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UKRAINE

Germany reeling as Putin tells Europe to pay for gas in rubles

President Vladimir Putin has said Russia will only accept payments in rubles for gas deliveries to "unfriendly countries" - including Germany - after Moscow was hit by unprecedented sanctions over Ukraine.

Putin and Novak
Russian President Vladimir Putin speaks with former Energy Minister Alexander Novak in 2019. Photo: picture alliance/dpa/Pool Sputnik Kremlin/AP | Alexei Druzhinin

Immediately after his announcement, the ruble – which has plummeted since the start of the Ukraine conflict – strengthened against the dollar and euro, while gas prices rose.

“I have decided to implement a set of measures to transfer payment for our gas supplies to unfriendly countries into Russian rubles,” Putin said during a televised government meeting.

He added, however, that Russia will continue supplying the volume of gas outlined in its contracts. 

Putin ordered Russia’s central bank to implement the new payment system within a week, saying it must be “transparent” and will involve the purchase of rubles on Russia’s domestic market.

Putin also hinted that other Russian exports may be affected.

“It is clear that delivering our goods to the European Union, the United States and receiving dollars, euros, other currencies no longer makes sense to us,” Putin said.

Germany has previously paid for its gas and oil imports in euros. 

Ukraine was quick to denounce Russia’s “economic war” on the EU and its efforts to “strengthen the ruble”.

“But the West could hit Russia with an oil embargo that would cause the Russian economy to plunge,” Ukrainian presidential advisor Andriy Yermak said on Telegram.

“This is now a key economic battle, and the West must collectively win it,” he added.

German Economy Minister Robert Habeck said Putin’s demand was a breach of contract and that Berlin will discuss with European partners “how we would react to that”.

The cabinet had scheduled a meeting on Wednesday evening to discuss a package of measures to assist people with increased energy costs. The measures will be announced on Thursday morning.

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

However, the surprise announcement from Putin is likely to have made discussions more difficult by dredging up awkward questions about Germany’s heavy reliance on Russian gas and oil.

Prior to the conflict, Germany imported around 55 percent of its natural gas from Russia

It has promised to transition away from Russian oil by the end of the year, but the government has so far been resistant to a full blockade on gas, citing fears of a standstill in industry and energy shortages for German households. 

Tough sanctions

Western countries have piled crippling sanctions on Moscow since it moved troops into Ukraine.

The West froze some $300 billion of Russia’s foreign currency reserves abroad, a move that Foreign Minister Sergei Lavrov on Wednesday described as “theft”.

But while the United States banned the import of Russian oil and gas, the EU – which received around 40 percent of its gas supplies from Russia in 2021 – has retained deliveries from Moscow.

Brussels, however, has set a target of slashing Russian gas imports by two-thirds by the end of the year and is eyeing an oil embargo.

“Russia is now trying to pressure the West with counter sanctions — and reduce its dependence on foreign currencies,” Swissquote senior analyst Ipek Ozkardeskaya told AFP.

‘Historic decision’

Russia has been moving to “de-dollarise” its economy for years, since the introduction of Western sanctions over its annexation of Crimea from Ukraine in 2014.

In March 2019, the Russia state energy giant Gazprom announced its first sale of gas for rubles to an unnamed western European company.

Deputy Prime Minister Alexander Novak said Wednesday a shift to trading in the national currency would “increase reliability”.

He warned that a full embargo on Russian oil and gas would lead to a “collapse” of the global energy markets and “unpredictable” spikes in prices.

Russian Deputy Prime Minister and former Energy Minister Alexander Novak in the Kremlin in 2016. Photo: picture alliance / dpa | Sergei Karpukhin/Pool

But Ukrainian Foreign Affairs Minister Dmytro Kuleba said any country that met Russia’s demands would be indirectly aiding the brutal war on Ukraine. 

“If any EU country bows to Putin’s humiliating demands to pay for oil and gas in rubles, it will be like helping Ukraine with one hand and helping Russians kill Ukrainians with the other,” he wrote on Twitter.

“I urge relevant countries to make a wise and responsible choice.”

READ ALSO: ‘Whatever it takes’: Calls grow for painful German blockade of Russian gas

‘Upend opponents’

Analyst Timothy Ash of BlueBay Asset Management said, however, that it was “hard to see Putin’s move as ruble positive”.

Ash said Putin is essentially trying to force Western countries to trade with Russia’s central bank, which they have sanctioned.

“It will just accelerate diversification away from Russian energy,” he added.

According to investment group Locko Invest, the countries declared “unfriendly” by Russia account for more than 70 percent of Russia’s energy exports in terms of earnings.

The group also highlighted the danger for Gazprom of running out of foreign currency to honour its debts in the future.

But Andrew Weiss of the Carnegie Foundation said: “Putin definitely knows how to build and exploit leverage”.

“Putin has routinely used escalation in such situations to upend his opponents’ best-laid plans. No reason to doubt that that’s changed,” Weiss said on Twitter.

