Russia orders “unfriendly countries” to pay the gas only in rubles otherwise contracts will be terminated


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Russian president Vladimir Putin has announced that he has signed a decree obliging countries that buy Russian gas to pay it in rubles, starting with April 1, and if payment is not made in this currency, then the contracts will be terminated, Reuters reports.

“Today I signed a decree establishing the rules for trading Russian natural gas with so-called unfriendly states. In order to be able to buy Russian natural gas, then foreign customers will have to open an account in rubles with Russian banks and make payments from these accounts, starting tomorrow (Friday, April1),” the Russian leader told a televised speech.

If the payments are not made in this way, then we will consider this an inability to pay by the customers, with all the necessary consequences. Nobody gives us anything for free and we are not going to do charity acts either – therefore those contracts will be terminated”, said Putin.

The Russian president has ordered Gazprom, Russia’s largest energy company, since March 23, to convert natural gas contracts with “unfriendly countries” into rubles.

Putin argued back then that the supply of Russian goods to the European Union and the United States and the collection of payments in dollars and euros “makes no sense to us.” He urged the Central Bank and the Moscow government to establish within a week the order of operations for the purchase of rubles on the domestic market by Russian gas buyers.

Russian publication Kommersant reported today that Gazprom is examining options for stopping gas supplies to “unfriendly” countries and assessing the possible consequences.

On March 7, the Russian government approved a list of countries and territories it considers “unfriendly”, saying they had taken hostile action against Russia, its companies and its citizens.

The list includes the United States, Canada, European Union member states, the United Kingdom (including the British territories Jersey, Anguilla, the British Virgin Islands, Gibraltar), Ukraine, Montenegro, Switzerland, Albania, Andorra, Iceland, Liechtenstein, Monaco, Norway, San Marino , North Macedonia, as well as Japan, South Korea, Australia, Micronesia, New Zealand, Singapore and Taiwan. Romania is also on the list.

Several European officials have flatly rejected the idea of ​​paying for Russian gas in rubles after the Kremlin’s announcement.

“European countries will continue to pay for Russian gas in euros and dollars as written in the contracts,” German Chancellor Olaf Scholz said after Vladimir Putin’s ultimatum. “It says in the contracts that the payments are made in euros and sometimes in dollars. I told the Russian president clearly that this will remain the case and companies want to pay in euros and they will do so“, Scholz explained.

Previously, Chancellor Olaf Scholz had said that all contracts stipulate the currency, and the currency in which it is paid is part of the contract, while German Economy Minister Robert Habeck said that Berlin considers a “breach of contract” Russia’s request.

It is practically a breach of contract, it is important to understand,” Italian Prime Minister Mario Draghi said last Thursday.

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