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The EU has insisted it will not cede to Moscow's demand to pay for gas in roubles Shutterstock/Korobcorp

Europe must 'turn off tap of money' going to Russia for oil and gas, Eamon Ryan says

The European Commission is proposing a new package of sanctions to punish Russia for its invasion of Ukraine.

LAST UPDATE | 3 May 2022

ENVIRONMENT MINISTER EAMON Ryan has said Europe needs to act decisively to “turn off the tap of money going to Russia” for oil and gas.

Ryan was speaking after the European Union warned member states to prepare for a possible complete breakdown in gas supplies from Russia, insisting it would not cede to Moscow’s demand that imports be paid for in roubles.

The European Commission will today propose to member states a new package of sanctions to punish President Vladimir Putin’s Kremlin for its invasion of Ukraine, including an embargo on Russian oil, officials said.

But energy and environment ministers meeting in Brussels yesterday addressed the larger and potentially more complicated issue of Russia’s natural gas, upon which several countries — including EU top economy Germany — depend for much of their power generation.

Moscow has demanded clients from “unfriendly countries” — including EU member states — pay for gas in roubles, a way to sidestep Western financial sanctions against its central bank. It has cut off Bulgaria and Poland after their firms refused to comply.

After the talks, the French chair of the meeting, ecological transition minister Barbara Pompili, and the European commissioner for energy, Kadri Simson, said the 27 member states were united with Poland and Bulgaria and would stockpile gas to be prepared for a breakdown.

Simson said that “following the full procedure as set out by Russia constitutes a breach of sanctions” imposed by the European Union. She said that, to her knowledge, no European company was preparing to follow Putin’s decree and change its payment methods.

Ryan attended the meeting in Brussels yesterday. Speaking on Morning Ireland today, the minister said Europe needs to “turn off the tap of money going to Russia to fund this war”.

The Green Party leader said energy has been used as a weapon by Russia to try and divide Europe.

“Energy is being used in this conflict as a weapon. It’s a weapon against the European people, as well as the people in Ukraine.”

Ryan noted that yesterday’s meeting was in response to Russia cutting off supplies to Poland and Bulgaria, adding that Moscow is likely to cut supplies to other countries who have refused to pay for their energy in roubles.

“The Putin government will look to divide Europe. Divide and conquer, as it were.”

The minister said the Irish government has called for “the strongest possible sanctions, because the risk we have is that kind of gradual approach will see this war dragging, and terrible loss of lives and also damage to the everyday lives of everyone in Europe because the high energy prices we’re seeing are a direct consequence of the war”.

Ukraine’s foreign minister Dmytro Kuleba earlier told Morning Ireland that since the beginning of the war, EU countries have paid more than €40 billion to Russia for gas and oil.

“We understand that Russia still has some reserves which allow them to uphold their economy. But in a midterm perspective, Russia will be exhausted and Putin will be stopped,” Kubela said.

“This is why sanctions are so crucial. However, I want to be clear on this, the time for half measures when it comes to sanctions is gone because of what is happening now.

“The European Union supports Ukraine with one hand and at the same time EU members pay for Russian gas and oil with the other hand – subsidising the Russian war machine.”

Ryan said he agreed with Kubela, stating: “I think he’s right. I think we need to go strong and as quickly as we can.”

He said the exact details of Europe’s response are yet to be decided.

“At the end of the council meeting yesterday – and for all the differences and all the difficulties – there was actually a real sense of unity and solidarity and common purpose to support the Ukrainian people and to to take on this use of energy as a ransom weapon,” Ryan stated.

‘Tricky’ problem

Several European countries are to renew supply gas contracts at the end of May, and reports suggest some could seek to work around the sanctions by following the method put forward by Moscow.

This would entail a firm opening two accounts in Russian state energy giant Gazprom’s bank. Payments would be deposited in one account in euros or dollars, then be passed through the sanctioned Russian central bank, before arriving in the second account in roubles.

Simson and some ministers seemed to say that this would still constitute a sanctions breach. But other member states demanded further clarification from the European Commission’s experts.

“What has happened today is that the European Commission and the presidency have confirmed that paying in roubles is unacceptable, that it is a breach of sanctions and a breach of European solidarity,” Poland’s environment minister Anna Moskwa said.

“Many countries, including the Baltic states, Denmark, the Netherlands and Finland, have today reaffirmed solidarity and that they will certainly not pay in roubles,” she said.

But Sweden’s Khashayar Farmanbar, minister for energy and digital development, said: “I think the clarification is still ongoing … it is a complex process.”

“I mean, paying with one currency is one thing, but if that involves another country’s central bank, then it becomes part of a different part of the package, and that is going to be a bit tricky.”

The Czech minister of industry and trade, Jozef Sikela, said he had asked for a “clear explanation of how to proceed”.

During the meeting, European officials were forced to deal with media reports that Italy wants to continue to pay in roubles until there is a legal alternative.

Kadri said she had spoken to Italian minister Roberto Cingolani, who did not attend the meeting, and that the report was “misleading” — but she promised to provide him and all EU capitals with clearer guidance on resisting Putin’s ultimatum.

She added that Russia’s actions showed “they are not reliable suppliers and that means that all the member states have to have plans in place for full disruption”.

Phased-out oil

Germany’s minister for economic affairs and climate Robert Habeck said Berlin would follow EU policy but also suggested the dual Gazprombank accounts plan could be “a face-saving solution for Putin”.

The EU will tomorrow propose a phased-out ban on imports of Russian oil — but not gas.

The commission will propose a tapered ban over six to eight months, to give time to diversify supply. One senior official said there could be opt-outs for the most dependent countries, like Hungary.

The sixth package of anti-Russian measures will also target the country’s largest bank, Sberbank, which will be excluded from the global banking communications system SWIFT, diplomats said.

On Monday, the EU’s top diplomat, Josep Borrell, said the new sanctions package would result in “more Russian banks that will leave SWIFT” during a visit to Panama.

© AFP 2022 

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