News World Europe Europe slams Russian ‘blackmail’ over gas contracts

Europe slams Russian ‘blackmail’ over gas contracts

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President Vladimir Putin has threatened to halt contracts supplying Europe with a third of its gas unless they are paid in Russian currency, his strongest economic riposte so far to crushing Western sanctions over his invasion of Ukraine.

European governments rejected Mr Putin’s ultimatum for Friday, with the continent’s biggest recipient of Russian gas, Germany, calling it “blackmail”.

Moscow did, however, offer a mechanism for buyers to obtain roubles via a Russian bank.

The energy showdown has huge ramifications for Europe as US officials circle the globe to keep pressure on Mr Putin to end a five-week invasion that has uprooted a quarter of Ukraine’s population.

Europe wants to wean itself off Russian energy but that risks further inflating soaring fuel prices. Russia has a huge revenue source at stake, even as it reels from sanctions.

Facing stiff resistance from Ukraine’s military, Mr Putin has played one of his biggest cards in the demand on European energy buyers.

“They must open rouble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting from tomorrow,” he said on Thursday (local time).

“If such payments are not made [in roubles], we will consider this a default on the part of buyers, with all the ensuing consequences … existing contracts will be stopped.”

With the war exacerbating global fuel prices, US President Joe Biden launched the largest release ever from the US oil reserve and challenged oil giants to drill more to bring down gas prices.

“This is a moment of consequence and peril for the world,” Mr Biden said at the White House as he announced a release of 180 million barrels starting in May.

But that amount fails to cover a US loss of Russian oil, which Mr Biden banned this month.

Western governments say Mr Putin’s demand for rouble payments would be a breach of contracts in euros or dollars. Germany and Austria declared “early warnings” on gas supplies, but no EU country has yet signalled it is facing a supply emergency.

An order signed by Mr Putin allows customers to send foreign currency to a designated account at Russia’s Gazprombank, which would then return roubles for the gas buyer to make payment.

Mr Putin sent troops on February 24 for what he calls a “special military operation” to demilitarise and “denazify” Ukraine.

At talks this week, Moscow said it would scale back offensives near the capital Kyiv and north as a goodwill gesture and focus on “liberating” the southeastern Donbas region.

Kyiv and its allies say Moscow is simply trying to regroup following losses after a Ukrainian counter-offensive that has recaptured suburbs of the capital plus strategic towns and villages in the north-east and south-west.

US and European officials say Mr Putin has been misled by generals about his military’s dire performance.

Ukraine’s President Volodymyr Zelensky has praised “our defenders”, who have resisted aerial bombardments and pushed armoured columns back. Now, he said, Russia was building up forces for new strikes on the Donbas, which it demands Ukraine cede to pro-Moscow separatists.

Peace negotiations were set to resume on Friday.

The war has been particularly fierce in the besieged Azov Sea port of Mariupol, a gateway to the Black Sea that links a strategic corridor between Donbas and the Russian-annexed Crimea peninsula.

The mayor’s office estimates 5000 people have died.

Tens of thousands have been trapped for weeks with scant food, water and other supplies in the city that once housed 400,000 people but has been pulverised by bombardment.

The International Committee of the Red Cross was sending an aid convoy and Ukraine dispatched 45 buses in hopes of evacuating people on Friday.

There was evidence of Ukraine’s successful counter-attack in Trostyanets, an eastern town, including burnt-out Russian tanks and abandoned ammunition on muddy roads.

Ukraine’s state nuclear company said all Russian forces that occupied the Chernobyl nuclear station had left the defunct plant, possibly concerned about radiation.

Western countries say Mr Putin’s real aim was to swiftly topple Ukraine’s government, and that its failure is a strategic catastrophe, bringing economic ruin and diplomatic isolation.