Europe Responds to Putin Signing a Decree Demanding Gas Payments
Putin signs a decree requiring “unfriendly countries” to pay in rubles for gas imports. Photo: Mikhail Klementyev/ Reuters
As sanctions imposed on Russia continue to intensify the impact on the Russian economy, President Vladimir Putin made the executive decision to require gas payments by foreign importers to be made in rubles. He already warned of this decree last week, as a result in the dramatic drop in the ruble’s value. In his statement, as reported by Polish news channel TVN24, he explained that if the importers do not transfer their payments in the currency, it will fail to meet Russia’s obligations and gas deliveries will subsequently be ceased. G-7 countries disapproved of the new regulations, claiming that they violate existing contracts with Russia.
Released on March 31, the decree specifically targeted the “unfriendly countries,” particularly the US, members of the European Union, Ukraine, South Korea, Switzerland, Canada, Japan, Norway, and the UK, and ordered that their payments will only be accepted if they come from an account in one of the major Russian banks. The law is coming into effect today, putting a lot of economic pressure on the Western countries to decide whether they can survive independently from Russian gas or not.
Putin’s announcement on Thursday was especially concerning for Germany and Italy; however, the two countries received Putin’s reassurance that they would be able to continue paying in euros, or sometimes in US dollars. German Chancellor, Olaf Scholz, claimed that he made it clear during his Wednesday call with Putin that payment options will remain in either of the two currencies and is not set to change. During yesterday's press conference with Austrian Chancellor Karl Nehammer, Scholz expressed his hope to end Germany’s dependence on Russian oil and coal by the end of this year, but emphasized that that will not be the case with gas yet.
Morawiecki speaking on Wednesday. Photo: Polsat News
After his Wednesday call with Putin, the Italian Premier, Mario Draghi, expressed his concerns about Russia’s compliance with the contract if the currency was to change, and announced that Italy with the rest of Europe is pushing for a cap on Russian gas prices, since the current astronomical prices are essentially “financing the war.” As reported by ABC News, Draghi believes that such a cap can be achieved, considering Russia’s economic reliance on Europe’s gas market being the only one available to them.
A more radical approach to the situation has been taken by Poland. Two days ago Polish Prime Minister Mateusz Morawiecki, announced that Poland will stop receiving Russian coal by the end of May, and Russian gas and oil by the end of 2022. Oil is the most difficult to cut off, as 63 percent of imports come to Poland from Russia. However, representatives of Orlen, the largest oil refiner and petrol retailer, assured that the company will begin to rely on deliveries from the Middle East and Africa. According to Morawiecki, this drastic shift away from Russia is supposed to awaken Europe and take similar steps to Poland.