Mikhail Klimentiev/Sputnik/AFP via Getty Images
Russia wants “hostile countries” to pay for Russian natural gas in rubles. It’s a new directive from President Vladimir Putin as he tries to leverage the resources demanded by his country to counter a barrage of Western sanctions.
“I have decided to implement (…) a series of measures to transfer payments – we will start with this – for our natural gas supplies to the so-called hostile countries in Russian rubles,” Putin said. at a televised government meeting, adding that confidence in the dollar and the euro had been “compromised” by the West’s seizure of Russian assets.
The new requirement emerged in an effort to prop up the declining Russian currency, the ruble, by increasing demand for it. Its value appreciated against the dollar and the euro following Putin’s announcement. Natural gas prices jumped in Europe, where Russia supplied about 45% of imports.
Marcel Salikhov, president of the Moscow Energy and Finance Institute, said the move amounted to a “symbolic counter-sanction” aimed at the West. He noted that the Kremlin had already ordered exporters to exchange 80% of their foreign exchange earnings for rubles.
“It is difficult, given the current economic situation, for the Russian authorities to abandon oil and gas sales to Western countries,” Salikhov told NPR.
“You can say, ‘We don’t trust euros or dollars’, but economically it’s the same operation. Money is money.”
Earlier this month, President Biden banned imports of Russian energy into the United States, with a 45-day window to terminate existing contracts. European countries have announced plans to reduce dependence on Russian energy. But for now, they continue to source supplies from Russian oil and gas companies, the largest of which are state-controlled.
Biden and his European allies are expected to announce new sanctions this week.
So far, Russia has continued to meet its contractual obligations to Western gas and oil consumers, even as it announced the redirection of its energy exports to China. Moscow also recently added the United States, the United Kingdom and the whole of the European Union to its growing list of “hostile countries”.
Russian leaders have also hinted at more serious consequences as members of the EU bloc have sought – so far unsuccessfully – to impose an outright embargo on Russian imports.
In a speech to the Russian Duma on Wednesday, Kremlin Energy Minister Alexander Novak warned of a potential ‘collapse’ in energy markets – predicting prices would soar as Russian exports stagnated.