Brussels warns: Payment in rubles violates EU sanctions

EU Commission President Ursula von der Leyen reminds European companies not to give in to threats from Russia.

European companies that agree to pay for Russian gas in rubles, as requested by Moscow, are violating EU sanctions and exposing themselves to “high” legal risk, Commission President Ursula von der Leyen warned on Wednesday.

“About 97% of contracts (between EU groups and Russian gas suppliers) provide for payments in euros or dollars (…) Companies with such contracts must not give in to Russia’s demand, which would contradict the sanctions imposed by the 20’s .” Seven, she added.

Vladimir Putin issued this ultimatum to European countries at the end of March in order to sow discord within the countries of the Union. But the Russian decree released in early April appeared to leave gas-importing countries with an option.

According to the European Commission quoted by Bloomberg, companies can simply open an account with Gazprombank to deposit their payments in dollars or euros. It is then up to the banking organization to make the conversions.

Vladimir Putin’s threat was therefore more political than economic. So believes L’Opinion Thierry Bros, a professor at Sciences Po and a specialist in energy geopolitics.

“Gazprom is most annoyed”

“Some may have believed that paying in rubles should increase the price, but the effect would be exactly the same if Russian companies were forced to convert the collected amounts into rubles,” confirms Thierry Bros, a professor at Sciences Po and a specialist in geopolitics most upset by this story is Gazprom, which undoubtedly needs to stop building up reserves in euros and dollars and pay all its employees in rubles.”

If the rate of the Russian currency against the euro and the dollar has actually returned to pre-crisis levels for a month, it is thanks to government measures such as the blocking of foreign exchange transfers or the very sharp increase in the key interest rates of the country’s central bank.

This recovery of the Russian currency does not mean that the Russian economy is in good health. According to the Rosstat agency, inflation reached 17.3% in March. A sharp decline in GDP is expected for 2022. According to the government, the decline for the year as a whole should be between 8.8 and 12.4%. A drop not seen in the country since 1992 (-14.5%).

Leave a Comment