Putin has big plans for how to bring back the value of the ruble and it includes creating a second cold war, pretty much. He announced Thursday a new type of trade deal.
His announcement was in Russian. I don’t speak Russian and I expect many of you do not, as well. So, here is a transcript of what he said:
“I have made a decision to implement in the shortest possible time a set of measures to switch payments for … our natural gas supplied to the so-called unfriendly countries to Russian rubles,” Mr. Putin said on Wednesday…
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the action means that every time a Western country buys a barrel of oil it would be “propping up his domestic currency.”
Путин объявил, что теперь за российский газ недружественные страны будут платить в рублях:
«Поставлять наши товары в ЕС и США, и получать оплату в долларах и евро не имеет смысла» pic.twitter.com/fKR2xetxEg
— Кремлевский пул РИА (@Kremlinpool_RIA) March 23, 2022
Putin’s strategy had an immediate impact with the ruble improving to 95 to the dollar. Right bow the ruble is less than 1 cent to the US dollar.
Spengler columnist for Asia Times and PJ Media, David Goldman tweeted: “Russia demanded rubles for natural gas payments. Ruble rises 10% today against dollar. Russia is making $1 bn a day from oil and gas shipments.”
Russia demanded rubles for natural gas payments. Ruble rises 10% today against dollar. Russia is making $1 bn a day from oil and gas shipments. pic.twitter.com/dbooZHMMe2
— David P. Goldman (@davidpgoldman) March 23, 2022
Gas prices in Europe also shot up:
Market expert, Holger Zschaepitz: “Russia plans to demand #Ruble payments for natural gas purchases from European nations, deepening its standoff w/west and potentially aggravating Europe’s worst energy crunch since the 1970s. European gas prices surged >30% after the news.”
#Russia plans to demand #Ruble payments for natural gas purchases from European nations, deepening its standoff w/west and potentially aggravating Europe’s worst energy crunch since the 1970s. European gas prices surged >30% after the news. https://t.co/RElFpNzIYE pic.twitter.com/9BEx780xft
— Holger Zschaepitz (@Schuldensuehner) March 23, 2022
According to WaPo, that money was essential to Russia’s efforts to withstand escalating sanctions. Without it, Russia’s central bank cannot step in to protect the value of the ruble, weather trade disruptions or stabilize the country’s overall economy.
Russia has lived with economic sanctions since 2014, which limited trade and access to U.S. and European capital. Since then, the government has increased its reserves from $430 billion in May 2014 to $640 billion, financed largely through sales of oil and gas. It also diversified its reserves away from U.S. dollars and euros.
Erica Carlin is an independent journalist, opinion writer and contributor to several news and opinion sources. She is based in Georgia.
