Putin chairs his cabinet meeting on Wednesday.
Russian President Vladimir Putin announced that Russia will only accept payments in rubles to pump gas to countries he described as “unfriendly countries”, including all member states of the European Union, after Moscow was subjected to unprecedented sanctions following its invasion of Ukraine.
“I decided to implement a series of measures to transfer payments for our gas supplies to unfriendly countries into the Russian ruble,” Putin said during a government meeting broadcast on Russian television.
Putin has given Russia’s central bank a week to implement those changes and find a way to divert those payments away from other currencies.
He said that Russia would stop receiving payments in the currencies he described as “hacked”. He added that “Russia will continue to supply gas in the quantities proven in previous decades.”
Putin described the freezing of Russian assets abroad by Western countries as an “illegal” measure, and said that it destroyed trust between his country and those countries.
He said the United States and the European Union had announced a “real default” in paying their obligations to Russia. “Now everyone in the world knows that dollar obligations can be defaulted,” he said.
Immediately after Putin’s announcement, the ruble gained against the US dollar and the euro. The ruble jumped to its highest level in three weeks to reach the exchange rate of 95 rubles to the dollar before settling at the rate of 100 rubles to the dollar later on Wednesday.
The ruble rose in today’s trading by 3.4 percent against the dollar and 3.5 percent against the euro.
Before the sanctions imposed by the West on Moscow, the ruble exchange rate was equivalent to 80 rubles to the dollar, after it fell to a record low this month, reaching 120 to the dollar and to 150 to the dollar in the interbank market.
Observers expect that Putin’s move will strengthen the Russian currency, as a number of European countries still depend on Moscow for most of its energy supplies.
picture released, Getty Images
The ruble achieved some gains in today’s trading against the dollar and the euro.
Breach of the rules?
According to data from the Russian energy giant “Gazprom”, about 58 percent of the company’s sales of natural gas to Europe and other countries were settled in euros, as of January 27. The US dollar constituted the trading currency for about 39 percent of sales.
The European Commission had announced earlier that it plans to reduce dependence on Russian gas by two-thirds by the end of this year, and to end the European Union’s dependence on Russian energy supplies completely “well before 2030”.
But unlike the United States and Britain, European Union countries have not imposed sanctions on Russia’s energy sector.
“It is unclear whether it will be easy for European customers to convert their payments into rubles given the large size of these payments,” says partner at the energy consultancy Leon Izbeki, which bears his name.
But Izbeki notes that “there are no sanctions in place that would prohibit payments for Russian gas in rubles,” according to what was quoted by Archyde.com news agency.
He adds that the Russian Central Bank could provide additional liquidity to the foreign exchange markets that would enable European clients and banks to get the required amount of ruble in the market.
picture released, AFP
However, questions were raised as to whether the Russian decision constituted a breach of the rules of contracts agreed upon in the euro. This was pointed out by a source in the Polish government and described by Archyde.com as high, as he told the agency that the Russian decision “would constitute a violation of the payment rules stipulated in the current contracts.”
The source added, according to Archyde.com, that Poland has no intention of signing new contracts with Gazprom after the current long-term agreement expires at the end of this year.
Russia’s list of “unfriendly” countries includes countries that imposed sanctions on Moscow after its invasion of Ukraine. Conditions for dealing with these countries include obtaining the approval of a government committee to deal with individuals and companies from those countries.
The list includes the United States and member states of the European Union, as well as Britain, Japan, Canada, Norway, South Korea, Switzerland and Ukraine.
Some of these countries, including the United States and Norway, do not buy Russian gas.
Increase the number of NATO forces
picture released, Archyde.com
The Secretary General of the North Atlantic Treaty Organization (NATO) said that the alliance will approve a significant increase in the number of forces deployed on the eastern side
At the European level, the Secretary-General of the North Atlantic Treaty Organization, NATO, said that the alliance will approve a significant increase in the number of forces deployed on the eastern side, at an emergency summit to be held Thursday.
Jens Stoltenberg said four new NATO battle groups will go to Eastern Europe – namely to Slovakia, Hungary, Bulgaria and Romania.
For its part, Poland said it would expel forty-five Russian diplomats from its territory after accusing them of spying.
The Warsaw Internal Security Agency said the Russians used their diplomatic status as a cover for their intelligence activities.
On the other hand, Ukrainian President Volodymyr Zelensky accused Russian forces of using the buffer zone around the Chernobyl nuclear plant to prepare for new attacks.
Addressing the Japanese parliament, Zelensky said the fighting in some areas of his country was so bad that people could not bury their dead relatives.
On the other hand, Anatoly Chubais, a senior adviser to President Putin and one of the architects of Russia’s economic reforms during the 1990s, left his position as the Kremlin’s special envoy.
A source close to Chubais said he left Russia forever, citing President Putin’s war in Ukraine as a reason for leaving.