The announcement by Vladimir Putin on the immediate transition to payment of Russian gas in the countries Rubles has sent a shocking wave around Europe.
Earlier, some “unfriendly countries” according to Russia has stated that they will not pay in Rubles, citing breach of contract and other sentiments. But, the question remains, what happens next now? Will EU cave in to Russia’s Ruble demands or will Putin soften their stance on oil and gas payment in the country’s own currency?
As it stands now, Russia has the upper hand (oil, gas, requisite infrastructure and manpower) as they have European Union (EU) by the balls which they (EU and others) are not escaping anytime soon despite the political rhetorics of the West to shore up international political points.
In the worst case scenario, there are basically two options, both of which will ultimately hurt EU pride regardless of their stance or political gimmicks.
In the first instance, European countries dependent on Russia’s gas compromises and agree to pay in rubles while stepping up or fast tracking their shift from Russian gas. The complete shift from Russian gas is again, not happening anytime soon, even in the next 5yrs. Why?
Well, the reason is simple, Russian gas is the cheapest in the world. The USA and others cannot sustain its gas production if gas falls below certain benchmark that will guarantee profit. Again, cost of production means even if the Liquefied Natural Gas (LNG) is gotten from sources outside Russia, processing it into consumption gas is going to be time consuming and costly. Ultimately, this will require massive infrastructure.
So, for all of EU’s talks of renewable energy, weaning itself of Russian oil & gas and whatnot, reality is quite different. In fact, at the moment, EU literally has no option because their quota cannot be met by anyone else, even if Canada, Norway and USA pull their combined natural gas reserves to help their EU – NATO members who are dependent on Russian gas.
• Option 2:
Now, this option is the more drastic of the two. Here, EU – NATO completely refuses to pay for the gas in Rubles as demanded by Putin and their supply pipelines is immediately shut down by Russia.
Well, as you can well imagine, that’s not good news, and not to only NATO and EU countries as well. Should Russia go ahead with that hard stance, the European Union and NATO countries dependent on Russian gas will go into severe economic shock instantly.
Gas prices will soar on the global stage, transportation prices will skyrocket, many factories and industries will start closing shop, while truckers and factory workers will of course start mass protests expectedly.
Such a decision by Russia will send the world into an economic meltdown. Therefore, it’s not just EU and NATO countries that suffer Russia’s wrath alone. This is not good for anyone.