©Reuters. FILE PHOTO: A photo illustration shows US dollar and Russian ruble bills in Sarajevo.
By Guy Faulconbridge
LONDON, April 2 – President Vladimir Putin’s ruble payment plan for natural gas is the prototype that the world’s largest country will expand to other key exports as the West stems the fall of the US dollar by freezing Russian assets determined, as the Kremlin called it.
The Russian economy is facing its worst crisis since the collapse of the Soviet Union in 1991 after the United States and its allies imposed crippling sanctions over Putin’s February 24 invasion of Ukraine.
Putin’s main economic response so far has been the March 23 decree that Russian gas exports will be paid for in rubles, although the plan allows buyers to pay in the contracted currency, which is then converted into rubles.
“It’s the prototype of the system,” Kremlin spokesman Dmitry Peskov told Russian state TV Channel One about the ruble payment system for gas.
“I have no doubt that it will be extended to new categories,” said Peskov. He did not set a deadline for this action.
Peskov called the West’s decision to freeze $300 billion in central bank reserves a “steal” that has already accelerated the move away from reliance on the US dollar and euro as world reserve currencies.
The Kremlin, he said, wanted a new system that would replace the outlines of the Bretton Woods financial architecture put in place by the Western powers in 1944.
“It is obvious that, although it is still a long way off at the moment, we will come to a new system that is different from the Bretton Woods system,” said Peskov.
Western sanctions against Russia, he said, have “accelerated the erosion of confidence in the dollar and euro.”
Putin said the “special military operation” in Ukraine was necessary because it was used by the United States to threaten Russia and because Moscow needed to defend itself against the persecution of Russian speakers in Ukraine.
Ukraine has denied Putin’s persecution allegations and says it is defending itself against unprovoked aggression.
Russian officials have repeatedly said that the West’s attempt to isolate one of the world’s largest producers of natural resources is an irrational act that will drive up consumer prices and push Europe and the United States into recession.
Russia has long sought to reduce its dependence on the US currency, even though its main exports – oil, gas and metals – are traded in dollars on world markets. The dollar is by far the world’s most traded currency, followed by the euro, the yen and the pound sterling.
(Reporting by Guy Faulconbridge; Editing in Spanish by Javier López de Lérida)
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