Putin signs decree on paying for gas in rubles, except there is a "but"

THURSDAY, 31 MARCH 2022, 16:31 - DANA HORDIYCHUK

Russian President Vladimir Putin has signed a decree on the payment for gas by EU countries in rubles, but nothing is likely to change for the EU;

He said this during a press briefing on Thursday, Kremlin media reported.

To do so, countries that the aggressor considers to be ""unfriendly"" (i.e. that have imposed sanctions against Russia because of its invasion of Ukraine) must open accounts in Russian banks. The new order will come into force on 1 April, and contracts that do not comply with the decree will be terminated.

"If unfriendly countries do not pay from 1 April in rubles, we will consider this a default under the gas contracts, in which case existing contracts will be terminated," he said.

Putin's decree concerning payment for gas in rubles applies only to Gazprom's supply through pipelines.

It will work like this: special ruble accounts will be opened at Gazprombank (which is still not under sanctions and is not cut off from SWIFT) for foreign buyers to make payments for gas. As Putin himself said yesterday, nothing will change for companies in the EU and they will be able to continue paying in euros, while the bank will then convert the currency into rubles.

So the next step, according to Putin's decree, is for Gazprombank to sell the currency received on the Moscow Exchange. Furthermore, the government commission on foreign investment may issue permits to pay for gas in currencies other than rubles.

Background:

On Wednesday, Putin agreed to receive payments for gas from the EU in euros - saying the money would be sent to an account at Gazprombank.

The position voiced earlier by the G7 countries on not being able to pay for Russian gas in rubles applies to all EU countries. The bloc said paying in rubles would be a breach of their contracts and none of them would agree to it.