Tuesday. 29.11.2022
WAR IN UKRAINE

Putin says West must make payments via Russian accounts in future

Despite a slew of sanctions on Russia following its ongoing invasion of Ukraine, there have been almost none on fuel exports because much of Europe relies heavily on Russian fuel

HANDOUT - 18 March 2022, Russia, Moscow: Russian President Vladimir Putin delivers a speech during a concert held to mark the eighth anniversary of Russia's annexation of Crimea at the Luzhniki stadium. Photo: -/Kremlin/dpa - ATTENTION: editorial use only and only if the credit mentioned above is referenced in full.
Russian President Vladimir Putin delivers a speech during a concert at the Luzhniki stadium. Photo: Kremlin/dpa.

Russian President Vladimir Putin has ordered Western states to open accounts with Gazprombank with effect from Friday in order to continue receiving Russian gas.

If they do not do so, supplies to the "unfriendly" countries would be cut off, Putin told Russian state television on Thursday.

According to a decree signed by Putin, payments can continue to be deposited in euros or dollars into the Russian account. Gazprombank converts the money into roubles and transfers the amount to Gazprom in the Russian currency.

If payments are not made, deliveries would be stopped, Putin said: "We are not engaged in charity."

Earlier, Kremlin spokesman Dmitry Peskov had confirmed that EU countries could probably continue to pay for gas deliveries in euros as before.

A payment system is being worked on under which the money is paid in euros to Gazprombank, which is not affected by sanctions, then exchanged and transferred to Russia in roubles, Peskov said on Thursday afternoon, according to the Interfax news agency.

According to Italy's Prime Minister Mario Draghi, all other states in Europe may continue to pay for Russian gas in euros or dollars.

Putin had announced a week ago that in future he would only sell Russian gas to "unfriendly" states in exchange for roubles. At the time, the Kremlin chief instructed Gazprom and the central bank to work out appropriate modalities for switching payments from euros and dollars to roubles.

Putin justified his rouble initiative with the fact that "in violation of the norms of international law, the foreign exchange reserves of the Bank of Russia were frozen by the member states of the European Union."

This was the EU's reaction to Russia's war on Ukraine. Putin had said that payments in euros and dollars were now of no value to the country.

G7, EU reject payments in roubles

The group of G7 economic powers and the European Union as a whole reject payments in roubles. The German government had accused Russia of breach of contract.

On Wednesday evening, Putin telephoned Chancellor Olaf Scholz, and, according to the Kremlin, already assured him that the switch to rouble payments for Russian gas should not lead to disadvantages for Germany.

Scholz also reiterated on Thursday that gas deliveries from Russia should be paid in euros. "In any case, it is true for the companies that they want to, can and will pay in euros," he said. He added that they would now take a close look at what Putin was proposing.

Gas supplies in Germany are stable, according to the Federal Network Agency. Deliveries via the Nord Stream 1 pipeline from Russia to Germany continued at a high level, it said. The current level of gas storage was 26.8%, with slight injections.

Russia said earlier that gas is still being pumped.

Transit via Ukraine

About 109.5 million cubic metres of gas is expected to transit via Ukraine, said Gazprom spokesperson Sergei Kupriyanov, in comments reported by the Interfax news agency. That is the same as was sent on Wednesday and is the most allowed under current contracts.

Despite a slew of sanctions on Russia following its ongoing invasion of Ukraine, there have been almost none on fuel exports because much of Europe relies heavily on Russian fuel.

But the other sanctions are damaging Russia's economy and have sent the rouble into freefall. Putin's demand that payments start coming in roubles is seen as an attempt to bolster demand for the currency.

Many Western countries have begun the process of orienting their economies away from Russian fuel imports, though many think that process will not move quickly and leave Europe vulnerable to fuel shortages in the coming year.

Meanwhile, the OPEC+ oil alliance is turning on the oil tap only moderately: Production will be increased by another 432,000 barrels per day in May, the alliance of about 20 countries announced after an online ministerial meeting on Thursday.

The countries justified their rather cautious step by saying that geopolitical reasons were responsible for the recently high oil price, so hardly any effects on the price of heating oil and petrol are to be expected.

Putin says West must make payments via Russian accounts in future
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