May 23, 2022

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Russian ruble demand: Putin says sanctions should be lifted

Russian ruble demand: Putin says sanctions should be lifted

Putin takes a week to complete the adjustments to the ruble. So far, almost no gas has been billed in this currency. According to Russia’s state-owned Gazprom, nearly 60 percent of trade is in euros, less than 40 percent in dollars and a few percent in pounds sterling.

The question is whether Russia can unilaterally implement the change to the ruble. Germany says the gas contracts must be terminated if Russia wants to receive the ruble from now on. Italy, after Germany’s largest customer, wants to continue to pay in euros. An exception is Bulgaria. The country’s Energy Minister said that gas can be billed in rubles if necessary.

Eneco buys 15 percent of its gas from Gazprom’s German subsidiary Wingas. “We expect the current contract with Wingas to continue in euros. We have no reason to believe it will be different.”

more expensive gas

About 40 percent of the gas used in Europe comes from Russia. If contracts are to be broken, this will lead to higher prices for consumers, believes Elwin de Groot, an economist at Rabobank.

“Breaking open contracts is a negotiating moment. This will likely lead to higher prices for a number of importers. It will also have consequences for consumers’ wallets.”

Gas prices have risen since Putin’s announcement. In one day, 20 percent was added after the price of gas fell slightly in recent weeks.

political reason

De Groot believes that Russia is not only putting the ruble requirement on the table to increase the exchange rate and gas prices. “Besides the economic reason, there is a clear political reason behind this. He wants to force Europe to undermine and undermine its sanctions.”

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According to De Groot, this has to do with the fact that there are not enough rubles circulating on the European market to be able to pay for all the gas. Then European countries have to buy rubles from the Central Bank of Russia and sanctions have been imposed on this bank by the European Union. Then European countries would have to circumvent their own sanctions. Putin actually says that sanctions should be lifted.