European leaders condemned Russia’s move to cut off gas supplies to Poland and Bulgaria as “blackmail”, while prices shot up on Wednesday following the announcement.
The supply was suspended after energy companies Bulgargaz and PGNiG did not comply with a statement issued by Russian President Vladimir Putin last month, which stipulated that all payments for gas were to be made in roubles in a bid to strengthen the Russian currency.
Russian state energy giant Gazprom issued a statement claiming it had “completely suspended gas supplies” to Bulgaria and Poland “due to absence of payments in roubles”.
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Kremlin spokesman Dmitry Peskov denied the action was blackmail and said payments in roubles were necessary because western sanctions had frozen “a big portion of our reserves”.
However, Poland and Bulgaria have reacted with defiance, as they insisted the cut off would have little effect on them for the time being.
Poland said it could manage on existing stocks and extra deliveries from allies for the warmer summer months while they work to complete pipelines to secure a permanent alternative supply.
It said its contract did not stipulate payment in roubles, as President Andrzej Duda said the cut to gas supplies violated “basic legal principles”.
Austria’s government has also announced that its energy company, OMV, would continue to pay for gas in euro, setting aside €5 billion to refill its gas reservoirs.
Chancellor Karl Nehammer said: “Austria is sticking to the jointly agreed EU sanctions to the last dot and comma.”
European Commission president Ursula von der Leyen said: “The era of Russian fossil fuel in Europe is coming to an end.”
She added that Russia had “failed once again in its attempt to sow division among member states”.
Russia’s move has caused gas prices to increase on financial markets, with the euro sinking in value against the dollar while the rouble strengthened.
Moscow has now claimed that it is prepared to cut off supplies to further EU countries.
Germany has warned that Europe’s manufacturing powerhouse could be thrown into recession if its gas supply is cut.
As the economic stakes rise, Minister for Foreign Affairs Simon Coveney has said more than €1 billion in frozen Russian assets could be seized in order to pay for the reconstruction of Ukraine.
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