Kremlin relaxes gas payment rules amid sanctions pressure
The Kremlin is easing restrictions on payments for Russian gas. Vladimir Putin signed a decree on Thursday allowing foreign customers to pay for it in banks other than Gazprombank, which has been subject to American sanctions. Payments in currencies other than the rouble are also making a comeback.
On 21 November, Washington announced sanctions against approximately 50 Russian banking institutions, including Gazprombank, which is the financial arm of Gazprom. The American move aimed to reduce the Russian budget's revenue from the sale of fossil energy resources.
Did Putin have no choice? Payment for gas not only in roubles
In November, Gazprombank, through which payments for Russian gas are made, was subject to U.S. Treasury sanctions. Shortly after the outbreak of the full-scale war in Ukraine—in April 2022—Putin signed a decree requiring buyers of Russian gas to open accounts in Gazprombank and pay for the resource in roubles. Given the overwhelming opposition from the majority of European countries, including Poland, this meant turning off the gas tap.
The Putin regime's move softens its previous economic policy, but only partially. Kremlin agencies, including TASS, report that foreign contractors are getting the option to deposit "at a ruble account opened by a Russian supplier in the authorized bank." Putin did not mention which banks are involved. The decree only mentions an "authorised bank."
Washington's sanctions have weakened the rouble against the dollar and euro to its lowest level since March 2022. The Central Bank of Russia set Friday's exchange rate at 103.4 roubles per dollar and 109.8 roubles per euro.
The weakening rouble makes Russian export goods cheaper in global markets, while at the same time Russians have to pay more for imported goods from abroad. This increases the risk of further inflation, which is already at 8.5%.
