President Vladimir V. Putin’s demand on Wednesday that “unfriendly international locations” like the US, Britain and the European Union members pay for Russian natural gas in rubles has raised questions as as to whether such a transfer would result in renegotiation of some contracts.
Robert Habeck, the German minister for the financial system and local weather, responded by saying that the demand amounted to a breach of contract. And Francesco Giavazzi, an financial adviser to Italy’s prime minister, Mario Draghi, mentioned at a Bloomberg Capital Market Discussion board in Milan: “My view is that we pay in euros as a result of paying in rubles can be a option to keep away from sanctions, so I feel we maintain paying in euros.”
Mr. Putin’s demand would blunt the effectiveness of sanctions imposed by governments against the invasion of Ukraine which are directed at undermining the worth of Russia’s forex. Requiring consumers to pay in rubles would imply a rise within the demand for the forex, which, in flip, would assist prop up its worth.
The sanctions have pushed down the value of the ruble as folks have frantically rushed to show their rubles right into a extra steady forex, just like the greenback or the euro.
Vinicius Romano, a senior analyst on the consulting agency Rystad Vitality, wrote in a market word: “Gasoline provide agreements are typically thought of sacrosanct. And in an excessive situation, insisting on ruble funds might give consumers trigger to reopen different facets of their contracts — such because the period — and easily pace up their exit from Russian gasoline altogether.”