India was targeted for buying Russian oil, real culprit is EU

Amidst ongoing concerns expressed in Western media reports regarding a possible Rupee-Rouble arrangement between India and Russia, it appears that it is the EU countries that are increasingly complying with Russian requirements for payments for the supply of Russian gas in Roubles.

This is despite the fact that the war in Ukraine is seen as a war on Europe and in response, the EU has imposed unprecedented sanctions.

On 31 March 2022, Russia had imposed a requirement for gas-related payments to be made in Roubles for companies located in ‘unfriendly countries’, which includes obviously the EU. Reports coming from Europe in recent days indicate that a large number of companies from several EU member countries are complying with these requirements. Translated simply, this is a Euro-Rouble arrangement, as it entails opening two bank accounts – one in Roubles and another in Euros – in the Russian Gazprombank, which is not included among the banks sanctioned by the EU. The payments are initially made in euros and then get converted into roubles within the bank. The companies that are doing so include those located in Austria, France, Germany, Hungary, Italy, Slovakia, and Slovenia, among others. The list of such companies is growing by the day, especially after Russia halted gas supplies to Bulgaria, Poland, and Finland, because their companies refused to comply with the Russian requirement for gas payments to be made in Roubles. Russia has also stated that it would be publishing the full list of such EU companies soon.

It is also interesting that the European Commission continues to avoid providing clarity whether such Rouble payments being made by EU companies violate the EU’s sanctions laws or not. There is, at this time, no clarity that opening Rouble accounts is a breach of the EU sanctions. It is quite possible that this avoidance may be intentional with a view to enable these EU countries, heavily dependent on Russian gas, to continue to receive supplies from Russia.

It is also surprising that instead of training their guns on these companies, much of the Western media tends to focus on Indian purchase of oil and unsubstantiated reports of efforts being made by India and Russia to enter into Rupee-Rouble arrangements. It is worth also noting that the EU has been unable to impose the sixth package of sanctions, which was announced by President Ursula von der Leyen in early May, as there is yet to be agreement among the Member States on a ban on import of oil from Russia. As a result, the EU continues to remain the biggest importer of Russian oil and gas, importing as much as 3/4th of all Russian fossil fuel exports, even as countries in other regions continue to be castigated for importing Russian oil and gas in much smaller quantities. According to the website ‘beyond-coal.eu’, which monitors EU fossil fuel imports, the EU imports since 24 February, when Russian forces first entered Ukraine, has amounted to Euro 54 billion, out of which Euro 28 billion is for oil, Euro 24 billion is for gas and the remaining for coal imports.

According to inputs received from EU capitals, hydrocarbon companies from Poland, Bulgaria and Finland have refused to comply with the Russian decree. Oil and Gas companies from the Netherlands are sitting on the fence citing a lack of clarity on sanctions on Russia for the invasion of Ukraine. Apparently, companies from Hungary, Germany, France, Italy, Austria, the Czech Republic and Slovenia have continued to pay for and receive Russian gas but the details with supplier Gazprom and whether they have opened Rouble dominated account is not common public knowledge. Hence, there is a little surprise of the Russian Rouble firming up against the international currencies.

Clearly understanding the EU play with Russia, Prime Minister Narendra Modi had apparently told his friend French President Emmanuel Macron during his visit to Paris this month that long term sanctions are counterproductive as they hit smaller and weaker economies and create global instability. Clearly, Russians are clearly laughing their way to the bank and Ukraine is being plastered with bombs and missiles.