On Thursday, Russian President Vladimir Putin announced that he had signed a decree requiring foreign buyers of Russian gas to pay in roubles beginning April 1, and that contracts would be terminated if these payments were not made.
“They must open rouble accounts in Russian banks in order to purchase Russian natural gas.” Payments for gas deliveries will be made from these accounts beginning tomorrow,” Putin said in a televised statement.
If such payments are not made, we will consider the buyers to have defaulted, with all the consequences that entails. Nobody sells us anything for free, and we won’t do charity either – existing contracts will be terminated.”
Energy is the most powerful lever at Putin’s disposal as he tries to retaliate against sweeping Western sanctions over his invasion of Ukraine, as Russia supplies about a third of Europe’s gas.
His decision to enforce rouble payments has boosted the Russian currency, which fell to historic lows following the invasion on February 24 but has since recovered.
The move has been slammed by Western businesses and governments as a violation of existing contracts, which are denominated in euros or dollars. According to France’s economy minister, France and Germany are preparing for a scenario in which Russian gas flows are halted, plunging Europe into a full-fledged energy crisis.
Buyers would transfer foreign currency to a special account at a Russian bank, which would then send roubles back to the foreign buyer to pay for the gas, according to an order signed by Putin.
He stated that the switch was made to strengthen Russia’s sovereignty and that the country would honor all contracts.
The decision by Russian President Vladimir Putin to enforce rouble payments has boosted the Russian currency, which had fallen to historic lows following the invasion on February 24.
Source: Reuters
