Russian President Vladimir Putin has issued a decree stating that foreign buyers of Russian gas must pay in roubles starting on Friday, or risk having their supplies cut. This move has been rejected by European capitals, with Germany referring to it as "blackmail". The potential consequences include Europe losing over a third of its gas supply, with Germany already implementing emergency measures that could lead to rationing. Putin is using energy exports as a key tool in response to Western sanctions imposed on Russia due to its invasion of Ukraine, which Moscow refers to as a "special military operation". In his televised speech, Putin stated that those purchasing Russian gas must establish rouble accounts in Russian banks for payment starting on April 1. Failure to do so will be considered a default, leading to the termination of existing contracts. It is uncertain if there are alternative payment methods for foreign firms, as the European Union and G7 have rejected the use of roubles. His choice to implement rouble payments has caused the Russian currency to increase in value, after it had dropped to record lows following the invasion on February 24th. The rouble has now regained a significant amount of the value it lost. Western companies and governments have refused to alter their gas supply contracts to accommodate a different payment currency, with most European buyers currently utilizing euros. Executives believe that renegotiating these terms would require several months, if not longer. Payment in Russian roubles would help reduce the impact of Western restrictions on Moscow's access to foreign exchange reserves. European countries are scrambling to find alternative energy sources, but with limited options in the global market. The United States is offering more liquefied natural gas (LNG) to help, but it cannot fully replace Russia's supply. German Economy Minister Robert Habeck stated that Russia's attempts to divide Europe have failed, and Western allies are united in not allowing themselves to be manipulated by Russia. Germany has decided to continue paying for Russian energy imports in euros. France's economy minister Bruno Le Maire discussed the potential of Russian gas flows being stopped and the latest Russian demands for payments in roubles. Putin's order allows for payments to be made through special foreign currency and rouble accounts at Gazprombank, with foreign money being converted into roubles through currency auctions in Moscow. Putin believes this switch will strengthen Russia's sovereignty and is a response to Western countries using the financial system as a weapon. Trading in dollars and euros is seen as pointless by Russia due to assets being frozen in those currencies. Putin questions the current situation and actions taken by Western countries. We have provided European customers with our resources, specifically gas, and they paid us in euros, which they then saved. As a result, it is clear that we supplied some of the gas to Europe almost for free," Putin stated. He emphasized that this situation cannot continue and highlighted Russia's commitment to maintaining its business reputation. He stated that we will comply with obligations in all contracts, including gas contracts, by continuing to supply gas in the specified volumes and prices as outlined in existing long-term contracts. Several European companies with Russian contracts either had no immediate response or did not comment as Putin's announcement caused further concerns in the market. The tension with Russia has led to a surge in European gas prices in recent months, increasing the risk of recession. The high energy prices have already resulted in companies, such as steel and chemical manufacturers, cutting back on production. Poland's PGNiG, which has a long-term contract with Russia's Gazprom expiring at the end of the year, had no immediate response. The Polish Climate Ministry did not provide a response immediately. The contract between Poland and Gazprom is for 10.2 billion cubic meters of gas annually and is in dollars. Eni, an Italian energy company that is also a significant purchaser of Russian gas, did not comment either. In 2020, Eni purchased around 22.5 billion cubic meters of Russian gas. Their agreements with Gazprom will end in 2035. Germany's purchasers of Russian gas, including Uniper, RWE, EnBW, and VNG, did not provide an immediate response to requests for comment.