Putin Wants ‘Unfriendly’ Countries to Pay for Russian Energy in Rubles

Russia's President Vladimir Putin chairs a meeting on economic issues in Moscow on Feb. 17, 2022. Alexey Nikolsky/Sputnik/AFP via Getty Images

Russian President Vladimir Putin says that he wants “unfriendly” countries to start paying for Russian energy with rubles, a move that could strengthen the value of the weakened Russian currency.

Putin made the remarks at a March 23 meeting with members of his government, according to a video of his statement provided by state-backed media outlet RT.

“We will transition to charging supplies of natural gas and other raw materials in Russian rubles when dealing with unfriendly countries,” Putin said, according to an RT translation of his remarks. “Russia, of course, will continue supplying natural gas and will respect all the obligations and the pricing under the contracts that we have signed.

“We treasure our reputation as a reliable supplier and a reliable partner.”

Putin also instructed the Russian central bank and the government to develop a mechanism to make the ruble payments within a week, Russian state-backed media outlet Kommersant reported.

“It makes no sense for us to supply our goods to both the [European Union] and the United States and receive payment in dollars, euros, and a number of other currencies,” Putin said, according to a translation of his remarks, as cited by Kommersant.

Putin noted that, in his view, the U.S. dollar and the euro have been “compromised” by sanctions on Russia’s central bank reserves.

Following Putin’s remarks, April gas price futures contracts on the Dutch exchange spiked by about 20 percent to around $130 per megawatt-hour (MWh), although by 3:30 p.m. New York time, prices had eased, remaining up by almost 9 percent at about $107 per MWh.

Earlier in March, Russia announced a list of countries and territories that it considers to be “unfriendly.” The list includes the United States and Canada, member states of the EU, the UK, Australia, New Zealand, and Ukraine, where Russia is engaged in what it calls a “special military operation” to degrade its military and oust from power what it claims are dangerous nationalists.

Western allies have denounced Russia’s actions in Ukraine as an illegal, unjustified, and groundless war of aggression.

A host of countries have imposed punishing sanctions on Russia because of the invasion of Ukraine, including on its banks and wealthy oligarchs, closing their airspace to Russian planes, and banning the export of key technologies.

Western sanctions also have included freezing about $300 billion in assets of Russia’s central bank, a move Russian Foreign Minister Sergey Lavrov denounced on March 23 as “theft.”

The sanctions led to a sharp drop in the value of the ruble. Requiring countries to pay for Russian gas in rubles forces them to buy the Russian currency and helps push up its value.

Following Putin’s remarks about Russian energy transactions to be settled in rubles, the Russian currency gained ground against the dollar and other currencies.