SAINT PETERSBURG: President Vladimir Putin said on Friday that European nations should pay for Russian gas in euros, as the Kremlin moves to dump the dollar following rounds of US sanctions.

“The euro is completely acceptable for us in terms of gas payments. This can be done, of course, and probably should be done,” Putin said at the Saint Petersburg International Economic Forum.

The Russian leader’s comments came a day after his economy ministry announced it was dropping the dollar from its National Wealth Fund (NWF) and shifting to other currencies.

The Kremlin has for years worked to wean the economy off the dollar and Russian state-owned energy companies have been turning to non-dollar settlements. The economy ministry said that from May 20 the share of dollar assets in the fund had been reduced to zero percent from 35 percent.

Finance Minister Anton Siluanov said the euro would make up 40 percent of the fund, with 30 percent in yuan and 20 percent in gold.

Economists interpret the appeal as a signal to US in the build-up to summit with President Biden

The British pound and the Japanese yen will make up five percent each.

Some economists said the move was designed to send a signal to Washington in the run-up to a summit between Russian leader Vladimir Putin and US President Joe Biden on June 16.

The face-to-face meeting in Geneva comes amid the biggest crisis in ties between the two countries in years, with tensions high over a litany of issues including human rights, election meddling, Ukraine, and Belarus.

Moscow has been reducing the share of its dollar holdings since the West imposed sanctions on Russia following the annexation of Crimea in 2014.

While the US dollar is essential for international trade, it makes Russia more vulnerable to sanctions from Washington.

About the summit with President Biden, Mr Putin said he is hoping to improve deeply damaged ties with the United States when he holds his first meeting with his US counterpart.

“We need to find ways to regularise these relations,” the Russian leader said, adding that bilateral ties were currently at a “low level”.

“We will talk about strategic stability, about the settlement of international conflicts,” Mr Putin said, noting that disarmament, the coronavirus pandemic and environmental issues would also be on the agenda.

“We have no disagreements with the United States,” he added.

“They only have one disagreement: they want to hold back our development, they talk about it publicly.”

Both Russia and the United States have downplayed expectations of any breakthrough.

Since taking office in January, President Biden has imposed fresh sanctions against Moscow over what US authorities say was Russia’s role in the massive SolarWinds cyber attack and meddling in last year’s presidential election.

Washington has also harshly criticised Moscow for the near-death poisoning and subsequent imprisonment of Kremlin critic Alexei Navalny.

Published in Dawn, June 5th, 2021