Hungary has broken ranks with the EU by saying it is ready to yield to Russian demands to pay for gas in rubles.
- SEE MORE How dependent is the UK on Russian gas?
- SEE MORE What happens if Russia stops gas supplies to Europe?
- SEE MORE Russia-Ukraine War: The Oil and Commodities Shock
Vladimir Putin signed a decree last week stating that “foreign buyers” must pay for gas supplies in Russia’s currency. Reuters reported and warned that “contracts would be stopped if these payments were not made”.
The Russian President said in a televised address: “To buy Russian natural gas, you need to open ruble accounts in Russian banks… Nobody will sell us anything for free, and we will not do charity either. Existing contracts will be stopped.”
Moscow supplies “roughly a third of the gas in Europe,” the news agency said, meaning “energy is the strongest lever available to Putin.” Response to harsh Western sanctions.
Russian money for Russian gas
Putin’s demand that countries buy gas with rubles was interpreted as an “attempt to revalue the ruble hit by Western sanctions”. BBC called.
The decree means that foreign buyers “must open an account with Russia’s Gazprombank and transfer euros or US dollars to it,” the broadcaster explained. The bank will then “convert this into rubles, which will then be used to pay for the gas”.
BBC business editor Faisal Islam said the measure was “a Dramatic escalation in the economic struggle between the West and Russia over the invasion of Ukraine”.
Putin essentially “outlined a way to cut off gas supplies to Europe in case western customers refuse to pay for supplies in Russia’s ruble currency,” he added. But after all, Russia “still needs the money for the gas and after signing a peace agreement still wants to leave open the possibility of a market for its main export”.
Hungary, which has long been economically and politically linked to the Kremlin, became the first country to publicly state yesterday that it will endorse the decree. Fresh off his election victory, Prime Minister Victor Orban told a press conference: “It doesn’t cause us a problem… so we will pay in rubles if the Russians ask for it.”
Orbán is “one of Russia’s closest EU allies and his stance differs markedly from that of other European importers of Russian gas.” financial times called. Germany in particular has already said it is ready for “supply disruptions and may have to ration gas if Moscow cuts or delays supplies”.
But the Hungarian prime minister’s stance is a “challenge of opposing Putin’s attempts to change the terms of energy contracts,” the paper added, especially as he comes under “increasing pressure” from his EU allies to loosen his ties with Moscow.
Moscow “is currently working out methods for accepting payments for its natural gas exports in rubles”, Radio-free Europe (RFE) reported, saying “it will make decisions in due course should European countries refuse to pay in Russian currency”.
Kremlin spokesman Dmitry Peskov said after Putin’s televised speech last week: “We will not supply gas for free, that’s clear. In our situation, it is hardly possible and appropriate to engage with European buyers for charitable purposes.”
But on the face of it, the G7 seems poised to “reject the demand,” RFE added. German energy minister Robert Habeck said last week that “all G7 ministers were in complete agreement on this [would be] a unilateral and clear breach of the existing treaties”.
“Payments in rubles are not acceptable and we will urge the companies concerned not to follow Putin’s request,” he added after a meeting between officials from France, Germany, Italy, Japan, the US, Britain and Canada.
“Either the West gives in and meets Putin’s demands,” reads the website, “or it hesitates and risks seeing how far Putin will go to withhold gas supplies and potentially cut the money needed by its flagging domestic economy.” .”
https://www.theweek.co.uk/news/world-news/russia/956359/why-russia-demanding-gas-payments-in-roubles Why Russia demands gas payments in rubles