EU: opening ruble accounts to buy gas breaches sanctions

EU: opening ruble accounts to buy gas breaches sanctions

Companies in the European Union that open an account in rubles to pay for Russian gas would violate sanctions imposed by the bloc, according to EU officials.

EU officials issued the warning Thursday as governments and companies are seeking clarity on the impact of a demand by Russian President Vladimir Putin that gas must now be bought in local currency. The officials said the new Russian demand is problematic because it involves the country’s central bank, which is under sanctions.

European Commission President Ursula von der Leyen warned companies on Wednesday not to bend to Russia’s demands, saying that doing so would breach sanctions. But companies are seeking workarounds, and the bloc’s own guidance document issued last week appeared to encourage them to do so.

The officials said companies can buy gas without violating sanctions if they only open an account in euros to make their payment for gas and declare their obligation complete. 

But the Moscow decree stipulates that a payment is considered complete only after the funds are converted and placed in a second account in rubles. The EU officials said that arrangement would violate sanctions because it would constitute a loan to the central bank. By having the payments cleared only when they are converted into rubles, Moscow is seeking to have European companies circumvent sanctions, they added.

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