Vladimir Putin, the President of Russia, said yesterday his country would only accept payments in Russian currency rubles for gas deliveries to unfriendly countries, such as all European Union members after the West hit Moscow with unprecedented sanctions over its Ukraine invasion. During a televised administrative meeting, Putin announced his plan to implement measures to transfer payment for Russian gas supplies to unfriendly nations into rubles.
On Wednesday, Russian President Vladimir Putin said that Russia wants payment in rubles (Russian currency) to unfriendly nations and European gas prices skyrocketed on concerns the recent move would worsen the region’s energy crisis. pic.twitter.com/MkyC8eCVBD
— Live News Now (@LiveNewsNow6) March 24, 2022
The Russian leader ordered his government to implement the changes within a week. He declared to deny receiving payments in compromised currencies. Putin further added that his government would continue supplying gas to the countries in fixed volumes described in previous agreements. He also called the freezing of Russian assets abroad illegal. Finally, Putin said that the European Union and the U.S. declared an actual default on the obligations to Russia.
Outcomes of Putin Announcement
Soon after the Russian president’s announcement, the Russian currency, rubles, strengthened against United States dollars and the euro. It soared after his announcement to a three-week high past ninety-five percent against the dollar. Moreover, rubles pared gains but stayed less than a hundred, closing at around 97.7 against the U.S. dollar, down over twenty-two percent since 24th February.
On Wednesday, prices of some European gas up to thirty percent higher. Likewise, Dutch and the United Kingdom’s wholesale gas prices jumped. Russian gas accounts for around forty percent of the total consumption of Europe. In addition, European Union gas imports from Moscow this year fluctuated between two hundred million to $800 million (eight hundred million euros) per day.
Robert Habeck, the Economy Minister of Germany, called Russian leaders’ demands a breach of deal, and other consumers of Russian gas reiterated the point. A spokesman for Eneco, a Dutch gas supplier, purchases fifteen percent of its gas from Gazprom, the Russian gas giant’s German subsidiary Wingas GmbH, said it had a long-term deal designated in euros.
According to Gazprom, fifty-eight percent of its sales of natural gas to EU and other nations as of 27th January settled in euros. United States dollars accounted for around thirty-nine percent of gross sales and exceptional about three percent. Commodities traded globally are mainly traded in the euro or American dollar, which make up approximately eighty percent of international currency reserves.
Russian List of Unfriendly Countries
Russia drew up a list of unfriendly nations corresponding to those that slapped sanctions against it. The nations include Ukraine, the U.S., South Korea, the United Kingdom, European Union member states, Switzerland, Norway, Canada, Singapore, and Japan. So instead, the U.S. is consulting with its partners on the issue and every country.