Putin talks tough on gas-for-rubles deadline. But European leaders aren’t too worried

Russian President Vladimir Putin has demanded so-called “unfriendly” countries pay for Russian gas in rubles.

Russian President Vladimir Putin has told countries to pay in rubles or have their natural gas supplies cut off.

The leaders of Germany and Italy seem unperturbed by Putin's rhetoric.

Europeans will not be bound by the Kremlin's new mechanism and can continue paying for Russian gas in euros or dollars.

Foreign buyers of Russian gas must open a Russian bank account or have their contracts canceled in order to pay in rubles, according to a decree issued by Putin on Thursday.

Russia's president has repeatedly demanded that countries that are unfriendly to Russia switch to Russian gas in order to get rid of the sanctions.

The rules for trading Russian natural gas with the so-called "unfriendly" states were signed today. In order to purchase Russian natural gas, counter parties from such countries must open ruble accounts in Russian banks, Putin said in a televised address.

We will consider a failure of the buyer to fulfill its obligations if the payments are not made.

If the terms weren't met by Friday, existing contracts would be stopped.

Germany, Europe's biggest consumer of Russian gas, said Putin's decree amounted to political blackmail.

The decree does not apply to Berlin and Rome, according to the German Chancellor and Italian Prime Minister.

The German government said in a statement that the Russian president told Scholz that gas deliveries would have to be settled in rubles from April 1.

Putin emphasized in the conversation that nothing would change for the European contractual partners, according to the readout.

Payments would continue to be made in euros to Russia's Gazprombank, which is unaffected by economic sanctions, and the bank would convert the money into euros.

The foreign exchange reserves of the Bank of Russia had been frozen by EU member states, according to the Kremlin's readout of the call. The Russian statement said that experts from Russia and Germany would continue to negotiate.

Italian Prime Minister Mario Draghi spoke to reporters on Thursday about his call with Russia’s Putin.

On Wednesday, Italy's Draghi held a call with Putin. Italy does not expect a halt to the deliveries of Russian gas, according to the president of Italy.

European firms would continue to pay in euros or dollars, rather than in rubles, according to Draghi. The Italian prime minister said he believed Putin had changed his demands.

There has been a process of reflection within Russia that has led to a better definition of what it means to pay in roubles, as President Putin defined it yesterday.

The conversion of the payment is an internal matter of the Russian Federation, he said.

The Kremlin spokesman said earlier in the week that Russia would not be seeking gas payments in rubles immediately.

European buyers of Russian gas say the Kremlin isn't entitled to change long-term contracts because Germany and the G-7 have signaled that cannot happen.

Russia's state-controlled gas giant, Gazprom, is unlikely to violate its existing contracts by refusing to supply gas to customers who refuse to pay in rubles, according to energy analysts.

Russian state-owned energy giant Gazprom said Friday that it was continuing to supply Europe with natural gas, Reuters reported.

European countries have become more dependent on Russian energy exports since the Kremlin launched its invasion of Ukraine.

The analysis shows that Russia's military might is being reinforced by European countries.

Fossil fuels play a central role in the Russian government, as revenue from Russian oil and gas was seen to be responsible for roughly 42% of the federal budget between 2011 and 2020.

The European Union gets 40% of its gas from Russian lines.