In the televised announcement on Thursday, Russian President Putin said “To buy Russian gas, they need to open ruble accounts in Russian banks,”.

“It is from those accounts that gas will be paid for starting April 1. If such payments aren’t made, we will consider this a failure by the client to comply with its obligations”, Putin said.

“Nobody sells us anything for free, and we are not going to do charity either – that is, existing contracts will be stopped,” Putin said. 

Putin hinted that this was in direct retaliation for western countries placing financial sanctions on Russian banks and for not allowing industries to do work with the Russian financial system. 

Europe depends on Russia for approximately a third of its gas needs. Europe’s largest economy Germany imports approximately 45% of its coal and 55% of gas from Russia. 

The decree signed by Putin on Thursday, March 31 creates a mechanism for buyers to transfer their currency to a special account at a Russian bank (Gazprombank), which would then be converted to roubles for the foreign buyer to make payment for the gas.