Russia insists on ruble payments for gas supplies

style="float: right; margin-bottom: 10px; font-weight: 600;"Tue 29th Mar, 2022

Following the EU's widespread rejection of payment for gas supplies in rubles, Kremlin spokesman Dmitry Peskov has announced possible new steps by Russia. "No payment - no gas," Peskov said in an interview with the U.S. television chain PBS, according to the state agency Tass on Monday evening.

Moscow wants to wait for the EU's response and then determine the next steps. "However, we definitely do not intend to show ourselves as benefactors and provide free gas to Western Europe," Peskov stressed.

Russian President Vladimir Putin's confidant accused the West of unleashing an all-out economic war against Russia. "Unfortunately, these circumstances are most unfriendly," Peskov said of the sanctions. This, he said, had brought us into the realm of "total war."

"And we in Russia feel this war in such a way that the Western European countries, the U.S., Canada and Australia are waging an actual war in trade, in the economy, they are seizing our property, our cash and blocking our finances," Peskov complained. "And we now have to adapt to the new reality."

Putin had ordered the previous week that natural gas be delivered to "unfriendly" states such as Germany only against payment in rubles. This would prop up Russia's currency, which has come under pressure, because importing countries would have to obtain rubles. Germany is among the countries affected. Until now, gas deliveries from Germany, for example, have been paid for in euros.

On Monday, the group of seven leading democratic economic powers (G7) rejected the Russian demands. Germany currently chairs the group of states, which also includes France, Italy, Japan, Canada, the United States and the United Kingdom.

"Putin's attempt to divide us is obvious," said German Economy and Climate Protection Minister Robert Habeck after a virtual meeting with G7 energy ministers. But there was great unity, he said. "We will not be divided, and the response of the G7 countries is clear: The contracts will be honored."

German Chancellor Olaf Scholz also reiterated, "Companies will pay according to their contracts." He added that these contracts were predominantly euro-based.

Asked about preparations in case Russia halts gas supplies, Habeck said, "We are prepared for all scenarios." He said the German government has been working on responses to scenarios since the turn of the year.

Putin's demand for payment in rubles should be interpreted to mean that he "has his back to the wall at this point, otherwise he would not have made this demand," Habeck said.

Payments from the West for energy supplies are not decisive for the direct financing of the Russian war against Ukraine. Putin can finance the army, supply soldiers, deliver fuel for tanks or build weapons of war largely within his own country. "For that, he needs rubles. He can print the rubles," Habeck said. "As long as Russian workers accept rubles as a means of payment, he can finance the war from his own resources."

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