March 31 (Reuters) – Russian President Vladimir Putin said on Thursday that he had signed a decree saying foreign buyers must pay in roubles for Russian gas from April 1, and contracts would be halted if these payments were not made.
“In order to purchase Russian natural gas, they must open rouble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting from tomorrow,” Putin said in televised remarks.
“If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences. Nobody sells us anything for free, and we are not going to do charity either – that is, existing contracts will be stopped.”
Russia supplies about a third of Europe’s gas, so energy is the most powerful lever at Putin’s disposal as he tries to hit back against sweeping Western sanctions over his invasion of Ukraine.
His decision to enforce rouble payments has boosted the Russian currency, which fell to historic lows after the Feb. 24 invasion but has since recovered.
Western companies and governments have rejected the move as a breach of existing contracts, which are set in euros or dollars. France’s economy minister said France and Germany were preparing for a possible scenario that Russian gas flows could be halted – something that would plunge Europe into a full-blown energy crisis.
An order signed by Putin set out a mechanism for buyers to transfer foreign currency to a special account at a Russian bank, which would then send roubles back to the foreign buyer to make payment for the gas.
He said the switch was meant to strengthen Russia’s sovereignty, and it would stick to its obligations on all contracts.
Germany rejects Putin’s roubles for gas demand
German Economy Minister Robert Habeck on Thursday rejected demands by Russia that European countries pay for its gas in roubles as an unacceptable breach of contract, adding that the manoeuvre amounted to “blackmail”.
Speaking during a joint news conference with his French counterpart, Habeck said he had not yet seen a new decree signed by President Vladimir Putin mandating gas payments in roubles.
“With regard to the threat, demand or consideration – one doesn’t know what to call it anymore – to be made to pay in roubles, it is crucial for us that the contracts are respected,” said Habeck. “It is important for us not to give a signal that we will be blackmailed by Putin.”
Separately, Chancellor Olaf Scholz said German companies would continue to pay for Russian gas using euros as stipulated in contracts.
“By all means, it remains the case that companies want, can and will pay in euros,” he told a joint news conference with his Austrian counterpart Karl Nehammer.
