What Is the Truth on the Gas for Rubles Standoff?

An underwhelming compromise

It wasn’t a Russian bluff (so Russia remains a great power), but neither was it any kind of humiliation of the West.

It ended in a midway compromise.

The EU-ites will not be converting euros to rubles or handling rubles at all. But they will have ruble accounts.

They will continue to send their payments in euros. After which GazpromBank will convert their euros and credit them to their ruble accounts which Gazprom will debit.

So then GazpromBank will act as an intermediary black box. EU-ites will pretend that the payment has been made as soon as their euros are sent to GazpromBank, and the Russians will pretend the payment is only made once the euros leave GazpromBank as rubles.

It’s probably what Moscow was aiming for all along, but it is a little underwhelming.

No big victory was scored here by either side. Instead they agreed on a face-saving solution for both.

  1. Ilya G Poimandred says

    You miss the gold floor at 5000 roubles/gram. This is the more important move. Now, after Russia uses this system for most of its resource sales to Europe, and the Rouble breaks below 80, there will be an arb for buying gold from the west (through intermediaries, since gold exports to Russia are banned by the unfriendly nations).. that’s the real kicker, breaking the fake paper gold market.

  2. Walther says

    This article shows author’s total lack of understanding of economic basics.

    This gas-ruble scheme means the following:

    1. Western countries are forced to give their money to Russia bank first, and only once that money (euros or dollars) are sold on international exchange for rubles, and rubles than sent to Gazprom account, the gas is sent. That means no more freezing (theft, actually) of Russian money for the gas and oil delivered. That’s the main point.

    2. Move has immediately recovered value of Ruble, from 120 to 80 rubles for dollar, mitigating effects of sanctions.

    3. The fact that ruble is now required to make payments in Russia, means that more and more countries are now going to ask to be paid in rubles for their goods, as they will need those rubles to pay for russian gas and oil, and that means that dollar will sharply decline in value. Overall, total victory for Russia, and complete loss for dollar, while euro will get hurt too, but not that much as USD.

    Try to inform yourself about the basics, before writing something.

    1. steve kastl says

      Thanks for good synopsis. Even at war, Russia is nice to accept rubles rather than just cutting off gas due to “technical reasons.” As a U S citizen, I’m ashamed of my criminally incompetent government that works only for billionaires.

    2. Field Empty says

      You’re an idiot.

      1. Why freezing was possible has nothing to do with the currency of the payments but that currency was held in foreign banks.

      2. Ruble has srenghtened due to currency controls, has very little to do with this move.

      3. In fact ruble is no required for payments. Customers don’t need to handle the ruble at any time. Price is still calculated in euros so Russian gas is still propping up the petroeuro.

      Try to not be such a fanboy but actually look at the real world as it actually exists, loser.

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