Brussels prepares for new gas cuts by Putin: "Our response will be immediate"

For weeks, Europe and the United States have punished the Russian economy with sanctions, trade restrictions and financial blockades.

The blow has been hard, more than expected in Moscow at the beginning of the invasion of Ukraine, but after assessing the damage, making calculations and weighing his forces, Vladimir Putin has decided this week to raise the tone of the aftershocks.

The announcement on Tuesday night that the supply of gas to Poland and Bulgaria was interrupted this Wednesday caused a notable shake in the Old Continent, in the markets and the chancelleries.

The first, but not the last.

The natural gas futures contracts soared 20% in the day due to the fear that the Russian lockdown would multiply to other governments, although at the close the rise had been contained by 8%, above 116 euros the MWh.

At the same time, the euro posted its steepest fall against the dollar in five years.

The Kremlin's excuse is that

and

have not made the payments in rubles, as required by the law recently passed in Russia.

But it's really just an excuse.

The bulk of

, that the contracts are denominated in euros or dollars and that they will be paid that way now and later.

"Paying in rubles would be violating our sanctions," recalled the president of the European Commission, Ursula von der Leyen, condemning "blackmail."

Community sources assume that there will be more threats, more blackmail and selective cuts, but they insist that the reserves are sufficient to face specific challenges.

The Putin government has pressured, warned and threatened cuts like the ones happening these days, but it is a game of bluffs everywhere.

, not many of its members at least, as they rely entirely on fossil fuels from the East to heat homes and keep businesses open.

But Russia cannot suddenly give up its main source of income, which brings in some 700 million euros a day at a critical time for its economy.

The play is clear.

, to send more weapons to Ukraine and to force a total ban on purchases of Russian hydrocarbons and gas.

And it also points to Bulgaria because both are transit countries for fuel.

With this she wants to scare others, to convey that she is ready for a general cut if the West does not loosen up and, furthermore, to force a division among the 27. "Bulgaria and Poland are transit states. In the event of unauthorized withdrawals of Russian gas of transit volumes to third countries, supplies for transit will be reduced by this volume,"

Since February there are already conflicting positions.

A group led by Warsaw and the Balts wants disengagement and open clash.

Another, with Germany or Austria, very energy dependent, say they agree, but they can't do it, not yet.

They ask for time and patience and try to dilute the initiatives a bit.

They seem to be accepting that measures against oil are inevitable, although they ask for transition periods and for the process to be very sequential.

Then there are the least affected, from Spain and Portugal to Ireland, which adjust a little depending on the day.

And then those who, like Hungary, even play both sides.

Saying that they would not mind paying in rubles, stating that they are not willing to approve sanctions on Russian gas (something that requires unanimity) and even entering into Moscow's game.

Up to four buyers of Russian gas, according to Gazprom sources collected by Bloomberg, would have paid in rubles to date, although there is no confirmation or details.

"Gazprom's announcement that it will unilaterally cut off gas supplies to certain EU member states is another provocation by the Kremlin, but it is not surprising that it uses fossil fuels to try to blackmail us. This is something the European Commission has set itself up for. been preparing, in close coordination and solidarity with the Member States and international partners. Our response will be immediate, united and coordinated", assured

.

"About 97% of all contracts explicitly stipulate payments in euros or dollars, so it is very clear. The Russian side's request to pay in rubles is a unilateral decision (...) Companies should not access the Russian demands, it would be a violation of Russian sanctions," the president warned.

After an emergency meeting of the so-called Gas Coordination Group, Poland and Bulgaria began receiving gas shipments from their EU neighbors yesterday.

"This shows, first of all, the immense solidarity between us, but it also shows the effectiveness of past investments, for example, in interconnectors and other gas infrastructure. The Commission will also intensify its work with the so-called regional groups of Member States, that they can provide the most immediate solidarity with each other. This will mitigate any impact on possible gas interruptions," added the German.

Unity, however, is more complicated on this issue.

Poland, which two years ago received almost half of its gas from Russia, says it is prepared to combat "gas imperialism" and completely disconnect this year.

But Hungary or Slovakia are much more in tune with Moscow.

The Government of

has reached an agreement with Putin to pay its bills into an account denominated in euros at Gazprombank, one of the main Russian entities that, however, is not on the sanctions list precisely because it is in charge of energy payments.

And Gazprombank later enters rubles in Gazprom Export, which is the company that has stopped supplies to Poland and Bulgaria.

Slovakia would do the same, something that doesn't directly violate sanctions but comes perilously close, which tentatively satisfies sellers.

The Commission continues to study with the sector legal ways to maintain operations.

On Friday he sent some guidelines, in which he stressed that there is nothing irregular in April accounts in non-sanctioned banks, but warning that any foreign exchange operation, especially in collaboration with the Russian Central Bank and that implies forced conversions of deposits to rubles is not acceptable.

According to Gazprom, up to 10 European buyers would have accepted the system, opening up to two connected accounts in the entity.

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