Status: 01.04.2022 15:11 hrs

Western gas customers will have to pay their bills via Gazprombank, which will exchange the money into rubles. Economist Südekum explains what Putin intends by this and whether a gas freeze has become more likely. The ruble decree and Russia’s statements in recent days have caused some confusion. But now it is clear: Western buyers of Russian gas can continue to pay in euros and dollars, but they have to open special accounts at Gazprombank. How exactly is this supposed to work?

Jens Südekum: Basically, everyone is still poking around a bit in the fog, because the official documents are just being worked out. So far, a German customer such as Uniper has paid the money for the gas directly to a Gazprom account named in the contracts, in euros. Now the situation could be that Uniper continues to transfer money in our currency to an account at Gazprombank, but at the same time has to sign a second form.

This could instruct the bank on behalf of the customer to exchange these foreign currencies into rubles and credit the corresponding amount in the Russian currency to a newly created ruble account of Uniper. This ruble amount is then forwarded to Gazprom. This is how it could work and both sides have what they want: We pay in euros, but Putin receives rubles.

About the person

Jens Südekum is a professor of international economics at the Düsseldorf Institute for Competition Economics (DICE) at Heinrich Heine University. He is a member of the Scientific Advisory Board at the German Federal Ministry of Economics and advises the German government on economic issues. And what is still unclear?

Südekum: The crucial question now is when exactly the gas customer fulfilled his contractual obligations. At the time when the euros were transferred – and thus as before? Or only when the conversion has taken place and the ruble amount ends up with Gazprom?

There could be a legal tug-of-war over this. The Russian side will argue that the contract is not fulfilled until the conversion has taken place. But the lawyers on the European side will probably see it somewhat differently, because the two additional steps would be a deterioration compared with the current contractual situation and thus an additional risk. That is the most important point that is still open from my point of view. The basic decision seems to me to have been made for now: gas will continue to flow.

“Extended arm of the Russian central bank” What are the concrete consequences for Western companies? What about the exchange rate? Will anything change in the payment amount?

Südekum: In essence, not much will change for European companies – except for the opening of the new account. Some even claim that they don’t even have to do that, because Gazprombank can take care of it automatically for the buyer.

Customers like Uniper continue to have no exchange rate risk because the amount due is paid in euros. The conversion only takes place afterwards according to the current ruble exchange rate. Payment therefore continues to be made in euros and dollars. The exchange rate risk remains with Gazprom. What is the purpose of the measure then?

Südekum: Putin is turning Gazprombank into an extension of the Russian Central Bank. The previous status quo was: We pay for our gas in euros or dollars to some Russian bank, which by decree has to exchange 80 percent of the foreign currency at the Russian central bank into rubles. So that’s where the foreign exchange is. However, the Western sanctions mean that the central bank has only limited ability to use it for currency stabilization.

The markets do show that it is managing to support the ruble exchange rate despite sanctions. There are speculations that the central bank, for example, has euro-dollar accounts at a Chinese bank and moves the money there. It then passes it on to its subsidiary institutions in the U.S., where the foreign currency is eventually used to buy rubles. Via the intermediate stations, it is no longer noticeable that the Russian central bank is behind it. This route is, of course, somewhat tricky. All the financial institutions involved are taking a high risk.

The change moves the Russian central bank out of the line of fire a bit. It no longer has to deal directly with supporting the ruble. That job is now taken over by Gazprombank, which is legally safer because it is not subject to sanctions. However, this is not an issue that Putin is directly concerned with. It is the work of the central bank’s president, Elvira Nabiullina.

Is the central bank indirectly circumventing the sanctions? From this, the conclusion can be drawn that the Russian Central Bank is circumventing Western sanctions. Is that the case?

Südekum: I think ultimately it is a smart move by the central bank. The Russian financial system is thus indirectly undermining the spirit of the sanctions. Because the West actually wants to prevent the central bank from taking action on the markets to support the ruble.

Now it is looking for a way to get back into the game or to use others to its advantage. From their perspective, this is not reprehensible, but the actual purpose of the sanctions is, of course, diluted. To be fair, though, it has to be said that we have in principle created this mess ourselves, because we did not impose sanctions on Gazprombank because of the energy deliveries. You said that Putin is not concerned with supporting the currency. What are the Kremlin leader’s personal goals? SWP expert Janis Kluge recently emphasized in an interview with that he wants above all to demonstrate the power of Russian gas. Do you see that similarly?

Südekum: From Putin’s point of view, the whole thing is a muscle play. It started when Olaf Scholz said there would be no embargo because we still need Russian gas. A few hours later, Putin said there would be gas only on his terms. One could also have expected him to play it tough, accepting only direct ruble payments and otherwise turning off the tap. It didn’t turn out that way, but instead it actually became clear that gas will continue to flow.

For Putin, it is now important to be able to sell the number as a victory nonetheless. He also wants to send a clear message that he has the power to stop gas supplies at any time. What we are witnessing right now in essence is the search for a solution.

e are looking for a technocratic solution that will allow both sides to come out of the matter with their faces preserved and the conflict ended for the time being. We continue to pay for our gas in euros or dollars, and Putin can say that he will receive rubles.

However, the whole thing could escalate again at any time – for example, through European import duties on Russian gas. Then Putin would have a renewed reason for the next threat to cut off supplies.

“Russian gas is a political issue” Has a possible gas freeze ultimately become more likely or less likely as a result of the new payment arrangements?

Südekum: In my opinion, the probability of a scenario in which this could happen has increased. Before the government’s declaration to forego an embargo, one still had the impression that there would be a tacit agreement that nothing would happen with the gas. We need the gas and Putin needs the foreign exchange earnings.

But now it has become clear: Russian gas is a political issue and is being used for muscle games. This can happen again at any time. That’s why the occurrence of a supply freeze – even if it has now been averted acutely for the time being – has become more likely in a new scenario


The interview was conducted by Till Bücker,

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