Rubles, not euros or dollars. Vladimir Putin wants to bill Gazprom’s Russian gas in his country’s currency, not in European or US currency. The President of Russia asked the Central Bank of Russia and the company to submit a report on this issue to him on Thursday, March 31, with the dual purpose of getting companies to buy rubles on international markets to boost their exchange rate, and to demonstrate their political strength in the face of European sanctions. “If you want gas, find rubles”in short (in Russian) Vyacheslav Volodin, Speaker of the Duma.
Specifically, this ban means that European countries must, according to him, buy Russian currency from banks. spared their own sanctions to serve as exchange banks. Undoubtedly, “The cost of transactions will be higher”notes Ludovic Subran, chief economist at Allianz, but the message is primarily political in nature: “This coup by Vladimir Putin will allow him to demonstrate that the ruble is still a convertible currency.” Vyacheslav Volodin is always full of ideas, and he would like to apply this logic to other products (fertilizers, cereals, coal, metals, wood, etc.). And the Kremlin did not reject these options.
To do this, theoretically, trade agreements should be revised. “Our contracts provide for payment for gas in euros. There is no item that allows the seller to change the currency”Jean-Pierre Clamadier, president of Engie, recently insisted on franceinfo. “I understand that this group is under stress at the moment.says Thierry Bro, an energy specialist and professor at Sciences Po. Companies within the framework of their licenses are required to be able to supply gas. The Italian Eni or the Austrian OMV have the same reaction. However, the legality of this measure may fade into the background due to the will of Moscow and the lack of alternatives.
So politics took over. And the G7 countries (Germany, Canada, USA, France, Italy, Japan, Great Britain) seem to be in the mood to sort things out. “All ministers I agree that this is a unilateral and clear violation of existing treaties”This was announced on Monday by German Economy Minister Robert Habeck. European companies will “could negotiate this request with Gazprom, for example, asking to halve the price”considers Thierry Bros.
To date, the EU and the G7 have ruled out any embargo on this gas, as Europe’s dependence is great. The paradox is striking today. While the Russian economy has been drowned in sanctions since the start of the war, its gas imports have been on the rise throughout the period, and this “to restock”explains Ludovic Subran, an economist at Allianz contacted by Franceinfo.
“Europe is now paying $750 million a day.”Ludovic Subran, economist
Therefore, Ukraine accuses its Western partners of financing the war waged by Vladimir Putin. Ukrainian President Volodymyr Zelensky, during a video conference in front of the Norwegian parliament, urged the Scandinavian country to produce more natural gas in order to reduce Europe’s dependence on Russia.
This increase in orders is partly due to concerns about future gas supplies and poorly adjusted orders before the war. But the phenomenon is also cyclical, because the gas industry traditionally begins its recovery in the spring to prepare for the next winter. “After dropping to 28%, the storage level is now being increased with the goal of reaching 80%, even 90% if possible”completes Thierry Bros.
Time is running out until alternate solutions are found. “About 75% of Russian gas supplies are replaceable. other more expensive consumables”explains Thierry Bros. But in the end, a quarter of the imported Russian gas, according to experts, cannot be replaced; 10% of European demand. Moreover, the Energy Regulatory Commission is already advising the French to save energy in anticipation of next winter.
The Kremlin, for its part, has already warned that Russia “free gas will not give” and that this period is not conducive “pan-European charity”.
“Russia must find a way to ensure payments are made and [l’exigence de paiement en roubles] not become an excuse for Europe not to pay.”Ludovic Subran, economist
By refusing to cash out payments in euros or dollars and choosing to close the gateways, he also risks being sued by the Stockholm Arbitration Court, which resolves international trade disputes. “Then the damage could amount to hundreds of billions of dollars., explains Thierry Bros.
On Wednesday, the Kremlin announced that the measure would be implemented gradually, without actually setting a deadline. In a conversation with German Chancellor Olaf Scholz, Vladimir Putin wanted to spare his interlocutor and major client: “Payment for Russian gas in rubles should not worsen the contracts of European clients“. According to German press secretary Steffen Hebestrait, the Russian president even assured his colleague of what payments from Europe next month “will still be in euros and transferred as usual to Gazprombank, which is not under sanctions”.