Putin changes ruble rules to keep Russian gas flowing to EU

Russia will loosen restrictions on the way foreign countries must pay for its fossil fuels in order to circumvent new sanctions imposed by Washington on a leading bank.

In an order published Thursday, President Vladimir Putin scrapped requirements for funds to be paid through Gazprombank, which is the target of new U.S. Treasury Department sanctions designed to deprive Moscow of the revenue it is using to continue its war in Ukraine.

Since 2022, Russia has demanded European buyers settle their accounts in rubles through the bank, to get around restrictions on it handling dollars and euros.

The new rule change will allow importers to use other banks or pay “in another way agreed upon by the Russian supplier with the foreign buyer.”

While the Kremlin cut off the supply of pipeline gas to countries like Germany, the Czech Republic and Poland in a bid to weaponize energy flows in the wake of the invasion, Hungary and Slovakia have continued to receive deliveries as part of a long-term contract with state energy firm Gazprom.

On Wednesday, Budapest — which still relies on Russia for around two-thirds of its natural gas supplies — announced it had asked the U.S. for an exemption to the sanctions to allow it to continue to do business through Gazprombank.

“Gazprombank was the key financial channel for oil and gas payments with Europe,” said Maria Shagina, a sanctions expert at the International Institute for Strategic Studies. “Blacklisting the bank has already caused the Russian ruble to tumble and it will affect gas payments with Hungary and Slovakia.”

Moscow’s central bank suspended currency trading last week after a dramatic decline in the value of the ruble following the announcement of the latest sanctions.

However, Shagina added that while finding alternative banks to handle payment might offer a “workaround,” other institutions could also face sanctions as part of efforts to cut off the flow of cash fueling the war.