Putin Signs Decree Creating Ruble Payment System For Russian Gas To Bolster Currency
According to RFE/RL, President Vladimir Putin has signed a decree forcing some purchasers of Russian gas to set up a special account to pay for their supplies as the country tries to cope with the impact of Western sanctions imposed because of Moscow's unprovoked invasion of Ukraine last month.
Putin said after signing the decree that, from April 1, buyers of Russian gas from what Russia deems "unfriendly" countries would have to set up special "K-accounts" to transfer their payments. Once the payment is received, the funds will be exchanged into rubles. The entire payment facility will be set up and run through Russia's Gazprombank, a subsidiary of state energy giant Gazprom.
Putin also said any country refusing to use the payment mechanism will be in violation of their contracts and face "corresponding repercussions."
European leaders have rejected paying for deliveries in rubles, saying such a move would undermine sanctions imposed on Moscow because of the war in Ukraine.
It is not clear if Russia can demand that buyers with contracts already agreed upon use the mechanism.
German Chancellor Olaf Scholz said the gas contracts stipulate payment mostly in euros and sometimes in dollars. He said he made clear to Putin in a phone call on March 30 “that it will stay that way.”
Berlin will look closely at Putin's decree, he said, but added: "In any case, what goes for companies is that they want to and will be able to pay in euros.”
German Economy Minister Robert Habeck said it is "crucial" that the contracts are respected and important for European countries "not to give a signal that we will be blackmailed by Putin."
Italian Prime Minister Mario Draghi said earlier that he had received assurances from Putin that Europe would not have to pay in rubles. Draghi said Putin assured him during a phone call on March 30 that "existing contracts remain in force...European companies will continue to pay in dollars and euros."
Draghi said analysis was under way “to understand what it means,” including whether European companies can continue to pay as they have been.
“The feeling is one I have had since the beginning, that it is absolutely not simple to change the currency of payments without violating the contracts,'' Draghi said.
Britain also does not plan to pay for Russian gas in rubles. Prime Minister Boris Johnson's spokesman told reporters: "That is not something we will be looking to do."
