The Washington Post: Europe accepts Putin’s demands on gas payments to avoid more shut-offs
European energy companies appear to have bent to Russian President Vladimir Putin’s demand that they purchase natural gas using an elaborate new payment system, a concession that avoids more gas shut-offs and also gives Putin a public relations victory while continuing to fund his war effort in Ukraine.
The system, which involves the creation of two accounts at Gazprombank, enables Europe to say it is technically paying for natural gas in euros, while Russia can say it is receiving payment in rubles — a requirement Putin imposed on “unfriendly” nations.
Putin’s insistence on rubles may be more about forcing European countries to scramble at his behest than about shoring up his country’s currency, some economists and energy experts suspect. European Union countries have been touchy about the notion they might violate their sanctions on Russia, and questions about the arrangement tested European unity, leading to weeks of chaos and contradictory guidance from Brussels. It also got countries talking about how much they still need Russian gas, even as they debate a Russian oil embargo.
A broad European refusal to adjust its payment terms to Gazprom, the Russian state-owned energy giant, would have pushed prices even higher for consumers and potentially led to rationing measures across the bloc. Two European Union members — Poland and Bulgaria — had their supplies cut in late April by Gazprom after refusing to go along with the new system, in what Poland’s prime minister called a “direct attack.” Finland this week was subject to a similar cutoff, as retaliation for its NATO application.
Alexander Novak, Russia’s deputy prime minister, said last week that “about half” of Gazprom’s 54 foreign clients have opened ruble accounts. An account of Novak’s comments from the Tass news agency did not say how many of those 54 were from countries considered adversarial.
https://www.washingtonpost.com/world/2022/05/24/eu-russian-gas-putin-rubles/