Saturday, May 21, 2022

Putin warns Russia will halt gas exports if payments not made in rubles

Russia will halt gas exports to so-called “unfriendly” countries beginning Friday unless they comply with his directive to make payment in rubles, Russian President Vladimir Putin warned Thursday as Moscow scrambles to prop up its economy.

“In order to purchase Russian natural gas, they must open ruble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting from tomorrow,” Putin said in televised remarks to Russian officials.

“If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences. Nobody sells us anything for free, and we are not going to do charity either — that is, existing contracts will be stopped,” he added.

Protestor against Russian oil and gas
Russia supplies a significant portion of Europe’s gas requirements.
Getty Images
Vladimir Putin
Putin’s directive has major implications for Europe, where many countries rely heavily on Russia oil and gas.
AP

Buyers will be directed to transfer their payment to accounts they set up with a Russian bank, which will exchange their currency for Russian rubles that will then be used to complete the transaction. Western officials have argued the ruble requirement is a violation of existing contracts, which set payments in euros or dollars.

Putin’s directive has major implications for Europe, where many countries rely heavily on Russia oil and gas to generate electricity and heat their homes. Russia covers about 40% of Europe’s gas needs, with any interruption likely triggering an energy crisis.

The fraught arrangement has complicated efforts by Western nations to increase economic pressure on Russia, which generates a sizable portion of its annual revenue from oil and gas exports. Unlike the US, the European Union did not include a ban on imports as part of its sweeping sanctions against the Kremlin.

Vladimir Putin
Vladimir Putin said countries have until April 1 to comply with the ruble requirement.
via REUTERS

The ruble requirement for gas purchases is one of several steps taken by Russia to retaliate against nations who imposed sanctions – and to boost its own currency.

The Kremlin is looking to stabilize the ruble, which cratered alongside Russia’s main stock exchange in recent weeks following penalties that included the ejection of Russia banks from the SWIFT international payments system.

The ruble has since rebounded near to its value prior to the invasion of Ukraine as Russia mandates ruble payments and its central bank enacts currency controls.

With Post wires

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