Vladimir Putin declared, “I have decided to implement measures to change the supply of our gas in rubles to enemy countries.”
Vladimir Putin announced on Wednesday that Russia would no longer accept payments for gas supplies to the EU in dollars or euros, giving Russian officials a week to implement the new ruble system.
“I have decided to implement a set of measures to pay for our gas supplied to hostile countries in rubles and to abandon the compromised currency in all terms,” he said during the meeting with the Russian president. The government meeting explains that it is a reaction to the freezing of Russian assets in the West.
Vladimir Putin told the central bank and the government that the new system “within a week” should include “clear, transparent” and “acquisition of the ruble in the Russian exchange market”.
The announcement had an immediate effect on the Russian currency, which strengthened against the euro and the dollar, while it collapsed on February 24 and Russian forces entered Ukraine.
Russian Foreign Minister Sergei Lavrov called Wednesday a “theft” and pointed out that other Russian exports would be affected as the West froze about $ 300 billion worth of Russian reserves abroad.
“It is clear that the EU will no longer be able to supply our goods to the United States and receive dollars, euros and other currencies,” Putin said.
For now, Russian hydrocarbons are largely exempt from the harsh Western sanctions against Russia.
Admittedly, Washington has imposed a ban on Russian gas and oil. But the latter continues to flow towards Europe, relying heavily on Russian hydrocarbons and Moscow’s first market.
Removal of cash
But the EU is now considering a ban on Russian oil. Many decisive international summits are expected to recommend new Western sanctions.
Moscow, for its part, has been advocating for years the devaluation of its economy in order to mitigate its impact on sanctions.
In March 2019, the Russian public gas company Gazprom announced the sale of its first gas ruble to a European company.
“Without Russia’s hydrocarbons, it is absolutely clear that the gas and oil markets will collapse if sanctions are imposed. Rising prices for energy resources are unpredictable,” Deputy Prime Minister Alexander Novak said on Wednesday.
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