The showdown continues between the European Union and Vladimir Putin who is trying to support his national currency, heckled by sanctions. The Russian president announced Thursday that buyers of Russian gas from “unfriendly” countries will have to pay in rubles from accounts in Russia from Friday on pain of being deprived of supply. A red line, for European nations, which will continue to pay for Russian gas in euros and dollars as it is “written in the contracts”, according to German Chancellor Olaf Scholz.
The price of gas remains denominated in the currency of the current contracts, usually in euros or dollars. “They have to open ruble accounts in Russian banks. And from these accounts they will have to pay for the gas delivered and that starting tomorrow, ”Vladimir Putin declared on television after signing a decree to this effect. He added that in the event of refusal, “the contracts in progress will be stopped”.
“If these payments are not made, it will be considered 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.
The EU categorically refuses
“It is written in the contracts that the payments are made in euros and sometimes in dollars,” replied the German Chancellor during a press conference with his Austrian counterpart, Karl Nehammer. “I made it clear to the Russian president that it would stay that way” and “companies want to be able to pay in euros and will do so,” he added.
Germany and France are “preparing” for a potential stoppage of Russian gas imports, French Economy Minister Bruno Le Maire said in Berlin on Thursday. “There may be a situation in which tomorrow, in very specific circumstances, there will be no more Russian gas (…) it is up to us to prepare these scenarios, and we are preparing them,” he said. he detailed, during a press conference with German Economy Minister Robert Habeck.
VIDEO. For Bruno Le Maire, Europe has “solutions to become independent of Russian gas”
Moscow published a list of “unfriendly” countries in early March, which includes 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. Since the beginning of Moscow’s offensive in Ukraine, they have been trying to find ways to get rid of this dependency.
Russia tries to save its economy
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 the person who receives 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,” stressed Dmitry Peskov, spokesman for the Kremlin. “Russia remains faithful to its contractual obligations, in volume as well as in price,” he 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.
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.