Europe agrees to Putin's demands to pay for gas in order to avoid new blackouts
Europe agreed to dance to Putin's tune and gave in to his demands to pay for gas in rubles, WP writes. She explains this by the fact that no one imposed sanctions against the ruble. The opinions of the newspaper's readers were divided. Some call Europeans weaklings, others sympathize with them.
Rome – It seems that European energy companies have given in to Russian President Vladimir Putin, who demands that they buy gas using a new ingenious payment system. Thanks to such a concession, they will be able to avoid new gas shutdowns, and Putin has achieved a PR victory and will be able to continue financing his military operation in Ukraine.
Such a system, which provides for the opening of two accounts in Gazprombank, allows Europe to say that formally it pays for gas in euros, and Russia will be able to say that it receives payment in rubles. This is exactly the demand Putin made to "unfriendly" countries.
Putin's insistence on settlements in rubles looks more like the president's desire to make European countries dance to his tune than to strengthen the national currency, according to some economists and energy experts. The EU countries are very sensitive to the allegations that they may violate their own anti-Russian sanctions, and that such a scheme has become a test for European unity, since chaos has been reigning in the EU for several weeks, and contradictory instructions have been coming from Brussels. The countries also started talking about how much they need Russian gas, although they themselves are currently debating the introduction of an oil embargo against Russia.
In the near future, they are ready to fulfill some Russian requirements in order to prevent an energy crisis. But this means that they will pay money to Russia despite the fact that they condemn the military operation launched by the Kremlin, impose sanctions against oligarchs and supply weapons to Ukraine.
Russia has already introduced strict capital controls and significantly raised interest rates to stabilize the ruble. Now, when Europe signals its consent to a new payment system, knowing that the next bills will have to be paid this week, the ruble is strengthening even more.
According to the new settlement system, gas bills will continue to come in euros. An important change is that after that, Russia will take euros from the account of a European energy company, convert them into rubles, transfer these rubles to a special ruble account also owned by this energy company, and then take them permanently.
"This transaction allows everyone to save face," said Alessandro Lanza, a professor at Rome's Free International University of Social Sciences (LUISS), who previously worked as an economist at Italy's largest energy company Eni.
If Europe refused the conditions of the Russian Gazprom for payment, prices for consumers would rise even more, and this could lead to rationing of consumption throughout the EU. At the end of April, Gazprom stopped gas supplies to EU members Poland and Bulgaria when they refused to pay under the new system. The Polish Prime Minister even called this step a "direct attack." This week, the gas was turned off to Finland as retaliation for its application to join NATO.
But most European countries have gone the other way, abandoning loud rhetoric, not wanting to be blackmailed and agreeing with the scheme and its technical details.
"Timely payment for gas received from Russia is guaranteed," the Austrian oil and gas company OMV said in a statement.
Meanwhile, many European politicians have become entangled in the new scheme. They do not understand the small details and do not know whether Russia will gain something significant from it. Therefore, the instructions of the European Union to the member states on the procedure were very vague.
Last week, the chief spokesman of the European Commission, Eric Mamer, said that opening an account in rubles is a violation of sanctions. A day later, the European Commissioner for Economics Paolo Gentiloni (Paolo Gentiloni) as if he gave the green light to a new payment system. Yes, settlements in rubles are a violation of sanctions. "But this is not happening," he said.
Italian officials familiar with the details of the deal say that there is every reason to believe that the new settlement scheme does not violate European sanctions. Europe has banned all transactions with the Russian Central Bank, but the Central Bank is not involved in the exchange process, about which Eni has received written assurances. This was told by a person familiar with the details of the transaction, who asked not to be named, since he is not authorized to talk about it publicly. He said that even if some European company starts paying directly in rubles, it will still not be a violation of sanctions. "Nobody imposed sanctions against the ruble," he said.
Theoretically, the strengthening of the national currency gives Russians more purchasing power abroad. This is a big advantage in normal times. But now this advantage is weakened, since the Russians are isolated from the global financial system in the conditions of a military conflict.
Eni directly said that it was opening an account to transfer money into rubles. OMV's statement was more vague. She announced that she was opening a "conversion account". The company declined to comment when asked if it was in rubles or not.
The German energy company Uniper made the following statement: "We have opened the necessary account in the Russian Gazprombank... but we will continue to pay in euros in accordance with the new settlement mechanism."
Russian Deputy Prime Minister Alexander Novak said last week that "about half" of Gazprom's 54 foreign customers had opened ruble accounts. The TASS report on these comments by Novak does not say how many countries from this list are considered unfriendly.
Economist Roberto Perotti from the University of Milan. Bocconi said there is only one "political value" in forcing European companies to open ruble accounts. Putin proves that he can set conditions for EU countries. Russia, Perotti said, could receive exactly the same amount of revenue by accepting euros as payment and exchanging them on a currency exchange. But in that case, no one would have paid attention to it.
Since there will be no abrupt and immediate interruptions of energy supplies, Europe has received a certain amount of time to fill its gas storage facilities and prepare for the winter peak of consumption.
But there is a chance that the Kremlin will still strike back. The draft decision prepared for the upcoming European Council summit indicates that the member states will agree to prepare for possible "serious supply disruptions." This means an increase in purchases in other non-EU countries and the conclusion of supply sharing deals within the bloc.
