rubles or euros?
Confusion in the gas dispute: Putin will in future demand payments from western countries via ruble accounts in Russia
Pipe systems and shut-off devices in the gas receiving station of the Baltic Sea pipeline Nord Stream 1 and the transfer station of the long-distance gas pipeline OPAL (Baltic Sea pipeline connection line)
© Stefan Sauer / DPA
With the announcement that gas payments would only be accepted in rubles, Kremlin chief Vladimir Putin caused great concern. A new regulation will come into effect this Friday. But it raises more questions than answers.
Kremlin chief Vladimir Putin has ordered, effective April 1, that Western countries must open accounts with Russia’s Gazprombank to continue receiving Russian gas. Otherwise, deliveries to the “unfriendly” countries would be stopped, Putin said on Russian state television on Thursday. According to a decree signed by Putin, payments can still be made in euros or dollars to the Russian account. Gazprombank converts the money into rubles and transfers the amount in Russian currency to Gazprom. In the absence of payments, deliveries would be stopped, Putin said. “We don’t do charity.”
At first it was unclear whether the states themselves had to pay in rubles or whether a euro payment would be converted directly.
Kremlin spokesman Dmitry Peskov had previously confirmed that Germany could probably continue to pay for gas supplies in euros as before. A payment system is being worked on, according to which the money will be paid in euros to Gazprombank, which is not affected by sanctions, then exchanged and transferred to Russia in rubles, Peskov said on Thursday afternoon, according to the Interfax agency. “The details will follow. We will not reveal the details now,” said Peskow.
Olaf Scholz: Gas from Russia is paid for in euros
According to Italy’s Prime Minister Mario Draghi, in addition to Germany, all other countries in Europe can continue to pay for Russian gas in euros or dollars.
The federal government wants to examine the latest demands by the Russian government for future payment of gas deliveries. “When we have the decree, the federal government will examine and evaluate it thoroughly,” said a spokeswoman for the Ministry of Economic Affairs and Climate Protection in Berlin on Thursday of the German Press Agency. “It is clear that Germany will continue to pay in euros. We will not change anything about that, the G7 decision applies.”
Chancellor Olaf Scholz (SPD) also emphasized again on Thursday that gas deliveries from Russia should be paid for in euros. “In any case, companies want, can and will pay in euros,” he said. We will now look closely at what Russian President Vladimir Putin is presenting.
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G7 and EU countries also reject ruble payments
Putin announced a week ago that in future he would only sell Russian gas to “unfriendly” states for rubles. At the time, the head of the Kremlin instructed Gazprom and the central bank to work out appropriate modalities for switching payments from euros and dollars to rubles. Moscow justified its actions with an alleged “economic war” by the West.
Putin justified his ruble initiative by saying “that the foreign exchange reserves of the Bank of Russia were frozen by the member states of the European Union in violation of the norms of international law”. This was the EU’s reaction to Russia’s war against Ukraine. Putin had said that payments in euros and dollars were now of no value to the country.
The group of G7 economic powerhouses, including Germany, as well as the European Union as a whole, reject payments in rubles. The federal government had accused Russia of breaching the treaty. On Wednesday evening, Putin called Chancellor Olaf Scholz – and, according to the Kremlin, already assured that the switch to ruble payments for Russian gas should not lead to disadvantages for Germany.
Federal government prepared for further escalation of the gas dispute
Putin phoned Chancellor Olaf Scholz (SPD) on Wednesday to provide information about the conversion of payments from euros to rubles. After the meeting, Scholz confirmed that Germany would continue to pay for gas deliveries from Russia in euros or dollars, as provided for in the contracts. Scholz did not agree to this procedure, but only asked for written information about it, Hebestreit emphasized. Putin asked for the conversation. The Kremlin had previously announced that switching to ruble payments for Russian gas should not put Germany at a disadvantage.
According to Economics Minister Robert Habeck (Greens), the federal government is also prepared for a further escalation of the gas dispute with Russia. “We are well prepared for everything that (Russian President Vladimir) Putin decides,” Habeck said on Thursday after talks with his French counterpart Bruno Le Maire in Berlin. According to the daily situation reports as part of the gas emergency plan activated on Wednesday, gas supplies are “stable”.
Although high prices are currently due for gas deliveries, the storage levels have increased further overnight, Habeck said. With a view to the demands from Russia to only pay for gas in rubles, Habeck again emphasized that it was “crucial that the contracts are observed”. They provide for payment in euros or dollars. “It’s important for us that we don’t give the signal that we’re going to let Putin blackmail us,” Habeck said.