European Union warned Member States in connection with Putin Decree

The European Union warned Member States that the requirement of President of the Russian Federation Vladimir Putin that “unfriendly countries” paid for Russian gas in rubles will violate the existing sanctions imposed after the invasion of Ukraine. It is reported by Bloomberg.

According to the publication, the European Commission submitted an analysis of Putin’s decisions to member countries.

Putin’s requirement of March 31 provides that European gas buyers open two accounts, one in foreign currency, and the other in rubles, and that Gazprombank will be responsible for converting foreign currency in rubles and the transfer of ruble payments Gazprom.

According to the preliminary legal analysis of the Commission, Putin’s decree significantly changes the procedure and creates a new legal situation.

The new process will transfer full control by the Russian state through its central bank from the point of view when the transaction is completed and at what point the buyer will be released from obligations. It would also give Russia control over the applicable exchange rate, which Moscow could manipulate in their own interests.

The report warned that this new method can lead to new costs for the buyer, as the transaction will be fully controlled by Russia, the source said.

It is important to note that this mechanism will violate the restrictive measures adopted by the EU in response to the invasion of Moscow to Ukraine and applied to the Russian government, its central bank and their trusted persons. This process can also affect other prohibitions for various money market tools that can be issued by Gazprombank.

Most member countries stated that they would not pay for gas in rubles. On Wednesday, Germany reiterated that he opposes Russia’s requirements.

The Commission has repeatedly stated that the agreed contracts must be followed and that almost all of them directly provide for payment in euros or dollars, and the unit will respond to any attempt by Russia bypassing sanctions.

But the decision on how to pay for the supply will eventually be on companies buying gas from Russia, and they will be in a difficult situation, since European firms must comply with all existing restrictive measures.