Guest Post by Martin Armstrong
In an attempt to boost the ruble and avoid sanctions, Russia will stop accepting payments in dollars and euros from “unfriendly countries.” India is on board and willing to change to a SWIFT alternative to easily convert rupees to rubles. The G7 has declared that they will not pay for gas in rubles. “[A]ll G-7 ministers agreed completely that this (would be) a one-sided and clear breach of the existing contracts,” German energy minister Robert Habeck stated. “Payment in ruble is not acceptable, and we will urge the companies affected not to follow Putin’s demand,” Habeck said.
Kremlin spokesman Dmitry Peskov said “we clearly aren’t going to supply gas for free” and Russia would not “engage in charity for Europe.” Europe’s pipeline systems are largely connected so it would be difficult to cut off flows to individual nations within the continent. Gazprom, the largest supplier of gas from Russia, has been notified. The company provided “unfriendly countries” with around 70% of exports in 2021 totaling $69 billion.
The contracts are already in order. “I want to emphasize that Russia will definitely continue to supply natural gas in line with the volumes and prices and pricing mechanisms set forth in the existing contracts,” Putin said as he knows that gas exports are essential to the Russian economy. “It’s pretty clear that it makes no sense for us to supply our goods to the European Union, to the U.S. and receive payments in dollars, euros, other currencies,” Putin also stated.
Europe still imports 40% of gas and 25% of oil from Russia. Since the Kremlin is open to all possible outcomes, Europe is preparing for gas shortages. Germany, the largest importer of Russian gas, has asked some energy companies to be aware of possible shortages. The current contracts in place should be safe if Putin keeps his promise, but then a real problem will arise.
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Actually, the EU has not paid at all for March gas deliveries because of its own sanctions…Why would Russia deliver more?
I’m not following this “war”, but I do wonder why the Russians waited until spring to attack
wouldn’t they have had more leverage in the fall? isn’t Germany heated completely with Russian gas? guess the fact their industrial base runs on it is enough
And why would the russian leadership leave gold, fiat reserves and whatever else in the hands of “western” entities knowing that they were subject to confiscation at any moment? They may be corrupt but they aren’t dumb. Appears that afghanistan was to show military cannot be trusted and now ukraine showing frn cannot as well.
Even though Russia made the first move of military units, the timing was dictated by TPTB to take attention from the failing covid and vax narrative. Or Russia may have chosen spring/summer to limit weather related civilian casualties. In any event you are correct, they should have plenty more leverage in Fall/winter–and be paid in gold or rubles.
The Ruble is now backed by gold at 5000 Rubles per gram. That ratio converts to about $1200/ounce, not the West’s $1600/ounce. The Ruble completely recovered it losses already. It trades at 100 Rubles/dollar. This is going to cause problems at the banks as the West will no longer be able to export its inflation with printed money.
A metric ounce or Troy ounce has 31 grams so the Ruble/Gold price is $1,550 which is low causing me to think this is an attempt to cause a rush into the Ruble as an arbitrage play. Gold is $1,941 at 10:43 cst.
This is one of the most significant changes in international trade in 50 years.