Possibly later in the day, the Kremlin will make its proposal for gas payments in rubles, which will apply to Germany and all “unfriendly” countries. One version seems to envisage an intermediary role of Gazprom Bank, which will accept payments in euros or dollars and convert this money into rubles internally, in Russia, as stated by the Italian Prime Minister Mario Draghi.
Russian President Vladimir Putin has repeatedly said in recent days that “unfriendly” countries to Russia should pay for gas in rubles, instead of dollars or euros. However, Moscow backed away from demanding that payments in rubles be made from today, removing even for the time being the risk of a serious disruption of supplies in Europe.
It is recalled that Putin had asked the state gas company Gazprom, the central bank and the government to give instructions for the implementation of the new policy from today, Thursday. The G7 major economies have rejected Russia’s demand for a currency change.
The role of Gazprom Bank
However, in talks with German Chancellor Olaf Solz on Wednesday, Putin said European companies could continue to pay in euros or dollars.
The money will be paid to Gazprom Bank and transferred in rubles to Russia, as reported by Deutsche Welle. According to the same information, Solz did not agree to this procedure, but asked for instructions in writing to better understand the proposal. Since then, further contacts between the two sides at the level of financial advisers appear to have taken place.
Mario Draghi said that from his communication with Putin he understood that the conversion of dollars and euros into rubles will take place internally in Russia. “Existing contracts are still valid and European companies will continue to pay in euros and dollars,” Putin told him, Draghi added.
According to Reuters, the proposed plan envisages that Gazprom Bank will play the role of intermediary for buyers’ transactions with Gazprom. Payments will be made in the currency provided for in the contract (eg euro), at the official ruble / euro exchange rate given by the central bank of Russia on this day.
The Kremlin claims that the change of currency is necessary due to the fact that European countries have “frozen” the foreign exchange reserves of the Bank of Russia.
However, yesterday, Kremlin spokesman Dmitry Peshkov confirmed that Russia would not demand immediate payments in rubles, as this is likely to be a “gradual process”.
According to the latest information, the Kremlin has not made the final decisions, but is considering expanding its plan to pay in rubles and other commodities, such as oil, cereals, fertilizers, coal and metals.
Germany, like the G7, insists that the gas deals cannot be revised unilaterally. However, Germany, which is dependent on Russia for 40% of its gas, has already implemented an emergency plan, warning industrial consumers that a ticket is not ruled out.
Why does Putin want payments in rubles?
After the Russian invasion of Ukraine, the ruble collapsed. From about 85 per euro last year, it fell to 110 and after the intervention of the central bank balanced at 94.1.
With the ruble at such low levels, Russian exports would bring less money to state coffers (to finance the war, among other things) than expected.
On the contrary, a more valuable ruble not only brings more money to Moscow, but is also a matter of national pride, when other countries are willing to pay for Russian exports in the national currency.
With more demand for the ruble, Moscow may question global dominance of the dollar, although it remains unclear whether China will support such a plan.
Detailed report on moneyreview.gr
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