Russia will stop supplying gas to countries it considers “unfriendly” unless they pay in roubles, according to a presidential decree effective immediately.
Buyers in 48 countries including the EU will be required to open a bank account both in foreign currency and in roubles at Gazprombank in Russia, according to the decree published on Thursday. The targets are countries that have established sanctions against Russia’s economy, governing and business elite for its invasion of Ukraine.
Vladimir Putin on Thursday said Russia was establishing “a clear and transparent scheme” for these foreign customers.
“If such payments are not made, we will consider this a default on the part of the buyers — with all the ensuing consequences,” he added during a speech at the Kremlin.
The decision and the threat of supply disruptions, largely mooted by the Russian president over the past 10 days, have triggered alarm among European countries that rely heavily on Russian gas. Germany on Wednesday said it was preparing for energy rationing.
Olaf Scholz, Germany’s chancellor, said on Thursday he had told Putin his country had checked its contracts with Russia for gas deliveries and will keep paying for them in euros and sometimes dollars.
Speaking at a press conference with his German counterpart, Robert Habeck, French finance minister Bruno Le Maire said France and Germany were preparing for all scenarios including Russia cutting off gas deliveries to Europe. Both also expressed opposition to paying for gas deliveries in roubles.
“The contracts include provisions that stipulate the currency they must be settled in and therefore the contracts must be settled in that currency,” said Le Maire.
A French finance ministry source said later that in its analysis the contracts would be paid in euros to Gazprom, which would then switch the payment over to roubles. “Given the uncertainties, we are preparing contingency plans for gas supplies.”
Putin gave the central bank, the customs authorities and the government 10 days to implement the new system. A similar switch of payments for other commodities, such as oil, metals and fertilisers is also being considered.
The reason for switching the payments to roubles was the weaponisation of the western financial system, Putin said.
“When companies from these countries refuse to fulfil contracts with Russian banks, enterprises, individuals, when assets in dollars and euros are frozen, it makes no sense to use the currencies of these countries,” he added.
“The transfer of payments for Russian gas supplies to Russian roubles is an important step towards strengthening our financial and economic sovereignty.”
Russia would strive to use its currency as payment for other exports, Putin added.
“We will continue to consistently and systematically move in this direction as part of a long-term plan, to increase the share of foreign trade settlements in the national currency and the currencies of those countries that are reliable partners.”
Additional reporting by Harry Dempsey and Olaf Storbeck
Source: Financial Times
