The Russian president added that in the event of refusal, “the current contracts will be stopped”.
Vladimir Putin announced on Thursday that buyers of Russian gas from countries “unfriendlywill have to pay in rubles from accounts in Russia from Friday on pain of being deprived of supplies, a measure mainly affecting the European Union. However, the price of gas remains denominated in the currency of the current contracts, usually in euros or dollars.
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«They must open ruble accounts in Russian banks. And from these accounts they will have to pay for the gas delivered and that tomorrow“Vladimir Putin declared on television after signing a decree to this effect. He added that in case of refusal, “current contracts will be terminated».
«If these payments are not made, it will be considered as a breach of obligations on the part of the buyer, and this will have all the necessary consequences.“Insisted Vladimir Putin. He recalled that this measure was a response to the freezing of some 300 billion dollars of foreign currency reserves that Russia had abroad, a sanction decided by the West in retaliation for the Russian offensive in Ukraine.
“unfriendly countries”
Moscow published in early March a list of countries “unfriendlywhich includes, but is not limited to, the United States, members of the European Union, the United Kingdom, Canada, Japan, Switzerland, Taiwan, South Korea, Norway and Australia. EU states are the main consumers of Russian gas. Vladimir Putin insisted that paying in rubles would have no effect on volumes or prices, which are formulated in most contracts in foreign currencies.
De facto, as the Kremlin explained Thursday morning, Russian gas consumers will have to carry out a foreign exchange transaction in Russia. “For those who receive the Russian gas, who pays for the deliveries, there is in fact no change. They just acquire rubles for the amount of currency that is provided for in the contract“said Dmitry Peskov, spokesman for the Kremlin.
«Russia remains faithful to its contractual obligations, in terms of volume and pricehe said, adding that Vladimir Putin and German Chancellor Olaf Scholz, as well as their advisers, had discussed the new system in detail the day before. Russian gas is crucial for the EU, which has been seeking since the beginning of Moscow’s offensive in Ukraine to find ways to get rid of this dependence.
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The decision to switch to ruble invoicing should allow Russia to support its national currency, which has been heckled by sanctions, but will deprive it of a source of foreign currency. Already, Russia obliges its exporters, including Gazprom, to convert 80% of their turnover into roubles.
These measures and a key interest rate of 20% enabled the Russian currency to recover. After dropping considerably in the wake of the start of the Russian offensive on February 24, it is back to levels close to those recorded before the assault.
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