To Pay In Roubles Breaches EU Sanctions, Says Von Der Leyen

April 28, 2022
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European Commission president Ursula von der Leyen calls for turning off the money tap to Russian gas suppliers, but European companies are still cooperating with the Kremlin.

European Commission president Ursula von der Leyen calls for turning off the money tap to Russian gas suppliers, but European companies are still cooperating with the Kremlin.

In a statement issued on Wednesday (April 27), von der Leyen spoke out unequivocally against paying for Russian gas in roubles, confirming that such payments are now illegal under EU law.

“Our guidance here is very clear: If it is not foreseen in the contract, to pay in roubles is a breach of our sanctions,” she said.

“We have around about 97 percent of all contracts that explicitly stipulate payment in euros or dollars, so it’s very clear. And the request on the Russian side to pay in roubles is a unilateral decision, and not according to the contract.

“Companies with such contracts should not accede to the Russian demands. This would be a breach of the sanctions, so a high risk for the company.”

Von der Leyen issued the statement in response to Russia’s cutting off of gas supplies to Poland and Bulgaria, after the two nations refused to comply with Russia’s proposed payments solution.

On March 31, President Vladimir Putin issued a decree requesting that, from April 1, European companies make payments for gas purchases by opening an account with Gazprombank, where euros or dollars could be sent and then converted into roubles.

Initially, the European Commission equivocated as to whether this would constitute a form of sanctions busting.

On April 21, in a frequently asked questions (FAQs) report, the commission said it “appears possible” that European companies could comply with Putin’s decree without breaking EU law.

“The existing sanctions do not prohibit engagement with Gazprom or GazpromBank, beyond the refinancing prohibitions relating to the latter,” the commission wrote.

“Likewise, they do not prohibit opening an account with GazpromBank. Such engagement or account, however, should not lead to the violation of other prohibitions in Council Regulations (EU) 833/2014 or Council Regulation 269/2014.”

European gas companies in limbo

Despite von der Leyen’s announcement, Bloomberg News reported that "four European gas buyers have already paid for supplies in rubles” and that “ten European companies have already opened the accounts at Gazprombank".

Bloomberg received the information from a source who spoke on condition of anonymity in order to discuss “confidential matters”. The source was described by Bloomberg as a “person close to Russian gas giant Gazprom”.

The source also said that, even if other buyers reject the Kremlin’s terms, it is unlikely that Russia would cut off other nations’ gas supplies until the second half of May, when its next payments are due.

Gaspipe blackmail: The EU’s response

In a separate press statement on April 27, von der Leyen described Russia’s actions as a “provocation”, adding that EU member states had prepared for Russia to retaliate.

“It comes as no surprise that the Kremlin uses fossil fuels to try to blackmail us,” she said.

“This is something the European Commission has been preparing for, in close coordination and solidarity with member states and international partners. Our response will be immediate, united and coordinated.”

Von der Leyen said the EU’s first priority in its response would be to ensure that Russia’s gas blockade has minimal impact on European consumers.

Poland and Bulgaria are now receiving gas from their EU neighbours, for example, following a meeting of the EU’s Gas Coordination Group.

In a press statement, Poland’s state-owned oil and gas company PGNiG said Russia’s blockade would have no impact on current deliveries to customers, who are receiving fuel according to need.

PGNiG added that its underground gas storages are currently 80 percent full, and that it can source additional gas via interconnectors with Germany and the Czech Republic, or liquified natural gas (LNG) via a terminal in Świnoujście.

The EU has also reached an agreement with the US to provide at least 15 billion cubic metres of LNG in 2022, with expected increases until at least 2030, and will present further plans to speed up its green transition in mid-May.

“This latest aggressive move by Russia is another reminder that we need to work with reliable partners, and build our energy independence,” said von der Leyen.

“Every euro we invest in renewables and energy efficiency is a down payment on our future energy independence.

“Today, the Kremlin failed once again in this attempt to sow division between Europeans. The era of Russian fossil fuels in Europe will come to an end.”

Switzerland joins EU in banning Russian coal imports

In related news, the federal government of Switzerland has enacted further sanctions against Russia and Belarus, after adopting the EU’s fifth round of sanctions packages through a decision on April 13.

The new measures include sanctions on Russian coal and lignite, and sanctions on goods that are important sources of revenue for Russia, such as timber, cement, seafood and caviar.

Finally, Switzerland will prohibit the provision of financial support to any Russian entity in public ownership or under public control.

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