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Putin balks at ruble-versus-gas threat – POLITICO

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Vladimir Putin blinked.

The Russian president last week insisted that “unfriendly countries” must pay for Russian gas in rubles. He reiterated that request Thursday, but there’s a huge loophole — the measure doesn’t apply to Russia’s European gas customers, despite them being among the so-called “unfriendly countries” that have punished Russia for its invasion of Ukraine.

The Kremlin spoke very heatedly about gas contracts on Thursday.

“To buy Russian natural gas, [buyers] need to open ruble accounts in Russian banks. Payments for gas delivered starting tomorrow will be made from these accounts,” Putin said called in a televised address after signing a decree on gas sales to unfriendly countries.

If you don’t pay that way, you won’t get any gas, he warned.

“If such payments are not made, we consider this as default by buyers with all the ensuing consequences,” Putin said. “No one will sell us anything for free, and we will not do any charity work either. That means the existing contracts will be stopped.”

But European customers will not be bound by the new system, according to the leaders of Germany and Italy.

“Existing contracts remain in force,” said Italy’s Prime Minister Mario Draghi called on Thursday and described the outcome of talks with Putin on Wednesday.

“European companies – and [Putin] has repeatedly pointed out that this is a concession, a regulation that only applies to European member countries – will continue to pay in euros or dollars,” Draghi said, adding: “The switch from payments in euros or dollars to rubles is an internal one matter for the Russian Federation. I got that.

“The feeling is that it’s not easy at all to change payment currency without changing contracts,” he said.

Russia supplies about 40 percent of Europe’s natural gas, and the money it makes from those sales is vital to the country’s budget. The threat of the ruble is seen as a way for Moscow to stimulate demand for the ruble, thereby boosting its value. It plummeted as a result of sweeping Western sanctions against Russia over its attack on Ukraine, but has regained much of its value in recent days.

Officials in Berlin said they received the same message as Draghi about the European gap after Chancellor Olaf Scholz also spoke to Putin on Wednesday.

according to a Advertisement from the German governmentPutin told the German head of state that gas deliveries would have to be billed in rubles from April 1, but “nothing would change for European contractual partners”.

Payments would continue to be made in euros or dollars, and then Gazprom Bank – the intermediary for much of Europe’s gas payments to Russia – would convert the money into rubles.

“In any case, companies want, can and will pay in euros … In my conversation with the Russian President, I also made it clear that this will remain the case,” said Scholz on Thursday.

“It is important to us not to send a signal that we will be blackmailed by Putin. And as long as the banks are not sanctioned, what they do with the money is largely up to them,” said German Economics and Climate Minister Robert Habeck.

This was underlined by his French counterpart Bruno Le Maire, who made it clear that European customers would not bow to Putin’s demands.

“We do not accept payment for gas contracts in a currency other than that stipulated in the contracts,” he said. “Contracts are contracts, and contracts must be strictly observed.”

America Hernandez, Hans von der Burchard, Zia way and Hannah Roberts contributed reporting.

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