Europe is trying to reduce its dependence on Russian fuel. To begin with, it imposed an embargo on coal supplies. There is also a more ambitious plan that provides for the gradual abandonment of oil imports. It is supported by the majority of EU countries, but it is opposed by states that are heavily dependent on Russian oil, primarily Hungary.
Gas is the most important issue for the continent, because 40% of the gas burned in Europe comes from Russia. The European Union has stated that by the end of the year it is determined to reduce its purchases in this country by two-thirds. But he did not follow the example of the United States and did not impose a complete ban on imports.
According to analyst Alessandro Pozzi, who works at Mediobanca and monitors the energy industry, "at least in the near future, Europe will probably have to continue paying Putin for the gas supplied by him."
The material for the article was provided by Emily Rauhala, Quentin Aries, Loveday Morris and Rick Noack
Authors: Chico Harlan, Stefano Pitrelli
Readers' comments
TFCFM
The EU has been telling us how incredibly determined it is to punish Russia, and how it is not going to buy Russian fuel...
But he keeps buying it, paying in euros!!! How do you like it? Somehow all this is contradictory...
RB4FL
Just the oligarchs on both sides shook hands, winked and nodded.
StayCalm1
These are the harsh statements of Europe.
Gas dependence has existed for decades, but it will disappear in months. How so.
Captain Covfefe F52 Ace
If sanctions harm your economy to the same extent as the economy of the other side, these are stupid sanctions.
Tank Mulling
How pathetic they are, these Europeans. Weaklings.
Gimme wine
Right. And the Americans are such good fellows — flatly refused, and instantly. Now we cry and get hysterical when unleaded gasoline rises in price to five dollars per gallon. Add to this the shortage of baby food — and in general, the end of the world begins. Spare us.
On deck
Putin's temporary victory.
Captain Covfefe F52 Ace
We also buy oil from the Prince of the Flesh Tearer. While. Rejoice while she is, you scum.
DavelnNY
Putin is accelerating the transition of many countries to green energy. This is a plus.
James-Olsen
Maybe so, but German Economy Minister Habeck announced today that his country will temporarily compensate for the lack of energy with coal.
Democracy Dies In Hipocrisy
But someone said that disconnecting Russia from SWIFT would quickly bring Putin to his knees...
Get real people
It turns out that in reality Europe is in Ukraine on both sides of the front line. It sends aid and military equipment to Ukraine and at the same time helps Russia pay for the army and weapons.
That's really true — comfort and low gas prices are more important than moral principles.
Brashford
And America buys oil from Middle Eastern tyrants.
DavelnNY
Europe must take care of its people. If its economy collapses because of fuel prices, it will not be able to help anyone, including Ukraine.
This is just a short-term victory for Putin, it will only accelerate the EU's withdrawal from Russian fuel.
Jaj801
It's easy to reason like that. And you try to live in winter without heating and without electricity. Or see what happens when your electricity bills rise by 300%.
Europe is doing the right thing. She makes a deal with the devil today to tell him next year: go to hell (let's hope so). We are not dependent on Russian gas, so it makes no sense to praise the United States as a wise and generous country.
Andrew Mellon
Trump warned the Europeans about this, said that this would happen, but they did not listen to him. They never listen to anyone. They decided to turn GREEN, and they themselves count on the Russians, who should supply them with gas for heating houses and generating electricity. Let them freeze in the dark now.
Jaj801
Americans don't understand this. Imagine, gasoline prices instantly jump to $12 per gallon, and electricity bills increase by 200%. And all because of a military conflict on another continent. How will people live? How will they get to work? To heat houses, to use household appliances? Chaos will begin, anger and irritation will arise.
Such a future awaits some EU countries if they refuse. If they have a long-term goal (to significantly reduce their dependence on Russian energy resources by next winter), I don't see any problems here.
Yes, we wish Ukraine victory, but not at the expense of the poor and middle class, who will suffer from the rampant rise in energy prices. Not everyone in the EU wears white collars.
TheBecket
This is the price of "green" energy. Having turned green, Europe has lost the ability to provide itself with energy, and now it is forced to kneel before Putin and pay tribute to him for refusing raids. It was all so predictable. It is just as predictable as the fact that the Washington Post will not say a word that the reason for such a fiasco was Europe's love for "green" energy.
Quantumpenguin
I think Germany, Italy and France (and Henry Kissinger) they want Ukraine to give Putin part of its territory so that he would be satisfied. Then they will be able to return to their oil contracts with Russia and with the oligarchs. They will be able to fall asleep safely again until Putin wants something else, say, Lithuania or Poland.
Saber tooth
They get 40% of their gas and oil from Russia. How long do you think the EU will be able to show Putin the cuckoo, while continuing to receive gas from him?
Biden may abandon ties with Russia. The Americans will tighten their belts and increase production at home. And the EU cannot do that. But America will also have to pay for it. Complaints about rising gas station prices will affect the election results in 2022, and this could end the power of Biden and the Democrats. In any case, our involvement in the Ukrainian events will come back to us, we will lose a lot in our country, as it happens in the EU.
