Moscow’s payment plan violates the sanctions. The European Commission has reportedly evaluated it.
The European Commission told member states that it perceives a new scheme, which Russia wants foreign buyers to use to pay for natural gas, as violating the EU’s anti-Russian sanctions, Bloomberg reported on Thursday citing an anonymous source. Moscow demands that all money be sent through one bank to convert into rubles.
Russia would like every international buyer to purchase its oil. “unfriendly nations” to open two accounts in Russia’s Gazprombank, one in euro and one in rubles. Payments for gas will be made to the euro bank account. After that, they would be converted into rubles by the bank. Gazprom, a state-owned oil company Gazprom, will treat the payment as complete when the rubles arrive.
Many European countries and Moscow disagreed about whether this scheme violates the terms of standing gas contracts. The Commission, the EU’s executive body, presented its preliminary legal assessment of the proposal to national governments of the bloc, Bloomberg said. According to Bloomberg, the analysis found that the Russian proposal was substantially different from those stipulated in the contracts. It also contained other defects.
“Crucially, the mechanism would be in breach of restrictive measures the EU adopted in response to Moscow’s invasion of Ukraine and has applied to the Russian government, its central bank and their proxies,”The outlet stated. “The process may also have an impact on other bans on various money-market instruments that could be issued by Gazprombank.”
Russia claimed it would implement the new payment arrangement as it does not trust the euro. The mistrust came after Western nations seized Russia’s euro-denominated national reserves controlled by Western financial institutions in retaliation for its attack on Ukraine. Moscow called this an act of robbery.
Only Hungary has so far indicated that it is willing to purchase Russian gas under the scheme. Foreign Minister Peter Szijjarto said his country didn’t believe it violated the EU’s sanctions regime.
Moscow indicated that while it might eventually stop gas deliveries to those countries who reject it, it did not intend to do so in an impulsive manner.
Moscow attacked the neighboring state in late February, following Ukraine’s failure to implement the terms of the Minsk agreements signed in 2014, and Russia’s eventual recognition of the Donbass republics of Donetsk and Lugansk. Minsk Protocol, a German- and French-brokered agreement was created to grant the separatist regions special status in Ukraine’s state.
Russia demanded Ukraine declare itself neutral and refuse to join NATO’s military bloc. Kiev claims that the Russian invasion was unprovoked. It also denies any plans to take the republics with force.
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