WSJ accuses Russia of extortion, but the accusation doesn’t hold water. European companies can easily purchase Russian natural gas and oil in Euros using the currency conversion procedure set up by Gazprombank. There is no breach of contract as WSJ alleges.
There are a number of fascinating factors at play in this story. One concerns the basic law of contracts, which assumes a contract to be an agreement to exchange value for value. Since the current batch of sanctions makes it impossible for Russia to spend euros as it wishes, trading gas for euros becomes an exchange of value for nothing. That is, if anyone is guilty of breach of contract, it would be Russia’s European gas and oil customers.
But this highlights another of the fascinating factors in this story. By agreeing to convert euros to rubles, Russia recovers part of the $300 billion in foreign reserve currencies the sanctions impounded, while at the same time allowing Russia to increase the quantity of rubles circulating in its own economy without risking inflation.
It appears that Europe and US attempts to hurt Russia with sanctions may actually have the opposite effect.