Russia announced, on Monday, that it will not provide Europe with free gas if it refuses to pay the value of gas supplies to it in rubles.

In response to a question at a daily press conference in Moscow about what Russia will do if Europe refuses to pay for gas shipments in rubles, Russian presidential spokesman Dmitry Peskov urged the Kremlin to solve problems as soon as they occur, pointing out that his country will not provide Europe with free gas.

"The supply process is very, very complex, it's not just buying a product in a store, you buy and pay at the checkout. There are shipments, payments and balance sheets, there are processes that take their time. Now all the interdepartmental work is going on with Gazprom," he said.

"But the fact that we will not supply gas for free is unequivocal, this can be said with absolute certainty. In our situation now, it is difficult and undesirable to engage in charitable work for Europe."

On Monday, Russian President Vladimir Putin instructed the government, the Central Bank and "Gazprom" to convert to the ruble for payments for gas shipments to unfriendly countries by March 31.

On the seventh of this March, the Russian government approved the list of unfriendly countries, which includes countries such as the United States, European Union countries, Britain, South Korea, Japan, Ukraine, Switzerland and Singapore, as well as 15 other countries that impose sanctions on Russia.

For his part, Russian lawmaker Ivan Abramov said on Monday that the G7's refusal to pay for Russian gas in rubles would undoubtedly lead to a halt in supplies, according to the Russian Information Agency.

Germany said on Monday that the energy ministers of the Group of Seven industrialized countries rejected Putin's demands that "unfriendly" countries pay for Russian gas in rubles.

Reasons for the decision to pay the ruble for gas and its effects

A report by the French newspaper “Le Figaro” says that Russian President Vladimir Putin’s decision to pay the ruble in exchange for gas delivered to hostile countries may seem technical, but it nonetheless affects a key area, which is the gas that Europe cannot do without at the present time. Thus, these transfers are a political tool and a means to support the Russian economy and finance the war.

The report added that the Russian response to the sanctions decided by the West in the wake of the attack on Ukraine, including the freezing of Russian assets, surprised the Westerners, especially when Putin gave his country's authorities a week to put in place the new system of the national currency.


Regarding the reasons for the Russian decision, experts give different opinions, as the French newspaper report quotes Isabel Megan, a professor at the Institute of Political Sciences in Paris, as saying, “Vladimir Putin has the idea of ​​supporting the ruble, which has fallen sharply since the beginning of the war in Ukraine.” And on this basis, it seems that The demand for the ruble will be greater, which will enhance its value.

Indeed, "there has been a slight rebound since the announcement," notes economist Jonathan Hackenbroich, an expert on sanctions and geo-economic issues, but questioned how "sustainable" that rebound is.

The report believes that the economic effects of the Russian action appear to be less significant than it appears, according to several experts.

This measure could also strengthen the control of the Russian energy giants and economic elites by preventing them from keeping a portion of the dollars and euros they receive, while their interest - as Isabel Megan explains - was to "keep as much foreign currency as possible to counteract the collapse of Russian currency.

Megan cautioned that the decision also burdens importers with exchange risks, because "there is always a cost to convert currencies, and it has become much more expensive since the implementation of sanctions against Russia."

However, the contracts that bind Russia with its suppliers stipulate payment in advance and not when the gas is received, so Anna Crete, director of the chair of gas economics at Paris Dauphine University, says that "some have already paid the amounts due for the whole of 2022," so this measure will be if it comes into effect. The effect is only gradual over time.

According to the newspaper, some experts see the Russian decision above all as political, arguing that Putin cannot remain silent in the face of the rain of sanctions.

There is a domestic interest "to show that the man is strong", says Thomas Gribbin, head of the Macroeconomics and International Finance Program at the Center for Future Studies and International Information, and internally "it also creates an analogy between Russia and other major powers, such as the United States, which pay for their imports with their national currency, which It shows Russia symbolically as a superpower that wants to be paid in rubles,” which is important for Russian public opinion and the general public.


Is Russia winning?

The report of the French newspaper "Le Figaro" sees that the exchange becomes more complicated by this Russian measure, and creates a state of uncertainty, which may lead to increased pressure on the already tense markets, as operators are forced to obtain rubles to pay for gas, in a context in which companies and banks are reluctant to Get it for punitive reasons.

The other point of controversy, however, is that the decision involves a renegotiation of the agreements, and here Anna Kriti notes that “the gas contracts are long-term, between 10 and 20 years and are very closed,” the vast majority of which are denominated in dollars and no one can decide by One is to change the currency, and accordingly Putin's decision will force the parties to renegotiate these contracts, which will take much more time than the one-week deadline he set for his country's authorities.

And whether Russia will start renegotiating from a position of strength, Anna Kriti said that it is not necessary, because the Europeans can win, but this needs full coordination, especially since their need for Russian gas is equal to Russia's need for European money.

"Although China is a potential customer, it is difficult to stop such a pipeline and quickly redirect exports to another point on the globe," she added.

Can contracts be terminated?

At the present time, if the Russian announcement aims to divide the Western alliance - according to the French newspaper - the 27 countries seem united, so the Polish gas group announced that it will continue to pay for its purchases of Russian gas in accordance with the current contract and will reject what Russia is demanding of payment in rubles, and the same story In Germany, where the change represented a "breach of contract", and Vienna rejected the request, the announcement showed Europe that there was an urgent need to get rid of Russian raw materials.

Here Philip Martin, dean of the School of Public Affairs at the School of Political Science in Paris points out that Europe, by paying in rubles or other currencies in the end, "continues to provide resources to Putin to wage his war", going so far as to describe the sanctions imposed by Western countries as "useless" as long as they It does not include the Russian gas embargo.