Russian President Vladimir Putin's April 1 decree requiring the settlement of Russian energy exports in rubles caused a great shock to the EU government and buyer companies. At the same time, the decree also states that affected customers from "unfriendly countries" can still continue to pay in euros and dollars.
How exactly should this seemingly flexible decree be interpreted?
What decision did Putin make?
From April 1, Russian gas supplies must be paid in rubles, and buyers from Western countries must open special accounts in rubles and special accounts in foreign currencies at Gazprom. For this, no customer representatives are required to appear in Russia.
As a result, EU companies will be able to continue to pay for gas in euros or dollars, but there is still a lot of clarity.
Former ECB President Mario Draghi said it was not entirely clear how the new payment method would work. "I understand, but I may also understand that it is not right, that the payment conversion is merely an internal matter of the Russian Federation," Draghi said on Thursday after a phone call with Putin.
German Chancellor Shchutz also told Putin on Wednesday that euro payments would continue.
How is ruble settlement paid?
The payment process is described in Article 6 of the Regulation: foreign customers should transfer funds to a special currency account in category K in the foreign currency (eur or USD) specified in the gas supply contract. Luxembourg-based Gazprombank then sells the currency on the Moscow Stock Exchange and deposits the proceeds of the Russian ruble into a special foreign currency account.
The next step is to get the ruble to the account of the Russian supplier. Only then will the payment be considered completed.
What if the money does not appear in rubles?
Putin said: "If such payments are not made, we will consider this to be the bankruptcy of the buyer and bear all the consequences." "No one sells anything to us for free, and we don't do charity work — which means existing contracts are suspended."
Is there a risk of gas supply disruption?
At the moment this problem does not appear to exist. Businesses in the West will not change anything but have to open a new account at Gazprombank.
On Friday, the day it switched to gas payments, Russia continued to supply Ukraine with large quantities of raw materials through Ukraine.
What impact does the new settlement have on the buyer's company?
The specific impact of the new settlement method is currently unpredictable. Analysts in Moscow expect the settlement system to be fully operational until the end of April and the end of May.
However, experts do not expect changes in the way gas is settled to have a significant impact on German companies.
Leuchtmann, head of currency at Commerzbank, said: "At present, it does not seem that much will change for German companies. Experts from Landesbank Hessen-Thuringia see the same situation: "Ultimately, if consumer countries continue to pay gas bills in euros and Russian banks exchange money into rubles, the previous payment methods will only change slightly." ”
What is the use of all this for Russia?
Putin said Russia hopes to strengthen its financial and economic sovereignty through this move. However, Russian economist Janis Kruger said the Russian economy had hardly changed. Because before that, Gazprom and Rosneft had committed to converting 80 percent of the energy supply revenue into rubles within three days.
But it is doubtful that the West sees whether the ruble will be supported for it.
Swiss economist Marcus Keupp also assessed the move as aimed at supporting the ruble. However, since it is still possible to pay in dollars and euros and then convert to rubles, the whole thing is not as dramatic as it initially seems.
Financial experts have another theory: Russia's central bank is largely sanctioned and isolated, and Moscow may want to make Luxembourg's Gazprombank a central gateway to the Western financial world.
Ulrich Leuchtmann, an expert at Commerzbank, said: "The Kremlin seems to want to turn Gazprombank into a quasi-central bank. ”
How have German politicians reacted?
The German federal government wants to study the Russian government's requirements carefully.
A spokesman for the Ministry of Economy and Climate said after putin's decree was announced. "Once the decree has been implemented, the German federal government will thoroughly review and evaluate the settlement system."
"It is clear that Germany will continue to pay in euros. We are not going to make any changes to that, and the decision of the Group of Seven is also valid," he said.
German Chancellor Shchutz also stressed once again that gas supplies from Russia must be paid for in euros.
What do EU procurement companies think?
German customers of Gazprom giant Gazprom were wary of the decree.
A spokesperson for energy company Uniper said: "We have seen reports and regulations in Russian, but we need time to translate and evaluate them. ”
Kerstin Andreae, head of the Federal Energy and Water Industry Association (BDEW), said he agreed with the German chancellor that the procedure should be very clear before further decisions were made.
"The contract is still denominated in euros or dollars. We expect the situation to continue," Andreae said.