Russian gas threat: Will Putin cut Europe off if payments aren't made in roubles?

08:59 AM @ Tuesday - 05 April, 2022

Russian officials said on Friday that their demand for natural gas to be paid for in roubles does not mean supplies will be immediately interrupted.

The previous day Vladimir Putin said buyers of Russian gas from "unfriendly" countries would have to pay in roubles from accounts in Russia from April 1, or face the "consequences".

European countries have rejected the demand, saying contracts stipulate that payments be made in euros or dollars.

"They (the buyers) must open accounts in roubles in Russian banks. And from these accounts they will have to pay for the gas delivered and that as of tomorrow," the Russian leader declared on television after signing a decree on Thursday.

In the event of refusal, “the current contracts will be stopped,” he added. "It will be considered as a breach of obligations on the part of the buyer, and this will have all the necessary consequences."
However, on Friday Kremlin spokesman Dmitry Peskov said “payments on shipments in progress right now must be made not this very day, but somewhere in late April, or even early May.”

Gas used for heating and electricity was still flowing from Russia to Europe on Friday.


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.

Russian gas is crucial for the EU, which since the Russian invasion has been accelerating its search to shed its dependence and find alternative energy sources.

How have European countries responded?

Western companies and governments have rejected Putin's demand as a breach of existing contracts, which are set in euros or dollars.

European countries will continue to pay for Russian gas in euros and dollars as it is "written in the contracts", was German Chancellor Olaf Scholz's response to Putin on Thursday.

"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 said during a news conference with his Austrian counterpart, Karl Nehammer.

German Economy Minister Robert Habeck said Russia had not been able to divide Europe and said Western allies were determined to not be "blackmailed" by Russia.

France echoed the German stance. "The contracts provide for a currency in which they are executed and therefore the contracts must be executed in the currency provided," French Finance Minister Bruno Le Maire said on a visit to the German capital.

Several German and other European companies with Russian contracts had no immediate comment.

Neither Poland's PGNiG nor the government commented immediately. There was no word either from Italian energy firm Eni, another major European buyer of Russian gas.

Germany and Austria have activated early warning plans amid concerns that Moscow could cut natural gas deliveries. Together with France, they also urged consumers to conserve energy.  - Euro News-