Russia’s announcement that it would only deliver gas in exchange for ruble payments has raised concerns in the West about possible bottlenecks. Now Kremlin boss Vladimir Putin wants to consult with Gazprom and the central bank.
A week ago, Kremlin boss Vladimir Putin announced that in future he would only sell Russian gas to Western countries for rubles – now Putin wants to discuss specific steps with representatives of the gas giant Gazprom and the central bank.
Putin had previously instructed that the modalities for converting payments from euros and dollars to rubles for customers from “unfriendly countries” should be worked out by this Thursday.
Kremlin spokesman Dmitry Peskov emphasized that the new payment system will not come into force directly on Thursday. The delivery of gas and payment are separate processes. At the same time, he recently emphasized that Russia is not a charity and said: “No one will deliver gas for free, and it can only be paid for in rubles.” Moscow had justified its actions with an alleged “economic war” in the West.
Telephone call between Putin and Scholz
The group of G7 economic powerhouses, including Germany, as well as the European Union as a whole, reject payments in rubles. The federal government had accused Russia of breaching the treaty. On Wednesday evening, Putin called Chancellor Olaf Scholz – and, according to the Kremlin, assured that the switch to ruble payments for Russian gas should not lead to disadvantages for Germany.
After the talks with Putin, Scholz (SPD) confirmed that Germany would continue to pay for gas deliveries from Russia in euros or dollars, as provided for in the contracts. In the phone call, Putin explained that a law will apply from April 1, according to which the delivery of gas must be paid for in rubles, as the spokesman for the federal government, Steffen Hebestreit, said in the evening.
However, nothing would change for the European contractual partners: payments would continue to be made exclusively in euros and, as usual, would be transferred to Gazprom Bank, which is not affected by the sanctions. The bank then converts the money into rubles. Scholz did not agree to this procedure, but only asked for written information about it, Hebestreit emphasized. Putin asked for the conversation.
Fear of delivery stop
Putin’s announced meeting with the central bank and Gazprom, as well as the refusal of Western countries to switch to the ruble, had nonetheless triggered fears in Europe that Russia could quickly cut off gas supplies. Concerns have also grown in Germany. The federal government announced the first of three stages of a gas emergency plan on Wednesday. This is intended to strengthen precautions in the event of an emergency, and a crisis management team has been set up.
The appeal went to consumers and companies to save gas. The security of supply is currently still guaranteed. The federal government again emphasized that the payment of gas deliveries in rubles demanded by Russia was a breach of the supply contracts.
Rising energy prices
Above all, rising energy prices are causing increasing problems – consumer prices in Germany in March were 7.3 percent above the level of the same month last year. In 2022 as a whole, consumers are threatened with the highest inflation since reunification. The “economic experts” warned that Germany could fall into a recession if the crisis worsened.
A possible Russian gas supply stop would also affect Ukraine, which receives important transit fees from gas transit. Despite the war of aggression launched by Russia, large quantities of gas have been pumped through Ukrainian pipelines every day. Since the beginning of the war on February 24, well over three billion cubic meters of natural gas have been transported west from Russia, according to the Ukrainian state operator for the gas transmission system.
Source: Stern
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