The European Union (EU) suffered some difficult news when news broke on Thursday, May 12, that 20 European natural gas buyers opened accounts with Russian bank Gazprombank so they could pay for Russian gas in rubles.
Bloomberg reports as many as 14 other companies have requested the paperwork to set up their own accounts.
Russian President Vladimir Putin demanded that all “unfriendly” countries pay for Russian natural gas in rubles in late March, which Brussels determined would violate EU sanctions and amounted to “blackmail.”
News of at least 20 European companies taking steps to comply with Putin’s demands undermines the EU’s stern messaging and highlights how dependent the EU is on Russian natural gas.
The EU largely followed U.S. calls for tough sanctions on Russia following its invasion and occupation of Ukraine. The question of energy imports proved especially problematic, though.
Before sanctions, Russian imports accounted for roughly 50% of Europe’s crude oil and 40% of its natural gas.
In March and April, the EU laid out five rounds of sanctions, setting different deadlines for its constituent nations to wean themselves off Russian energy and find alternative sellers. The sanctions did not include oil.
Russia retaliated by demanding that Russian natural gas be paid for in rubles. It then halted natural gas exports to Poland and Bulgaria for failing to abide by the new condition.
More recently, a Russian electricity provider cut off the delivery of electricity to Finland, but Fingrid, a Finnish grid operator, said this occurred because western sanctions prevented certain payment mechanisms. It was not a Russian countermeasure.
U.S. and EU officials hoped energy sanctions would strangle the Russian economy and force Putin to negotiate a withdrawal from Ukraine. Thus far, their effects have proved ineffective.
The EU has now proposed a sixth round of sanctions, this time banning oil imports. While this would cause significant harm to the Russian economy, the proposal elicited intense backlash from some EU nations, with Hungary committing to block the adoption of an oil ban.
Hungary imported 58% of its oil from Russia in 2020.