The EU goes to the ‘wall against wall’ over Moscow’s request to pay for gas in rubles, and after having talked with the G7 partners, invites importing companies not to bow to the Kremlin’s demands. “With our G7 partners we have clearly expressed our position: the agreed contracts must be respected. 97% of the contracts in question explicitly provide for payment in euros or dollars,” says a spokesman for the European Commission. And therefore “Companies with such contracts should not adhere to Russian demands”. A clear stance, after the intention was leaked to study Moscow’s decision, announced by Vladimir Putin and today notified to the importing companies, and discuss it at the Eurogroup and Ecofin on Monday and Tuesday in Luxembourg. Most of all,
It may have been the confrontation with the G7 partners that led to the line of firmness. The mechanism worked out by the Kremlin seemed like a compromise that could have saved the face of both Putin and the gas-importing countries, leaving the banks with the burden of exchanging gas euros for rubles. But a deeper analysis suggests a shield concocted by Moscow against sanctions and default. Which, if accepted, would have undermined solidarity with Washington and disavowed the G7, which just four days ago had defined the “clear unilateral violation of existing contracts” imposed by the Kremlin as “unacceptable”. Gazprom has begun to notify importing companies of the new mechanism and reassured that the flows will continue, since current deliveries must be paid no earlier than the end of the month. “We have received the communication from Gazprom and we are analyzing it”, Eni merely communicated.
For Italy, Turkey and Poland Gazprom is keen to let it be known that deliveries in March were higher than a year ago. Relaxing tones that, before the EU declaration, had contributed to a sharp drop in gas prices in Amsterdam, -10.9% to 112 euros per megawatt hour, despite a hiccuping trend in gas flows through the Yamal pipeline. More than the price of gas, however, and perhaps the ruble confirms the political significance of Putin’s move: in the area of ​​86 rubles for one dollar, it eliminated the collapse of the first weeks of the war, staving off a dangerous inflationary spiral. In the absence of energy sanctions, Moscow would secure over $ 300 billion in 2022, which would help it avert any hypothesis of default. And the ‘switch’ in rubles announced by Putin aims precisely to stop the hypothesis of sanctions on energy. To date, an EU importer makes payments into an exporter’s account (such as Gazprom) in London or Paris. The bank (Gazprombank or Sberbank, so far exempt from the sanctions), transfers the funds to an account in Moscow, where 80% of the sum is then converted into rubles. But the payment is officially concluded once the customer’s initial payment in Europe has been made: a detail that exposes Gazprom to the risk that, if the sanctions were extended to Russian energy exports, its foreign currency funds would be frozen. With the new mechanism devised by the Kremlin, everything must pass through Gazprom’s financial arm, namely Gazprombank, and the burden of the exchange passes to the gas buyer. Who must have a current account in Gazprombank in euros freely convertible into another account in rubles. Only after the conversion has taken place the funds reach Gazprom and the transaction is officially closed. The result is that Gazprombank’s currency transaction penalties would render the payment undone.
Sanctions on the accounts of the big energy companies, equal to the automatic closure of the gas pipelines. Plus the unknown factor of the euro / ruble conversion rate that would be imposed by Moscow. And the ‘shield’ could extend in the future to other ‘strong’ sectors of Russian exports: from oil to metals and cereals. A possible indication that Moscow does not intend to stop there is the decision, announced today, that transactions between Russian airlines and leasing companies from ‘hostile’ countries will also take place in rubles through accounts with Russian banks.

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