Putin eases gas payment rules amidst new sanctions
The Kremlin is easing restrictions on payments for Russian gas. Vladimir Putin signed a decree on Thursday allowing foreign customers to pay 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, the financial arm of Gazprom. This American strategy aimed to reduce Russia'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 typically processed, was sanctioned by the U.S. Treasury. Shortly after the full-scale war in Ukraine began—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 strong opposition from most European countries, including Poland, this effectively stopped the gas supply.
This recent move by the Putin regime softens its earlier economic policy, but only partially. Kremlin agencies, including TASS, report that foreign contractors now 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 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 dollar and 109.8 rubles per euro.
The weakening ruble makes Russian export goods cheaper in global markets, yet at the same time Russians face higher costs for imported goods. This situation elevates the risk of further inflation, which is already at 8.5%.
