In his chess match with the West, Putin struck a surprising blow: Europe will have to pay for petrol in rubles. Blackmail, rudeness, we can call it in different ways. The only thing that is certain is that the move is primarily aimed at strengthening the ruble. And apart from the constant reassurance, evidence that the Russian President intends to use gas and oil as weapons of war. Someone will remark that they are only doing it to defend themselves after suffering the harsh penalties and that the gas ends up being theirs so they can ask how they get paid. Yes, up to a point. There are treaties (and we need to see what currency they pay in) and let’s not forget that the evertougher sanctions are just a reaction to the Russian invasion.
Gas, it is all too clear, is a very powerful leverage that Russia knows it must keep Europe in check. But what has Putin’s decision to do with his country’s currency before (you never know) the supply disruption that would certainly have serious consequences for the Old Continent (but also for Russia)? One very simple thing: countries that buy Russian gas to pay for supplies must exchange euros for rubles. Obviously, to do this, they need to turn to the Russian banks, and up and down to the central bank. This will do two things: First, support the ruble and at the same time also support the central bank, which collects a commission for every transfer in rubles. The accounting ploy was well studied by Putin’s economic advisers.
But the move could prove very dangerous for Russia if it goes beyond the propaganda announcement. The benefits for the ruble would be undisputed, but blocking imports of valuable currency (euros or dollars) could turn out to be one boomerang. Indeed, in a short time, MOSCA would risk being dramatically impoverished and endangering the whole country. And there is another risk: what happens if Europeans decide not to accept the new payment method? Logically, the old continent would remain in the cold, that’s true, but what would Russia have to do? Close the taps. But then what would you do with the gas (380 million cubic meters per day)? And how would the Russian economy continue without the rich proceeds from this sale? Would you sell it to China? That’s not possible yet, the only pipeline to Beijing is fed from other sources. And even if you want, the flow rate of the pipeline is less (165 million cubic meters per day). However, it cannot be ruled out that gas supplies to Europe will be cut in order to exacerbate the conflict. Gazprom has not commented on Putin’s move for the time being.