Russian President Vladimir Putin said on Wednesday that Russia would start charging the countries it considers “hostile” in rubles for its natural gas.
“I have taken a decision to switch to ruble payments for our natural gas supplies to the so-called hostile states, stop using the compromised currencies in such transactions,” Putin said, per a transcript published on the Kremlin website as carried by Bloomberg.
The Russian President—whose list of “hostile” states includes the United States, all EU member states, Switzerland, Canada, Norway, South Korea, Japan, and many others – has ordered the Bank of Russia, the central bank, to develop a system for payments in rubles within a week.
“At the same time, I want to emphasize that Russia will definitely continue to supply natural gas in line with the volumes and prices, pricing mechanisms set forth in the existing contracts,” Putin said at a government meeting today.
It makes no sense for Russia to export goods to the EU or the United States in U.S. dollars or euros, Putin added.
The U.S. has already banned imports of Russian energy products, including oil, coal, and LNG.
Earlier this week, the foreign ministers of the EU member states failed to come to an agreement about whether to punish Putin with an oil embargo. Some small EU members, including Lithuania, pushed for an embargo, but the biggest economy, Germany, was against it.
Gabrielius Landsbergis, Minister of Foreign Affairs of Lithuania, tweeted on Monday:
“Why should Europe give Putin more time to earn more money from oil and gas? More time to use European ports? More time to use unsanctioned Russian banks in Europe? Time to pull the plug.”
But Germany and the Netherlands said that the EU couldn’t cut itself off Russian oil and gas right now. The European Union and its biggest economy Germany have been reluctant so far to ban imports of Russian energy or impose sanctions on Russian oil and gas exports, considering that Europe depends on Russia for more than one-fourth of its oil supply and one-third of its natural gas supply.
By Charles Kennedy for Oilprice.com