Kremlin loosens 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 make payments through banks other than Gazprombank, which has been subject to American sanctions. Payments in currencies other than the ruble are also being reintroduced.
On November 21, 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 rubles
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 rubles. Given the overwhelming opposition from most European countries, including Poland, this resulted in shutting off the gas supply.
The Putin regime's move softens its previous economic policy, but only partially. Kremlin agencies, including TASS, report that foreign contractors have the option to deposit "at a ruble account opened by a Russian supplier in the authorized bank." Putin did not specify which banks are involved. The decree only mentions an "authorized bank."
Washington's sanctions have weakened the ruble against the U.S. dollar and euro to its lowest level since March 2022. The Central Bank of Russia set Friday's exchange rate at 103.4 rubles per U.S. dollar and 109.8 rubles per euro.
The weakening ruble makes Russian export goods cheaper in global markets, while at the same time, Russians have to pay more for imported goods. This increases the risk of further inflation, which is currently at 8.5%.
