Italy: Russia will not ask for payment in rubles for natural gas

Italian Prime Minister Mario Draghi says he received assurances from Russian leader that European companies would not have to pay for gas in roubles, like promises received by Germany, and aired fears Russia will cut supplies

ROME — Italian Prime Minister Mario Draghi said on Thursday he had received assurances from the Russian leader that Europe would not have to pay for natural gas in rubles as requested, similar to promises Germany has received, and aired fears that Moscow will cut supplies that are used for heating and electricity.

Draghi said Russian President Vladimir Putin assured him in a 40-minute phone call Wednesday night that “existing contracts remain in place. … European companies will continue to pay in dollars and euros.”

Putin announced last week that Russia would require “unfriendly” countries to pay for natural gas only in Russian currency, asking the central bank to develop a procedure for buyers to acquire rubles in Russia. This has pushed already high gas prices even higher amid fears it could be a prelude to a natural gas cut, which could disrupt Europe’s economy and hurt Russia’s finances. Major Group of Seven economies, including Italy and Germany, agreed to reject the request.

The Italian leader said Russia still wanted payments in rubles but could handle currency conversion. Draghi said Putin gave a lengthy explanation of how to keep euro payments in dollars while satisfying Russia’s “ruble payments indication”.

Draghi said he had referred the discussion to experts and that an analysis was underway “to understand what this means”, including whether “European companies can continue to pay as planned, whether this means anything for pending sanctions”.

“The feeling is one I’ve had from the start, that it’s absolutely not straightforward to change the currency of payments without breaching contracts,” Draghi said.

German Chancellor Olaf Scholz received similar assurances from Putin on Wednesday evening. Scholz had requested more details about the process, which involves payments to a non-sanctioned Russian bank, his office said.

Italian Draghi also told the foreign press that Europe was pushing for a cap on gas prices with Russia, saying its payments were financing the war in Ukraine and that the prices paid by Europe did not match the global market.

“We – Germany and Italy, as well as other countries importing gas, coal, grain, corn – are financing the war. There is no doubt,” Draghi said. “For this reason, Italy and other countries are pushing for a gas price cap. There is no substantial reason for the gas price to be so high for Europeans.

Draghi noted that Russia has no other market for its gas, which gives Europe some breathing room. Asked about the risk that Russia reacts by turning off the taps, Draghi replied: “no, there is no danger”.

The prospect of continued deliveries of gas in exchange for euros aroused a cautious reception from German industry.

“This is good news, at least in the short term, because Russian gas supplies cannot be replaced in the short term,” said Achim Dercks, deputy director general of the Association of Chambers of Commerce and Industry. German industry, at RBB24 Inforadio.

He noted that companies are concerned that any cuts will affect the industry in particular, “but ultimately it would have serious economic effects for all of us”.

ABC News

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