How will Europe pay for gas from Russia – in euros, dollars or rubles? In recent days, information has emerged that Germany and Italy have agreed to pay for Russian gas to Gazprom in rubles and will not stop their supplies. This is not true.
At the end of May, payments will be made to Gazprom’s largest customers in Europe, which are in Germany and Italy. Germany’s Uniper and RWE, as well as Italy’s ENI, have said they have found a mechanism to continue paying for Russian gas without violating sanctions. This mechanism includes the opening of two accounts with Gazprombank. One in euros or dollars and the second in rubles. The client will pay for the gas in the agreed currency in the first account, and Gazprombank will convert the money into rubles through the second account. According to energy concerns, they will have complied with the sanctions.
But not according to Brussels. The EC has explicitly stated that in order for this method of payment to be legal, Gazprom must agree in writing that by receiving the euro or dollars, the payment has been made and the customer has nothing to do with the further path of his money. Whether Moscow will do this for its Italian and German clients is unclear. Russia has not commented on the issue. However, Bulgaria, Poland and Finland have already been denied this.
For this reason, the EC clarified its recommendations again.
Opening a ruble account with Gazprombank violates sanctions, the European Commission has said.
The clarification was necessary after member states and companies have been pushing for clearer criteria for weeks. In the clarification, Brussels reiterates that there is no problem to open an account in euros or dollars in a bank specified by the seller – in this case Gazprombank. But it is problematic to open an account in rubles.
If Gazprom says that the payment is completed only when it receives its money for the gas from Gazprombank in rubles, then we have a violation of sanctions in several possible ways. The conversion could take weeks if Gazprombank decides to delay buying rubles, which could de facto be interpreted as lending money to a sanctioned economy. The bank can convert through other Russian banks, which are, however, subject to sanctions. Then it will be investing money in sanctioned banks and it is also against EU rules. The only way to avoid this is for Gazprom to agree that as soon as the money is transferred to the foreign currency account, the contract has been fulfilled and the payment has been made.
What has happened so far?
Finland was the last country to pay for Russian gas. It paid in dollars, as agreed, Gazprom refused to accept the currency and stopped supplying gas to the country. Finland has said it will go to arbitration.
Not so firmly stated that the French ENGIE, which has to pay this week, will act.
“We have already negotiated with Gazprom to pay in euros and so far they seem to agree,” the company said.
The French refuse to say whether the payment will be made through Gazprombank.
Italy’s ENI has decided to open two accounts with Gazprombank – one in euros and one in rubles. However, the clarification from Brussels will prevent this intention if they do not want to violate the sanctions.
The German Uniper has also opened a foreign currency account in the Russian bank but did not specify whether there is a second one, in rubles. However, comments in the media show that German companies intend to use the same approach as the Italians. Until now, it was unclear whether Moscow would accept their payments when the currency came in or say that the gas was paid for only when Gazprom received rubles. Adding to this ambiguity is the opinion of Brussels, which clarified that a final payment in rubles made in the EU will be considered a violation. Both German, French and Italian companies will have to pay for gas at the end of May, with no exact date.
Bulgaria and Poland were the first countries to mature and both members refused to pay in rubles and converted the money into the agreed currency. Gazprom refused to accept this as a payment and stopped gas to both EU members.
In late March, Vladimir Putin issued a decree obliging Gazprom’s customers to pay in rubles. Gazprom. The decree explicitly states that the payment will be considered completed when the amount paid in foreign currency is converted into rubles and received by Gazprom. To that end, Putin advised customers to open two accounts – in foreign currency and in Russian currency.
Who will give way in this dispute – Russia, which needs big customers, or the EU, under the pressure of these same big customers, remains to be seen.
For Putin, the unclear situation is only helpful. It is the cause of high gas prices and strife in the EU.
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