France, Germany reject Putin demands for gas payments in roubles as 'blackmail'

Russian President Vladimir Putin announced Thursday that all EU purchases of Russian gas must be made in roubles starting April 1, a demand immediately rejected by French and German officials who said they were preparing for a possible halt in Russian supplies. Europe will not be "blackmailed" by Putin, Germany's economy minister said.

President Vladimir Putin on Thursday warned "unfriendly" countries, including all EU members, that they would be cut off from Russian gas unless they opened an account in roubles to pay for deliveries.

"They must open rouble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting tomorrow, April 1," Putin said during a televised government meeting.

"If such payments are not made, we will consider this a breach of obligations on the part of our buyers with all the ensuing consequences," Putin said.

Germany and France rejected Vladimir Putin's demand that foreign purchasers of Russian gas pay in roubles as an unacceptable breach of contract, adding that the maneuver amounted to “blackmail”.

Germany Economy Minister Robert Habeck said that Germany was prepared for all scenarios, including a stoppage of Russian gas flows to Europe. "It is important for us not to give a signal that we will be blackmailed by Putin."

French Finance Minister Bruno Le Maire said that both nations rejected Russia’s demand and were “preparing” for the possibility that Russia would halt deliveries.

On a visit to Berlin, Le Maire said both nations were "preparing" for the possibility "there is no longer any Russian gas".

While the United States banned the import of Russian oil and gas, the European Union – which received around 40 percent of its gas supplies from Russia in 2021 – has retained deliveries from Moscow.

According to the decree, all payments would be handled by Russia's Gazprombank, a subsidiary of state energy giant Gazprom. Buyers will transfer payments into a Gazprombank account in foreign currency, which the bank will then convert into rubles and transfer into the buyer's ruble account.

Western countries have piled crippling sanctions on Moscow since its invasion of Ukraine, including the freezing of its $300 billion of foreign currency reserves.

Diplomatic tit for tat?

Russia on Thursday said it would expand the list of EU figures banned from entering the country over its "anti-Russian" actions.

"The restrictions apply to the top leadership of the European Union including a number of European commissioners and heads of EU military structures as well as the vast majority of members of the European Parliament promoting anti-Russian policies," the Russian foreign ministry said in a statement.

Others include "high-ranking officials ... as well as public figures and media workers who are personally responsible for promoting illegal anti-Russian sanctions, inciting Russophobic sentiment and infringing the rights and freedoms of the Russian-speaking population", the statement added.

After the introduction of sanctions, Russia expanded the list of what it calls "unfriendly" countries that now includes the United States, Australia, Canada, Britain, New Zealand, Japan, South Korea, all EU member states and several others.

Propping up the rouble

Putin spokesman Dmitry Peskov said the new payment method would not affect the price of deliveries stipulated in contracts. "Those who receive Russian gas ... they just acquire roubles for the amount in currency which is stipulated in the gas contract," he told reporters.

German Chancellor Olaf Scholz said Thursday that Western countries would continue paying for Russian gas in euros or dollars, as previously stipulated. "We looked at the contracts for the gas deliveries," Scholz told reporters in Berlin. "They say that payments are made in euros, sometimes in dollars ... and I made clear in my conversation with the Russian president that that will remain the case," he said, referring to a telephone call with Putin on Wednesday.

While the EU refrained from an energy embargo against Russia, the bloc announced plans to slash imports of Russian gas by two-thirds this year.

Although payments for gas in roubles would allow Russia to support its national currency, it would also deprive Moscow of a source of foreign currency. The Kremlin has also hinted that it may seek payments in roubles for other exports too.

Russia has already obliged its exporters, including Gazprom, to convert 80 percent of their revenue into roubles.

According to Russia's Central Bank, its reserves – including the frozen $300 billion – decreased between February 18 and March 25 from $643.2 to $604.4 billion.

(FRANCE 24 with AFP)