According to the Russian head of state, the West has shown everyone that the obligations in euros and dollars may not be fulfilled
Moscow, March 23 – IA Neftegaz.RU. Russia will refuse to accept payments for gas supplies in currencies that have endangered themselves, including. US dollars and euros, and will change into settlements in rubles.
This was stated by the President of the Russian Federation V. Putin in a meeting with the government.
Another Chinese box
Remember the 2014 Sochi Olympics?
Then the Western authorities refused to come to the Games and it seemed that Putin put all his strength in persuasion, weakening control in Ukraine.
Then the West immediately staged a revolution of dignity (coup in Ukraine), mocking the Russian authorities.
The laughter ended when Crimea returned to Russia.
So now the West has done everything it can to drag Russia into a military conflict, in an effort to warm its hands to it.
It seemed that they were giving guarantees to V. Putin about Ukraine and opening the tap of the Nord Stream 2 MGP and it would not be a special operation.
The West began to rub its hands, but Putin asked Gazprom to convert the payments for the supplied gas into rubles.
The laughter is over again.
- not only Europe, buying Russian gas, finances a special operation of the Russian Federation in Ukraine,
- now Europe will also make the Russian ruble a hard currency.
Quite an elegant solution.
- I have decided as soon as possible to implement a series of measures for the transfer of payment – let’s start with this – for our natural gas supplied to the so-called unfriendly countries, for the Russian rubles.
- those. designed to refuse to such calculations all the currencies that have endangered themselves.
- I would like to emphasize separately that Russia will, of course, continue to supply gas in accordance with volumes and prices, the pricing principles set out in the contracts concluded earlier.
- Foreign consumers, as Russia’s gas payments to unfriendly countries are converted into rubles, should be able to take the necessary action.
- Future changes in gas contracts with unfriendly countries will only affect the payment currency – it will change to the Russian ruble.
- I call on the government to issue a directive to Gazprom to amend the existing contracts.
- all foreign consumers should be given the opportunity to make the necessary transactions;
- It is necessary to create for them a comprehensible, transparent procedure for making payments, including the purchase of Russian rubles. in the domestic foreign exchange market.
- I ask the Bank of Russia, together with the government, to determine the procedure for such transactions within a week.
- The West has shown everyone that commitments in euros and dollars may not be met.
In fact, this is a fairly sufficient step after the EU froze the assets of the Bank of Russia. Western sanctions are designed to undermine as much as possible our currency, which has been undervalued for so long.
Therefore, our government must think about how to restore the ruble’s exchange rate.
In this context, it makes sense to convert foreign trade into rubles.
In addition, the government has been considering the sale of oil and gas for rubles for more than a year and has already taken some steps in this direction:
- On May 5, 2021, Vladimir Putin signed amendments to the law on the regulation and control of currencies, which gave the government the right to determine the share of foreign trade arrangements made only in rubles.
- The Ministry of Finance is already preparing a mechanism that will help conclude trade agreements with other countries in rubles.
If the demand for the ruble increases, its exchange rate will stabilize.
A full transition to the ruble in foreign trade would mean a new regime for the Russian currency.
The idea is strategically correct, but there are risks in implementing it:
- it is impossible to immediately go to settlements in rubles, so it is necessary for the ruble to be a free convertible currency (ie those who buy Russian oil, gas, metals or timber should have the opportunity to buy the ruble, but in practice this is a matter of more than a month and probably not a year).
- it will be necessary to review long-term contracts, where the settlement currency is already registered;
- If Russia starts selling oil and gas for rubles, the federal budget will lose additional revenue from the devaluation.
The first reaction of the markets
According to Putin’s statements, gas prices in Europe have risen sharply.
March 23, 2022, futures contracts for gas at the TTF junction (Netherlands) at ICE Futures by 17:57 Moscow time reached 118,745 euros / MWh (1344.1 USD / 1000 m3), the increase compared to the previous day’s settlement price amounted to 18.5%.
At the peak, prices reached 132.25 EUR / MWh (1496.9 USD / 1000 m3).
At 18:10 Moscow time, the euro against the US dollar fell 0.36% to 1.0987 euros / dollar. USA.
The ruble against the US dollar increased by 4.52% to 98.8736 rubles / dollar. USA.