It’s a smart move by Russian President Vladimir Putin. Facing financial sanctions and economic pressures from the U.S, NATO, EU and western allies, Putin stated today that all oil and gas payments must be made in Russian rubles.
The EU has few options as they are reliant upon Russia for energy products oil and gas. If Putin organizes payment in rubles, his currency will automatically increase. This sets the stage for other less hostile countries like the BRICS alliance to assist Putin ideologically and financially by transacting in rubles through the Russian central bank.
(Oil and Gas) – […] Russian President Vladimir Putin said on Wednesday that Russia would start charging the countries it considers “hostile” in rubles for its natural gas.
“I have taken a decision to switch to ruble payments for our natural gas supplies to the so-called hostile states, stop using the compromised currencies in such transactions,” Putin said, per a transcript published on the Kremlin website as carried by Bloomberg.
The Russian President—whose list of “hostile” states includes the United States, all EU member states, Switzerland, Canada, Norway, South Korea, Japan, and many others – has ordered the Bank of Russia, the central bank, to develop a system for payments in rubles within a week.
“At the same time, I want to emphasize that Russia will definitely continue to supply natural gas in line with the volumes and prices, pricing mechanisms set forth in the existing contracts,” Putin said at a government meeting today.
It makes no sense for Russia to export goods to the EU or the United States in U.S. dollars or euros, Putin added. (more)
It will be interesting to see how quickly they can get this up and running.