RPT - ANALYSIS - Litigation Over Russian Bid to Switch Gas Trading to Rubles May Take Years

BRUSSELS (Pakistan Point News / Sputnik - 25th March, 2022) Western consumers will most likely resist paying Russia for natural gas in its national currency, the ruble, setting the stage for years of court action, political experts told Sputnik.

Russian President Vladimir Putin surprised European buyers by ordering the national gas giant Gazprom to change contracts to accept payment in rubles instead of US Dollars and Euros. The announcement caused the Russian Currency to climb against the dollar, while global gas prices jumped.

Samuele Furfari, a professor of geopolitics of energy at Brussels university ULB, told Sputnik that, although they are confidential, such contracts usually stipulate the currency of payment and other financial conditions.

"If the ruble alternative is not mentioned in the contract the only way forward is to go to court. In such commercial deals, the most frequent solution to avoid the courts of justice is international arbitrage, but that takes years anyway," he said.

Furfari suggested that Russia might be looking for a reason to stop gas or oil shipments to "unfriendly" countries prematurely. This would put pressure on Germany and central European nations, which depend heavily on Russian gas.

Xavier Moreau, a political expert and founder of the French think-tank StratPol, predicted that the West will most likely have a negative reaction to Putin's demand. German Chancellor Olaf Scholz argued that existing contracts stipulate euro or Dollar payments, while Slovenian Prime Minister Janez Jansa said no one in Europe knew what rubles even look like.

"The question will end up in arbitration chambers, solving nothing for the moment. But on the financial level, we are in fact witnessing a change of paradigm for the world," he continued.

Moreau said the freezing of Russia's currency reserves by Western banks had undermined the US dollar as the reserve currency par excellence causing a "crisis of confidence."

"Now Saudi Arabia sees Russian assets can be frozen in the West and is rushing to sell its oil to China in Yuan. It is a disenchantment with Washington. India is buying Russian oil at a discount and is preparing to use its currency, the rupee, to do so. The world of tomorrow will be economically dominated by Asia," he predicted.