How should we view Germany’s agreement to pay for natural gas in rubles? Could this lead to a rift between Germany and the U.S.?

Indeed, Germany has made the right decision—and this stance likely reflects France’s position as well (a close partner), while Italy has already trialed ruble-based payments. Germany’s dependence on Russian natural gas is extremely high and cannot be replaced in the short term. On March 25, German Economics Minister Robert Habeck candidly outlined Germany’s path toward reducing reliance on Russian energy. He revealed that, over the past four weeks, Germany had “managed” to cut its natural gas imports—including sourcing gas from alternative suppliers and switching from gas-fired to coal-fired power plants—reducing Russia’s share from 55% to 40%. Moreover, Habeck expressed his “hope” that Russia’s share would fall to around 30% by year-end. Yet this remains, at best, an optimistic aspiration. Although the U.S. has pledged to deliver 15 billion cubic meters of liquefied natural gas (LNG) annually to the EU, that volume amounts to only one-tenth of the gas the EU imports from Russia—offering little more than illusory relief for Germany. On one hand, cheap Russian gas will not return; on the other, Germany lacks LNG import terminals, and constructing such infrastructure would take at least three to five years. As Chancellor Olaf Scholz put it: “You can’t just calculate how much oil and gas exist on world markets—you must also understand how to transport them to Germany.” Amid the natural gas dispute, although German politicians publicly uphold political correctness and defer to the G7—led by the U.S.—using a joint G7 statement as a convenient excuse, domestic sentiment remains highly volatile, directly threatening political stability. Martin Brudmiller, CEO of German chemical giant BASF, warned: “This could trigger Germany’s most severe economic crisis since the end of World War II.” The last such crisis directly paved the way for the Nazi Party’s rise to power. Siegfried Russwurm, President of the Federation of German Industries (BDI), stated: “Rejecting Russian gas will plunge industries into despair,” adding, “Under these circumstances, the industrial sector—which saved us during the pandemic—may collapse.” Michael Hüther, Director of the German Institute for Economic Research, cautioned that boycotting Russian gas could jeopardize between 2.5 million and 4 million jobs. U.S. economist Bachmann offered a relatively more optimistic outlook but still noted that such a move could trigger a 3–4% contraction in Germany’s economy. Meanwhile, Germany’s inflation rate has already exceeded 5%. Florian Schulze-Berghof, spokesperson for ALDI—the largest discount supermarket chain in Germany—announced that, starting April 4, meat and dairy prices in Germany would rise due to the Ukraine crisis. Prices for meat, sausages, and butter at ALDI stores have “sharply increased,” driven by rising costs for animal feed, fertilizers, and energy. Moreover, Russia added fuel to the fire at an inopportune moment: Dmitry Medvedev, Deputy Chair of Russia’s Security Council, declared that Russia would supply grain and agricultural products exclusively to “friendly countries,” with payments settled in rubles and the importing country’s currency.

Putin stated he is ready to supply natural gas to Europe, yet Germany rejected the offer. How should we interpret Germany’s decision? How will Europe resolve its energy shortage crisis?

Crisis? European gas storage levels have nearly reached capacity—causing Dutch TTF natural gas futures prices to plummet to €−15.78. Yes, you read that right: the very same TTF natural gas futures contract—often cited by commentators to illustrate soaring European gas prices, looming energy shortages, and fears of freezing households—has turned negative. Clearly, LNG tanker capacity delivering gas to Europe is not constrained—and industrial LNG consumption still lags behind delivery speed. So where exactly lies the crisis? Unless Russia possesses the capability to sink those LNG tankers. Since March this year, Gazprom has accelerated its withdrawal from the European market, triggering sharp spikes in European energy prices. To alleviate the energy crisis, Europe has pursued multiple strategies since September, aggressively increasing LNG purchases—drawing a flood of LNG tankers toward the continent. After extensive, high-priced procurement, European natural gas inventories have approached maximum storage capacity. According to data from the Gas Infrastructure Europe (GIE) association, as of October 24, overall EU gas storage levels stood at 93.61%, while Germany—the EU’s largest economy—reached an exceptionally high 97.5%.

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