By Laurence Kotlikoff
Vladimir Putin: Satanically genius as everyone thinks – or satanically stupid as his works show? The Russian president is persistently pressuring Germany and other NATO buyers to pay in rubles to supply them with oil and gas – his obsession suggests nonsense. As for the “satanic element”, Evil: Putin is a serial killer, whether it is the murder of individuals or the extermination of states. Undoubtedly, the Russian president will be tried in absentia as a war criminal.
Why is Putin’s demand for a ruble’s magnificently foolish? Will it not support its currency with this move and, therefore, will it not reduce the cost of any goods that the Russians can still import? The answer is no.
Take Germany for example. Berlin buys Russian energy and pays in euros. The transaction brings more euros to Russia and more energy to Germany. Under Putin’s decree, however, Germany would use its euros to buy rubles. He would then use the rubles to buy energy from Russia. The extra step that Russia demands from Germany leads to the same “destination”: the euros are exchanged for rubles and the rubles are exchanged for Russian energy. Germany supplies the same amount of Russian energy and Russia puts the same amount of euros into its coffers.
As for the ruble-euro exchange rate, the increased demand for the Russian currency from Germany is offset by the reduced demand for the ruble by Gazprom, the main exporter of Russian energy. Why; Because Gazprom will no longer be paid in euros, which it sells for rubles. Yes, Gazprom must have accumulated an amount in euros. However, by law, he was required to convert 80 percent into rubles. For the remaining 20%, it does not matter if it is in Gazprom’s account at the Central Bank of Russia or at the Central Bank itself. Gazprom is a wholly state-owned company. So, if Moscow needs more euros, it can find them from Gazprom. This is the meaning of the “80% rule”.
If Germany and the other “unfriendly countries” for the Kremlin responded to Putin’s demand for rubles for oil and gas, the economic benefit to Moscow would not increase. The point is that NATO member states would not agree to comply with Putin’s decree even if there was not the slightest economic impact. It would be like putting the euros – which they now send to Russia for energy purchases – in boxes with the Russian flag on them.
They will not do that.
The members of the North Atlantic Alliance will not agree and Putin will either cut off Russian energy supplies or be ashamed. Thus, he will impose a significant economic sanction on Russia, which has not yet been implemented by the West: the ban on Russian energy imports, through Putin’s ban on Russian energy exports.
In short, Putin will give his country a shot in the arm. It would be good for his comrades to make sure that the Russian president fails.
Read also:
* Serbia: Defies boycott of Russia, concludes new deal with Gazprom
Source: Capital
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