Following Russia’s threat to cut off natural gas supply to Western countries that refuse to pay in rubles, European governments have reacted.
Last week, Moscow stated that it preferred to be paid in rubles rather than dollars or euros, and senior Russian MPs warned that if customers refused, supply would be curtailed.
President Vladimir Putin of Russia signed an executive order on March 31 requiring importers of natural gas from “unfriendly countries” to open accounts with Gazprombank, Russia’s third-largest bank, and to settle contracts in rubles.
“If these payments are not made, we will consider the buyers to be non-performing, and this would result in penalties,” Putin stated in a televised address. “No one gives us anything for free,” he continued, “and we’re not about to be philanthropic.”
Putin also instructed the Russian central bank and state-owned gas giant Gazprom until March 31 to come up with comprehensive ideas for changing the gas payment currency to rubles.
Gazprombank would open accounts on behalf of Western gas purchasers, acquire rubles on their behalf, and then transfer the money to Gazprom’s accounts, according to the decree, which takes effect on Friday.
Despite the fact that most of them rely on Russia for the majority of their oil and gas supply, the European Union has imposed harsh sanctions on Russia for its invasion of Ukraine.
As a result of Russia’s one-month invasion of Ukraine, the US has vowed to reduce the burden of gas supply on European countries. Russia can’t be trusted not to use oil and gas to blackmail European nations.
Following Putin’s directive, European countries have responded by stating that they signed contracts with Russia to pay for gas in Euros, which will not alter. They even went so far as to declare that if Russia follows through on its threats, its countrymen can expect gas shortages.
The move was described as “blackmail” and a breach of contract by Germany, Russia’s largest energy consumer in Europe.
During a joint press conference with his German counterpart Robert Habeck, French Finance Minister Bruno Le Maire remarked, “The contracts are in euros, must be paid in euros, and will be paid in euros.”
“We will not accept payment for [Russian] gas in any currency other than the one specified in the contract,” Le Maire stressed.
Berlin will only pay for Russian gas in euros, according to German Chancellor Olaf Scholz.
“We looked at the gas delivery and other delivery contracts. Payments are to be made in euros, sometimes in US dollars, but mostly in euros, according to the contracts. And I made it clear in my chat with Russian President Vladimir Putin that this will continue to be the case “In Berlin, Scholz told reporters.
The spokeswoman noted that UK Energy Secretary Kwasi Kwarteng had stated that “this is not something that the UK would be looking into.”
In response, Germany’s government activated a three-stage strategy for managing gas reserves in a crisis on Wednesday, giving a “early warning” of potential shortages. If supplies are seriously affected, the gas crisis plan might lead to rationing, with major industrial users being impacted first to safeguard families, hospitals, and other important services.
For nearly 40% of its natural gas, the European Union is reliant on Russia. EU leaders have set a goal of decreasing Russian gas usage by 66 percent by the end of this year, and are scrambling to find alternatives, including additional exports of liquefied natural gas from the US.