Moscow’s threat to
stop natural gas supplies to European Union (EU) states has sent the economic
bloc into a tizzy. Sanction-ridden Russia has first urged, then called and has
now finally threatened to cut off gas supplies if its not paid in roubles. On
Monday, EU energy ministers held an emergency meeting to discuss the
implications of Russia potentially cutting off gas supplies.

Russia’s threat to
stop gas supply aren’t empty. Last week, Moscow cut off supply to Bulgaria and
Poland after they refused to meet its demand to effectively pay in roubles.
While there are some EU states that have decided to stop using Russian gas,
there are some, including Europe’s economic powerhouse Germany, who are yet to wean
themselves off Moscow gas.

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The Russian threat
to turn off gas pipelines has an immense political impact. The West has, until
now, managed to put up a united front against Moscow for invading Ukraine.
However, the rag-tag unity becomes threatened when an energy crisis is on the
horizon.

Several European
companies are facing payment deadlines at the end of this month. During these
times, governments will be required to clarify if they can keep buying gas from
Russia without breaching the sanctions imposed by the European Union.

Russia has said
that foreign buyers of natural gas will be required to deposit their payments
in dollars or euros into the privately-owned Russian bank Gazprombank, which
would then convert it into roubles.

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Bulgaria, Denmark,
Greece, Poland, Slovakia have sought guidance from the EU on how to proceed and
Brussels is said to be drafting additional guidelines. Russia said on Friday that
it will only consider the buyer’s obligation fulfilled if hard currency has
been converted into roubles.

Bulgaria and
Poland have refused to engage with Russia’s scheme while Germany has suggested
the EU’s workaround to let companies pay. The central concern with paying
Russia in roubles is that it shelters Moscow from the full impact of the sanctions
and allows it to earn revenues that can go on to fund its military offensive in
Ukraine.