Russian President Vladimir Putin attends via video link a meeting with government officials at the Novo-Ogaryovo state residence outside Moscow, Russia, March 23, 2022. Sputnik/Mikhail Klimentyev/Kremlin via REUTERS
March 31 – Russian President Vladimir Putin said on Thursday he had signed a decree requiring foreign buyers of Russian gas to pay in rubles from April 1 and contracts would be halted if those payments were not made.
“To buy Russian natural gas, they need to open ruble accounts in Russian banks. Payments for gas delivered starting tomorrow will be made from these accounts,” Putin said in a televised address.
“If such payments are not made, we consider this a default on the part of the buyers, with all the ensuing consequences. No one is selling us anything for free, and we won’t be doing charity either – meaning existing contracts will be stopped.”
Russia supplies about a third of Europe’s gas, so energy is the strongest leverage available to Putin as he seeks to resist sweeping Western sanctions over his invasion of Ukraine.
His decision to enforce ruble payments boosted the Russian currency, which fell to historic lows after the Feb. 24 invasion but has since recovered.
Western companies and governments have dismissed the move as violating existing contracts, which are denominated in euros or dollars. France’s economy minister said France and Germany are preparing for a possible scenario that Russian gas flows could be halted – something that would plunge Europe into a full-blown energy crisis.
An order signed by Putin provided a mechanism for buyers to transfer foreign currency to a special account at a Russian bank, which would then send rubles back to the foreign buyer to make payment for the gas.
He said the move was intended to strengthen Russia’s sovereignty and it will honor its commitments under all treaties.
Reuters reporting; Writing by Mark Trevelyan, Editing by Guy Faulconbridge, Gareth Jones, Alexandra Hudson