Is there a way to avoid a gas blockade in Europe by overcoming the obstacle of the current – seemingly irreconcilable – positions of the European Union and Russia?
In all probability, the answer to this question is in the affirmative. And the converging signals are beginning to be seen in the explanations given by the various participants in this complicated and vital story. Let’s try to understand what could be the point of decline that would allow almost all parties to declare themselves winners to some extent. (Although that’s almost crucial: and we’ll come back to that below).
What is Russia asking for?
This point so far, very clear. Vladimir Putin has ordered enemy countries to pay in rubles for the gas they receive from Russia. The clear goal: to stabilize the Russian currency by continuing to collect huge payments in foreign currency (in this case euros). The Governor of the Central Bank of Russia, Elvira Nabiullina, has devised an elaborate system to translate Putin’s political will into banking systems. As is well known, the mechanism provides for each importer (eg Eni) to open two accounts with Gazprombank: one in foreign currency (for Russia: to stay with our example, euros), the other in rubles. Payment of the gas by the importer is regularly made on the currency account, but the Russian banking authorities are then authorized to convert this money into rubles and transfer it to the second account: and only if the rubles arrive at Gazprom from this second account ( the Russian exporter) that the payment is considered completed.
What is Europe rejecting?
Official statements by the European Union refer to this system as a system to circumvent the sanctions imposed by Europe itself against Russia. Not only that, they claim that this mechanism even violates sanctions because it would put the Central Bank of Russia at the heart of the gas transaction, which is asked to play a major role in converting euros paid by Western companies into rubles to play. moreover, at an exchange rate that the central bank itself could easily manipulate in Russia’s favour. Since the sanctions now stipulate that the Moscow issuing institution cannot carry out transactions in euros, this complex mechanism would be a violation of the sanctions. At least that is the (converging) legal opinion of the legal services of the European Commission and the Council of Ministers of the European Union.
But what does Europe consider unacceptable?
1. The moment when the payment is considered complete: Unacceptable, a senior EU official, quoted by Reuters Agency, said that the payment is considered complete only after the conversion into rubles.
2. The mere fact that European companies are obliged to open two accounts: What we cannot accept is that companies are obliged to open a second account in rubles, he said, adding that to a first assessment the Opening an account in rubles at all may constitute an evasion of the penalty.
3. The fact that the conversion is forced by the Russian authorities. We cannot accept that in the transition between the first and the second account, the sum in euros is in the hands of the Russian authorities and the Central Bank of Russia, which could theoretically be equated with a loan to the Central Bank of Russia – which would be a clear violation right now against sanctions.
Is there room for maneuver?
Apparently yes, if not obviously, still politically neutral. The possible breaking point could be as follows: Russia could continue to force European importers to open a ruble account and continue to enforce a compulsory conversion of ruble payments, but it could also explicitly or implicitly consider a payment to be completed when the importer pays the amount due in euros. Or at least the importer could consider the transaction complete if he paid the euros with no interest in the rest (and Russia would have nothing to say about that). This would allow European importers to see their position unchanged (We pay for gas in euros) and Russia to achieve its goal (Payment made in rubles).
To get to that point, both Russia and governments and importers would have to give up: Russia should indeed agree to consider the payment complete when the loan arrives in euros, or at least not resist this reading of reality. Europe should avoid considering opening a ruble account with Gazprombank as a way to circumvent sanctions, as this is done voluntarily by the importing companies and the conversion is managed by the Russian authorities.
a possible drop point?
In all likelihood yes: also because neither Russia nor European governments currently have an advantage in achieving a blockade. The reason is simple:
1. Russia receives at least a billion euros every day for the export of gas and oil from Europe: thanks to this money, it managed not only to continue funding the war effort, but also to stabilize the economy beyond the expectations of many analysts .
2. The European countries – above all Germany and Italy – are currently not able to completely replace Russian gas with fuels from other countries. They could be ready in a few months: not now.
3. Importing companies fear that they could face a situation where Russia could sue them in international commercial courts for non-payment of the amount due under the signed contracts. While Moscow’s currency exchange could be viewed as a breach of contract, the legal battle could be long and costly. It should not be forgotten that to this day, European companies’ long-term contracts with Gazprom oblige them to pay tens, if not more than a hundred billions a year to Russia (depending on market prices). A conviction of importers by an international court could have serious financial consequences for European companies.
Given these converging interests, the technical and bureaucratic concerns raised by the Commission could be addressed – at least for the moment.
And Ukraine?
Who would be excluded from this scheme – that is: who would have nothing, not even superficial or partial, to announce victories – clearly, Ukraine. Which Europe has long been asking for a total embargo from Europe on Moscow’s hydrocarbons. But even Kyiv – Finance Minister Sergiy Marchenko told the Kurier – appears to be leaving room for a temporary compromise solution: the total embargo is our top priority, he said, adding: So it takes time to get there price caps could be for gas or Oil to be specified. Or duties. Maybe even on all imports from Russia, and the money collected in this way could go towards the reconstruction of Ukraine.
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