Germany will support an EU oil embargo against Russia

In a speech to CNN’s Julia Chatterley on Monday, Finance Minister Christian Lindner said Germany would agree on new sanctions against Russia with its partners in the EU.

“Germany is ready for new sanctions, including an oil embargo,” he said.

The European Union has already agreed to phase out Russian coal imports as part of a fifth wave of sanctions imposed on Russia due to the country’s invasion of Ukraine.
But the bloc has had a much harder time reaching agreement to endorse a US-led embargo on Russian oil despite weeks of negotiations. Hungary reiterated its opposition to an oil embargo again on Monday, Reuters reported.

Lindner said he did not want to speculate on whether some EU Member States, such as Hungary, should be granted exemptions or derogate from an oil embargo.

“I can assure you that Germany is ready to reduce oil imports, we know others are considering this issue carefully,” he added.

Last year, Russia accounted for about 27% of EU oil imports. It also supplied about 40% of Europe’s natural gas. EU leaders have already promised to cut Russian gas imports by 66% this year and to break the bloc’s dependence completely by 2027.

Europe has bought Russian energy for $ 46 billion since the war in Ukraine began

“We have prepared to be less dependent on Russian energy imports,” Lindner said. “We can reduce imports, starting with coal, then oil. It will take longer to be independent of Russian natural gas imports, but we will continue, so that in the end we will be completely independent of Russia.”

Moscow raised its stakes in a tense energy battle with Europe last week by cutting off natural gas supplies to Poland and Bulgaria. State gas giant Gazprom said none of the countries had agreed to President Vladimir Putin’s demand that customers in “unfriendly” countries open two accounts in Gazprombank – one in euros and the other in rubles, from which payments for the gas would be made.

The vast majority of Gazprom’s contracts with its European customers provide for payment in euros or dollars. The Kremlin’s ultimatum regarding ruble payments is widely seen as a step towards strengthening its war chest and boosting the Russian currency.

Is Germany next?

German gas distributor Uniper said last week that it would continue to pay for its Russian supplies in euros, but added that it believed a “payment conversion in accordance with the sanctions law” was possible. It said it was investigating the matter carefully in close coordination with the German government.

Lindner said he expected Germany’s utilities to comply with the terms of their contracts, which require payment in euros or dollars.

Sky-high costs and shortages are pushing German industry to the brink

“Germany can not be blackmailed, we know that there is dependence on natural gas from Russia, that is a reality. We need time to reduce this dependence,” he told CNN. “This is the situation for the contracts, and we are not changing because Putin needs rubles for his war chest.”

Germany has reduced its consumption of Russian gas to 35% of imports from 55% before the war in Ukraine, but says it must continue to buy from Moscow at least until next year to avoid a deep recession.

Uniper said it could not do without Russian gas in the short term.

“This would have dramatic consequences for our economy,” it said in a statement.

Germany’s central bank said last week that an abrupt halt would push the economy into a deep recession. About 550,000 jobs and 6.5% of annual economic output could be lost during this year and next year, according to an analysis by five of the country’s best economic institutes.

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