READ ALSO: EXPLAINED: How Germany could end its dependence on Russian energy

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UKRAINE

Rapping, breakdancing Ukrainians win Eurovision in musical morale boost

Ukraine won the Eurovision Song Contest Sunday with an infectious hip-hop folk melody, boosting spirits in the embattled nation fighting off a Russian invasion that has killed thousands and displaced millions of people.

Rapping, breakdancing Ukrainians win Eurovision in musical morale boost

Riding a huge wave of public support, Kalush Orchestra beat 24 competitors in the finale of the world’s biggest live music event with “Stefania”, a rap lullaby combining Ukrainian folk and modern hip-hop rhythms.

“Please help Ukraine and Mariupol! Help Azovstal right now,” implored frontman Oleh Psiuk in English from the stage after their performance was met by a cheering audience.

In the Ukrainian capital Kyiv, the triumph was met with smiles and visible relief.

“It’s a small ray of happiness. It’s very important now for us,” said Iryna Vorobey, a 35-year-old businesswoman, adding that the support from Europe was “incredible”.

Following the win, Psiuk — whose bubblegum-pink bucket hat has made him instantly recognisable — thanked everyone who voted for his country in the contest, which is watched by millions of viewers.

“The victory is very important for Ukraine, especially this year. Thank you from the bottom of our hearts. Glory to Ukraine,” Psiuk told journalists.

Music conquers Europe

The win provided a much-needed morale boost for the embattled nation in its third month of battling much-larger Russian forces.

Mahmood & BLANCO  performing for Italy at Eurovision 2022

Mahmood & BLANCO perform on behalf of Italy during the final of the Eurovision Song contest 2022 in Turin, Italy. (Photo by Marco BERTORELLO / AFP)

“Our courage impresses the world, our music conquers Europe!” he wrote on Facebook.

“This win is so very good for our mood,” Andriy Nemkovych, a 28 year-old project manager, told AFP in Kyiv.

The victory drew praise in unlikely corners, as the deputy chief of the NATO military alliance said it showed just how much public support ex-Soviet Ukraine has in fighting off Moscow.

“I would like to congratulate Ukraine for winning the Eurovision contest,” Mircea Geoana said as he arrived in Berlin for talks that will tackle the alliance’s expansion in the wake of the Kremlin’s war.

“And this is not something I’m making in a light way because we have seen yesterday the immense public support all over Europe and Australia for the bravery of” Ukraine, Geoana said.

British Prime Minister Boris Johnson called the win “a clear reflection of not just your talent, but of the unwavering support for your fight for freedom”.

And European Council President Charles Michel said he hoped next year’s contest “can be hosted in Kyiv in a free and united Ukraine”.

‘Ready to fight’
Despite the joyous theatrics that are a hallmark of the song contest, the war in Ukraine hung heavily over the festivities this year.
 
The European Broadcasting Union, which organises the event, banned Russia on February 25, the day after Moscow invaded its neighbour.
 
“Stefania”, written by Psiuk as a tribute to his mother before the war, mixes traditional Ukrainian folk music played on flute-like instruments with an invigorating hip-hop beat. The band donned richly embroidered ethnic garb
to perform their act.
 
 
Nostalgic lyrics such as “I’ll always find my way home even if all the roads are destroyed” resonated all the more as millions of Ukrainians have been displaced by war.

Kalush Orchestra received special authorisation from Ukraine’s government to attend Eurovision, since men of fighting age are prohibited from leaving the country, but that permit expires in two days.

Psiuk said he was not sure what awaited the band as war rages back home.

“Like every Ukrainian, we are ready to fight as much as we can and go until the end.

Britain’s ‘Space Man’

Ukraine beat a host of over-the-top acts at the kitschy, quirky annual musical event, including Norway’s Subwoolfer, who sang about bananas while dressed in yellow wolf masks, and Serbia’s Konstrakta, who questioned national healthcare while meticulously scrubbing her hands onstage.

Coming in second place was Britain with Sam Ryder’s “Space Man” and its stratospheric notes, followed by Spain with the reggaeton “SloMo” from Chanel.

After a quarter-century of being shut out from the top spot, Britain had hoped to have a winner in “Space Man” and its high notes belted by the affable, long-haired Ryder.

Britain had been ahead after votes were counted from the national juries, but a jaw-dropping 439 points awarded to Ukraine from the public pushed it to the top spot.

Eurovision’s winner is chosen by a cast of music industry professionals — and members of the public — from each country, with votes for one’s home nation not allowed.

Eurovision is a hit among fans not only for the music, but for the looks on display and this year was no exception. Lithuania’s Monika Liu generated as much social media buzz for her bowl cut hairdo as her sensual and elegant
“Sentimentai”.

Other offerings included Greece’s “Die Together” by Amanda Georgiadi Tenfjord and “Brividi” (Shivers), a duet from Italy’s Mahmood and Blanco.

Italy had hoped the gay-themed love song would bring it a second consecutive Eurovision win after last year’s “Zitti e Buoni” (Shut up and Behave) from high-octane glam rockers Maneskin.

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