Opinion

Is there anything worse than paying for Russian gas in roubles?

photo_camera gas ruso rublos

Over the last few days we have been witnessing an escalation in the tension between Russia and the European Union (EU). Russia's imposition that gas imports must be paid for in roubles was announced a few weeks ago. Needless to say, this imposition means paying for supplies in a currency other than the one agreed in the purchase/sale contracts. No doubt most European countries did not expect this obligation to have such immediate consequences as the supply cuts to two countries close to Ukraine: Poland and Bulgaria.

It is clear that the economic sanctions imposed on Russia by Western countries are having an impact on the Russian economy, as evidenced by the immediate devaluation of its currency in the early stages of the conflict with Ukraine. In order to stem this haemorrhage and avoid a currency debacle on the markets, Russia has prescribed the obligation to pay for gas purchases in roubles. In parallel, Russia itself is propping up its currency by selling gold and foreign exchange on international markets in exchange for roubles. The latter policy is only sustainable in the very short term, and for this reason the best tool to maintain its currency is to ask Western states to cooperate with the payment of these gas sales in roubles and force them to contribute to sustaining the exchange rate.

This change in criteria implies an alteration of contractual conditions without prior warning or negotiation, and has been openly described by Brussels as blackmail. The current situation also makes mediation between the companies in the energy sector unfeasible, as they are not responsible for this imposition and have no room for manoeuvre or negotiation. In other words, the only negotiation would be with the Russian government itself.

The immediate reaction of the governments concerned has been to accelerate difficult supply alternatives/substitution and prepare their economies for a complicated contingency. These actions are logical and necessary, but we should not be tempted to focus on this particular issue, for there may be a larger problem lurking. Let us not forget that if there is one thing the Russian leader is an expert at, it is destabilising other countries, and the measure he intends to implement now is most likely aimed not only at shoring up Russia's already weak economy, but also at something that would be more profitable for him, which would be to drive a wedge between EU countries tempted to resort to payment in roubles to avoid supply cuts. Recent reports from anonymous sources have confirmed the opening of rouble accounts and even possible payments already completed in roubles.
As part of this strategy, it is not trivial that the first supply cut affects a country, Poland, which serves as a transit country for gas to other major consumers, such as Germany, and that Russia has also announced that, in the event of diversions of this gas in transit to Poland, the next country to be affected by the supply cut would be the recipient country. In other words, Putin wants to make EU countries themselves accomplices and guardians of his impositions.

The EU needs to measure its reaction and responses carefully, and not only look after the welfare of Western economies, but also avoid something more important: the creation of rifts among its members, otherwise we will be faced with an undesirable "divide and rule" strategy.

Whatever measures the EU adopts in the coming days should take into consideration that they must be meditated, consensual and, above all, if possible, negotiated. The collapse of the Russian economy is perhaps of less concern to Putin, as long as the damage done to his counterpart is of greater magnitude. Most Western leaders lack experience in conflicts of this scale; we need to learn fast, or else we may fall into traps and lose important battles.

Roberto Gómez-Calvet, Senior Lecturer in the Faculty of Social Sciences at the European University of Valencia/The Diplomat