Moscow’s Proposed Payment Scheme Violates Sanctions, European Commission Reportedly Assessed
The European Commission has told member states that it perceives a new scheme, which Russia wants foreign buyers to use to pay for natural gas, as a breach of anti-Russian EU sanctions, Bloomberg reported Thursday citing an anonymous source. Moscow wants all the money to go through a bank and be converted into rubles.
Russia wants every foreign buyer of its fuel to operate in “hostile nations” open two accounts in Russia’s Gazprombank, one in euros and one in rubles. Gas payments would go to the euro account, after which the bank would exchange them for rubles. The state gas company Gazprom will consider the payment complete once the rubles arrive.
Moscow and many European nations disagreed on whether the scheme violates the terms of permanent gas contracts. The Commission, the EU’s executive body, has submitted its preliminary legal assessment of the proposal to the bloc’s national governments, Bloomberg said. The analysis reportedly said the Russian proposal deviated substantially from the terms of the contracts and had other flaws.
“Crucially, the mechanism would violate the restrictive measures that the EU adopted in response to Moscow’s invasion of Ukraine and that it has applied to the Russian government, its central bank and its proxies.” the medium said. “The process may also have an impact on other bans on various money market instruments that Gazprombank could issue.”
Russia said it wants to implement the new payment agreement because it no longer trusts 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 it an act of theft.
Until now, only Hungary declared that it was willing to pay for Russian gas according to the proposed scheme. Foreign Minister Peter Szijjarto said his country did not believe he was in violation of the EU sanctions regime.
Moscow said it could eventually cut off gas supplies to nations that reject the scheme, but said it was in no rush to act now.
Moscow attacked the neighboring state in late February, after Ukraine failed to implement the terms of the Minsk agreements signed in 2014 and Russia’s eventual recognition of the Donbass republics of Donetsk and Luhansk. The Minsk Protocol negotiated by Germany and France was designed to give breakaway regions special status within the Ukrainian state.
Since then, Russia has demanded that Ukraine officially declare itself a neutral country that will never join the US-led NATO military bloc. kyiv insists the Russian offensive was completely unprovoked and has denied claims it planned to retake the two republics by force.