Russian President Vladimir Putin said on Thursday (March 31) that foreign buyers must pay for Russian gas in Russian currency roubles from April 1. He said that contracts would be halted if these payments were not made.
“In order to purchase Russian natural gas, they must open rouble 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.
“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.”
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Europe is dependent on Russia for third of its natural gas supply. This gives Russia leverage to hit back against the Western sanctions imposed on Russia in the wake of Ukraine invasion.
His decision to enforce rouble payments has boosted the Russian currency, which fell to historic lows after Russia sent tens of thousands of troops into Ukraine on the Feb. 24 but has since recovered.
Western companies and governments have rejected the move as a breach of existing contracts, which are set in euros or dollars. France’s economy minister said France and Germany were preparing for a possible scenario that Russian gas flows could be halted – something that would plunge Europe into a full-blown energy crisis.
An order signed by Putin set out a mechanism for buyers to transfer foreign currency to a special account at a Russian bank, which would then send roubles back to the foreign buyer to make payment for the gas.
He said the switch was meant to strengthen Russia’s sovereignty, and it would stick to its obligations on all contracts.
Putin also said Western nations will try to find new grounds to sanction Russia, adding that his country must aim to retain jobs and to create new ones. The Russian president also said that the United States was profiting from the global turbulence, adding that of U.S. military complex companies were on the rise.
(With inputs from agencies)
