On Wednesday, Russian President Vladimir Putin said he wants European countries to pay for Russian gas exports in rubles in response to US-led sanctions that aim to isolate Russia from the global financial system.
“A number of Western countries made illegitimate decisions on the so-called freezing of the Russian assets, effectively drawing a line over reliability of their currencies, undermining the trust for those currencies,” Putin said at a meeting with Russian government officials, according to The Associated Press.
The EU has followed the US in sanctioning Moscow but relies on Russia for about 40% of its natural gas imports. President Biden recently signed an executive order banning Russian energy imports into the US, but Washington’s European allies cannot afford to cut off the Russian supply.
Putin announced that Russia will take “measures” to switch the payment system for natural gas supplied to “unfriendly countries” to the ruble. Russia’s list of “unfriendly countries” includes some EU members, the US, and the UK.
The US and its allies targeted Russia with sanctions prohibiting the Russian central bank from dealing in dollars and euros, although there are significant exemptions carved out for energy deals. But the sanctions could make it difficult for Russia to use dollars it receives for gas payments.
Sourcing rubles could be difficult for Western countries and could potentially violate sanctions. It’s not clear if the sanctions exemptions would apply to energy deals made in rubles. European nations trading in the ruble could shield the Russian currency from crashing further, something the US wouldn’t want.