Putin: ‘Unfriendly countries’ to pay for gas in rubles
President Vladimir Putin’s new directive requires ‘unfriendly countries’ to pay for gas in rubles, the Russian currency, instead of dollars or euros
President Vladimir Putin’s new directive requires “unfriendly countries” to pay for Russian natural gas in rubles.
What he said: “I have decided to implement ... a series of measures to switch payments — we’ll start with that — for our natural gas supplies to so-called unfriendly countries into Russian rubles,” said Putin, in an effort to leverage Russia’s energy resources against a long list of sanctions from the West. According to Reuters, Russian gas accounts for an estimated 40% of Europe’s consumption.
He also said that trust in the dollar and euro has been compromised by the West’s seizure of Russian assets.
“It makes no sense whatsoever,” Putin added, “to supply our goods to the European Union, the United States and receive payment in dollars, euros and a number of other currencies.”
Experts said: This move could propel Russian currency by increasing demand, but some experts doubt it will work.
“Demanding payment in rubles is a curious and probably ultimately ineffective approach to attempting an end run around Western financial sanctions,’’ said Eswar Prasad, a professor of trade policy at Cornell University. “Rubles are certainly easier to come by now that the currency is collapsing. But exchanging other currencies for rubles will be quite difficult given the widespread financial sanctions imposed on Russia.”
“The hope that demanding payment in rubles will increase demand for the currency and thereby prop up its value,” Prasad added, “is also a false hope given all the downward pressures on the currency.’’
State of play: German Economy Minister Robert Habeck called Putin’s demand a breach of contract. Polish and Dutch officials also chimed in, reluctant to change the original terms.
Flashback: Earlier this month, President Joe Biden banned the import of Russian energy to the U.S., as European countries plan to reduce their dependence on Russia as well, per NPR.