hungary, has made clear that it will stick to its bilateral state-to-state agreement with Russia (cf. below).