Putin: "If Ruble Accounts Are Not Opened, Gas Supply Will Be Cut Off"... Attempt to Evade Sanctions

Targeting Europe, Applied Only to 'Pipeline Gas (PNG)'
Expanding to Grains, Mineral Resources Likely to Impact Global Economy

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Russian President Vladimir Putin warned Western countries that they must open ruble accounts at Russian banks to pay for Russian gas purchases, and if they do not comply with this measure, gas supply will be cut off. This is interpreted as a move to defend the ruble exchange rate and to attempt to evade Western sanctions against Russia.

On the 31st (local time), President Putin signed a presidential decree requiring payment for Russian gas purchases in rubles and stated in a speech, "Unfriendly Western countries must open ruble accounts at Russian banks for gas payments," warning, "If this is not implemented, gas supply will be stopped." He added, "In the future, we will increase the proportion of payments in Russian rubles or currencies of trusted partner countries in foreign trade."

According to this measure, Western countries must open ruble accounts at Gazprombank, which is not yet subject to sanctions. If gas payments are made in euros or dollars to this account, Gazprombank will convert them into rubles. According to Russian TASS news agency, this measure applies only to pipeline natural gas (PNG) mostly exported to Europe and does not apply to liquefied natural gas (LNG).

Experts view this measure as a means to evade sanctions. Charlie Robertson, global chief economist at Renaissance Capital, a US investment firm, told the UK Guardian, "This measure appears to focus more on finding ways to evade sanctions against Russia rather than defending the ruble's value," adding, "In the current Russian situation, reducing risks from sanctions and securing foreign currency is more important."

Meanwhile, European countries are strongly opposing this, calling it a breach of existing contracts. German Chancellor Olaf Scholz said at a press conference, "We will continue to make payments in euros or dollars as before." Vice Chancellor and Minister of Economic Affairs Robert Habeck also strongly criticized, saying, "This is a breach of contract and intimidation."

French Minister of Economy Bruno Le Maire explained at a press conference that "a situation where there is no more Russian gas tomorrow could unfold," and "we are preparing for such a scenario."