Russian President Vladimir Putin said Wednesday Russia will only accept payments in rubles for gas deliveries to “unfriendly countries”, which include all EU members after Moscow was hit by unprecedented sanctions over Ukraine.
Immediately after his announcement, the ruble which has plummeted since the start of the Ukraine conflict strengthened against the dollar and euro, while gas prices rose.
“I have decided to implement a set of measures to transfer payment for our gas supplies to unfriendly countries into Russian rubles,” Putin said during a televised government meeting.
He added, however, that Russia will continue supplying the volume of gas outlined in its contracts.
Putin ordered Russia’s central bank to implement the new payment system within a week, saying it must be “transparent” and will involve the purchase of rubles on Russia’s domestic market.
Putin also hinted that other Russian exports may be affected.
“It is clear that delivering our goods to the European Union, the United States and receiving dollars, euros, other currencies no longer makes sense to us,” Putin said.
Ukraine was quick to denounce Russia’s “economic war” on the EU and its efforts to “strengthen the ruble”.
“But the West could hit Russia with an oil embargo that would cause the Russian economy to plunge,” Ukrainian presidential advisor Andriy Yermak said on Telegram.
“This is now a key economic battle, and the West must collectively win it,” he added.
German Economy Minister Robert Habeck, whose country imported 55 percent of its natural gas from Russia before the conflict, said Putin’s demand was a breach of contract and that Berlin will discuss with European partners “how we would react to that”.