Experts believe that the decision comes in the context of Moscow’s attempts to support its economy and currency, after Western sanctions imposed following the war in Ukraine, noting that the expected losses and profits are distributed to both sides.
On Thursday, Russian President Vladimir Putin signed a presidential decree on the “mechanism for paying for gas supplied to unfriendly countries”, including the European Union.
Putin said: “If the aforementioned countries do not comply with the new payment system, we will consider this a failure from them to perform their obligations under the current contracts with all the consequences of the matter.”
Some did not hide their surprise at the speed with which Putin announced the decree, as what preceded it indicated the existence of a smooth transitional period at least.
Russia has been selling gas in hard currencies such as dollars and euros, and European countries say it is difficult to change contract texts overnight.
Reply to sanctions
Putin’s decision comes in the context of Moscow’s response to European sanctions, against the backdrop of the war in Ukraine, which included the Europeans freezing half of the reserves of the Russian Central Bank.
“The actions of the European Union will not remain unanswered … The irresponsible sanctions imposed by Brussels are already negatively affecting the daily lives of ordinary Europeans,” said an official at the Russian Foreign Ministry, Nikolai Kuprinets.
Under the new decree, Western countries will have to open ruble accounts in Russian banks.
ruble recovery
The Russian political writer, Yevgeny Sidorov, told “Sky News Arabia”: “I see the decision as objective and logical, as it came out of the cloak of recent developments, as the national currency was in a state of free fall against foreign currency prices, which jumped in an unprecedented way.”
Sidorov added that there was a need “to curb what is happening, not through administrative but economic measures, and it seems that Putin has found a mechanism for that.”
The Russian ruble lost more than 40 percent of its value, as a result of the sanctions imposed by the West on Russia.
Before entering the decision to buy Russian gas in rubles, the latter recovered from the blows of Western sanctions. In the last trading session on the last day of March, the Russian currency rose.
On Thursday, the ruble reached 83 per dollar, after it had reached 150 per dollar in early March.
Western reports asked: “Are the sanctions successful, after the ruble recovered almost completely from the sanctions?”
The “Fortune” website stated that Putin took a series of measures that helped lift the ruble out of its crisis, such as raising interest rates, in addition to strict restrictions related to currency exchange. The peace talks in Istanbul contributed to the appreciation of the local currency.
The site said that the ruble’s recovery shows that Western sanctions are not working properly.
Payment difficulties
It seems that the decision to sell gas in rubles comes in the context of ruble support and gas supplies, which are a lifeline for the Russian economy, as they represent practically half of the federal budget in Russia.
And 60 percent of the price of Russian gas is paid in euros and the rest in US dollars, and buyers will have to search for a Russian bank to open an account in it to pay in rubles, and this procedure will be cumbersome, because Russian banks are isolated from the global financial system “Swift”, which facilitates the flow of payments.
However, there are Russian banks that have not been affected by the sanctions.
The latest Russian step threatens more than a third of gas supplies to the European continent, especially Germany, which is the most dependent European country for Russian gas. Berlin says it is “blackmail”.
And the German government spoke of an emergency plan, which includes rationing the use of gas, which could harm the lives of ordinary people and the country’s economy alike, in the event of not reaching an agreement.
circumventing sanctions
Eswar Prasad, a professor of trade policy at Cornell University and a former official at the International Monetary Fund, told ABC News that paying Russia for gas in its own currency would at best help to a limited extent to circumvent financial sanctions, support the value of the ruble and protect the Russian economy.
“It will be cheaper for foreign importers to pay for Russia’s exports in a currency that is collapsing in value, but it is difficult to get the ruble and make payments in a way that avoids sanctions,” he added.
He warned that this step “could further turmoil global energy markets by exacerbating current supply disruptions and increasing uncertainty about future supplies, which could lead to further price hikes.”
However, he stressed that Russia may lose by giving up hard currencies in selling gas, as the Russian giant “Gazprom” will find it difficult to pay off foreign debts or buy supplies from abroad.
#deadline #today #happen #Russian #gas #payments