Putin Forces Gas Payments in Rubles... "Special Accounts Opened to Evade Sanctions" (Comprehensive)

Forced Opening of Special Foreign Currency Accounts at Gazprombank
European Sanctions on Russian Energy Imports Become More Difficult

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Russian President Vladimir Putin announced the enforcement of a law requiring payment for Russian gas in rubles and demanded European countries open special accounts capable of foreign currency payments. This move is interpreted as an attempt to create a means to circumvent sanctions against Russia and to fundamentally block the U.S.-proposed energy embargo.

Russia Forces "Remittance to Special Accounts"... Declares It Will Handle Currency Exchange Independently

[Image source=Reuters Yonhap News]

According to Russian TASS news agency on the 31st (local time), President Putin signed a presidential decree effective April 1 requiring payment for Russian gas purchases in the Russian currency, rubles. In a subsequent speech, he warned, "Unfriendly Western countries to Russia must open accounts at Russian banks for gas payment," adding, "If the new payment method we propose is not implemented, all current gas supply contracts will be suspended."

According to the ruble payment enforcement decree, overseas buyers of Russian gas must, in principle, remit gas payments in rubles. However, if remittance in rubles is difficult, they can open special accounts at Gazprombank, a subsidiary of Gazprom, and pay in dollars or euros.

The special accounts are opened upon application by overseas gas buyers at Gazprombank, with both special ruble accounts and special foreign currency accounts opened simultaneously. Subsequently, the buyer remits the amount specified in the existing gas contract in dollars or euros to the special foreign currency account. Once remittance is made, Gazprombank independently converts the funds into rubles on the Moscow foreign exchange market and transfers them to the buyer’s special ruble account. When this process is completed, the payment is finalized.

Simultaneous Foreign Currency Earnings and Ruble Exchange Rate Defense... Likely to Become Sanctions-Evasion Accounts

[Image source=Reuters Yonhap News]

Ultimately, Russia can earn foreign currency through gas payments while simultaneously defending the ruble exchange rate. Western countries will find it difficult to impose sanctions on Gazprombank’s special accounts in order to prevent disruption of Russian gas supply. It is analyzed that these special accounts will effectively continue to be used as accounts to evade sanctions.

Charlie Robertson, Global Chief Economist at Renaissance Capital, a U.S. investment firm, explained in an interview with the UK Guardian, "This measure appears to focus more on creating a means to evade sanctions against Russia rather than defending the ruble’s value," adding, "Given the current situation in Russia, reducing risks from sanctions and securing foreign currency is more important."

Jeffrey Schott, Senior Fellow at the Peterson Institute for International Economics (PIIE), also pointed out, "The main reason President Putin took this measure seems to be to prevent the freezing of foreign currency supply," and "It is a measure that encourages European countries to voluntarily evade sanctions against Russia and appears aimed at weakening the cohesion of sanctions."

There are concerns that in the future, not only natural gas but also major Russian export commodities such as coal, aluminum, palladium, and grain may be forced to open special accounts for transactions. President Putin stated, "We will increase the proportion of payments in Russian currency or currencies of trusted partner countries in future foreign trade," suggesting that ruble payment measures may be expanded going forward.

This content was produced with the assistance of AI translation services.