Putin threatens to cut off Europe's gas supply unless it's paid in roubles

31 March 2022, 17:01 | Updated: 1 April 2022, 00:20

putin
Putin threatens to cut off gas supply tomorrow unless Europe pays in roubles. Picture: Alamy

By Liam Gould

Vladimir Putin has threatened to cut off Europe's gas supply on Friday if countries continue to refuse to pay in roubles, the Russian national currency.

The Russian president has said "unfriendly countries" who import energy could be cut off from their gas supply from unless they open a state-linked bank and pay for it in roubles.

In a televised address, Putin said: "In order to purchase Russian natural gas, they must open rouble accounts in Russian banks.

"It is from these accounts that payments will be made for gas delivered starting tomorrow."

He added: "If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences.

"Nobody sells us anything for free, and we are not going to do charity either - that is, existing contracts will be stopped."

According to an order signed by Putin, gas buyers should open accounts with the state-controlled Gazprombank to facilitate currency exchange on purchases.

Russia currently supplies around a third of Europe's gas despite the country being hit by widespread sanctions following their invasion of Ukraine.

It has also seen a number of major Western companies shutting down all operations in the country. The Russian currency fell to historic lows since the invasion, but has since slightly recovered.

The rouble had fallen to a record low of 120 to the dollar, but recently rose to 3.4% stronger against the dollar.

Putin announced last week that "unfriendly" countries would have to pay in roubles as a response to the sanctions in an attempt to channel more money directly into the Russian economy and boost "sovereignty".

But the Russian president has insisted Moscow will fulfil all contracts if conditions are met.

"Russia will continue, of course, to supply natural gas in accordance with volumes and prices... fixed in previously concluded contracts," he said.

"The changes will only affect the currency of payment, which will be changed to Russian roubles" for a list of given countries.

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The list of "unfriendly" countries includes the United States, European Union member states, Britain, Japan, Canada, Norway, Singapore, South Korea, Switzerland and Ukraine.

58% of sales were settled in Euros as of January this year, and the US dollar for 39% according to gas giant Gazprom.

A Downing Street spokesperson said the government doesn't plan on paying for Russian gas in roubles, and that they were monitoring any potential impact on the European market.

He said: "That is not something we will be looking to do."

This comes as Prime Minister Boris Johnson alluded to Britain's future energy plans to withdraw reliance on Russian gas. Speaking to MPs in front of the Liaison Committee, he said: "Renewables are fantastic: offshore wind – and I stress offshore wind – I think has massive potential. But so does nuclear."

Germany - a country far more reliant on Russian imported gas - have taken their first steps to prepare for rationing this week as the threat of being cut off from imported energy continues.

German Economy Minister Robert Habeck has called the latest demands "blackmail" and said it would be an unacceptable breach of contract.

"It's important that sanctions are respected... but Putin is now trying to weaken this by trying to break through the sanctions with his rouble demand.

"To be prepared for this situation, this morning I declared the early warning level according to the gas law."

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