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EU Leaders Scoff At Putin's Rubles-For-Gas Demand

Several leaders from European Union members have scoffed at Russia's demand that some "unfriendly" countries will be forced to pay for its natural gas and oil in rubles, saying the move is a breach of contract.

In a move seen aimed at bolstering Russia's beleaguered currency in the face of crippling economic and financial penalties over its invasion of Ukraine, President Vladimir Putin has said Moscow will no longer accept payments in dollars or euros, what he called "compromised currencies" from countries that have imposed the sanctions.

While Putin did not name any countries, it is understood the policy would target Britain, Canada, Japan, Switzerland, Ukraine, the United States, and members of the European Union.

"This would be a unilateral decision and a clear breach of contract, and it would be an attempt to circumvent the sanctions," European Commission President Ursula von der Leyen said at the start of an EU summit in Brussels on March 24.

"We will not allow our sanctions to be circumvented...the time when energy could be used to blackmail us is over," she added.

Russia invaded Ukraine on February 24, prompting the sanctions and global condemnation.

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The sanctions have sent the Russian currency into freefall, while cutting Russia out of international money transfers and freezing its foreign currency abroad.

Putin gave the government and central bank one week to figure out the details on moving operations into the ruble, with energy giant Gazprom charged with making the corresponding changes to contracts.

Russian gas accounts for around 40 percent of Europe's total consumption. Daily EU gas imports from Russia this year have varied between 200 million euros to 800 million euros.

"This is basically a breach of contract, this is important to understand," Italian Prime Minister Mario Draghi said of Putin's move.

Added Slovenian Prime Minister Janesz Jansa, "I don't think anybody in Europe knows what rubles look like, nobody will pay in rubles."

Ukrainian Foreign Minister Dmytro Kuleba called Moscow's demands "humiliating" and warned countries potentially affected by the move not to give in.

"If any EU country bows to Putin's humiliating demands to pay for oil and gas in rubles, it will be like helping Ukraine with one hand and helping Russians kill Ukrainians with the other. I urge relevant countries to make a wise and responsible choice," he said on Twitter.

By RFE/RL

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  • John Donovan on March 26 2022 said:
    They can scoff all they want. A disgruntled customer at the cash register because his VISA card was just declined. Please use another form of payment or pay in Rubles.
  • John Donovan on March 26 2022 said:
    They can scoff all they want and rant all they want. Seizing private citizens property because of citizenship is outright theft. That is how the rest of the world will see it even though they don't say it. So when someones French Yaught is seized by some no name country, don't complain. It is all part of doing business.
  • Mamdouh Salameh on March 25 2022 said:
    European Union (EU) leaders could scoff at Russia's demand to be paid in rubles for its gas and oil supplies saying the move is a breach of contract and an attempt to circumvent the sanctions.

    However, Russia could equally argue that the EU’s sanctions on Russian banks and its Central Bank and the freezing of the assets of the Central Bank outside Russia are a breach of the international financial system.

    By demanding payment in rubles President Putin could have two objectives in mind. The first is that if these so-called unfriendly countries agree to pay him in rubles they will have to buy rubles in the open market and this will strengthen the value of the Russian currency against other world currencies. If they refuse, he can then halt his gas shipments to them and blame them for the disruption of supplies.

    The second objective is that if Russia is paid in rubles at the current devalued rate, the Russian Central Bank could later sell them at a higher rate when the Gulf conflict ends thus making a fortune in exchange rates alone.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Pradip Ghosh on March 24 2022 said:
    When western countries froze Russia&amp;#039;s foreign currency assets, was it as per rules?
    Who broke the rules first ?

Leave a comment

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