So if the Euro goes down in value and the Rouble goes up in value Russia is laughing all the way to Gazprombank and Europe isn’t laughing at all but at least Europe can get some gas and maybe we don’t have WW3?
(Isn’t this similar to what the US did with the $? I.e, Countries buy $$$ to buy oil (and to keep the $ afloat) otherewise no oil for you?),
March 31 (Reuters) - Russian President Vladimir Putin decreed on Thursday that foreign buyers of Russian gas would have to use special accounts at Gazprombank to pay for the import of Russian gas.
A foreign buyer is now obliged to transfer foreign currency to one special, so called “K”, account. Gazprombank would then buy roubles on behalf of the gas buyer to transfer roubles to another special “K” account, the order said.
Gazprombank would then transfer rouble funds from a ‘K’ type account of the foreign gas buyer to Gazprom’s (GAZP.MM) rouble accounts, the order said. Gazprombank can open such accounts without a presence of a foreign buyer’s representative.
I vaguely remember some reference to Putin as a grand chess master. Well it seems to me those nasty ruskies have really gotten the whole chess thing.
1 Got to pay for your energy in roubles (or gold)
2 Got to get your roubles through a Gazprombank account
3 Got to hold your roubles in a Gazprombank account
They could have said “Don’t f*** with us or you’re dead” but they were much more diplomatic. They’ve just said, “If you can think and understand basic economics, then you’ll know not to f*** with us or you’re dead”
I’ve now come round to the view that the current Russia/Ukraine conflict and the Europe/Gas scenario is the beginning of the new (Schwabian style) NWO with China + Russia replacing the US as the head of it. Rubles for gas is the beginning of the control of Europe being passed from the West to the East and the beginning of the end of US$$$ hegemony.
I’m hopelessly confused but sense you’re right @Rich. The coup d’etat against Joe Biden looks like it’s gathering momentum, and I’d keep an eye on that vile Hillary if I were him, but staying compos mentis for long enough is quite clearly beyond him. Suddenly everyone in the US has covid again, which smacks of a desparation to get back to the narrative that worked seeing as the humbling of Russia didn’t quite get off the ground. Can’t the US just go back to splendid isolation for a decade or four and leave the rest of us alone…?!
Dmitry Orlov is explaining it all very clearly on his Boosty site. But you have to subscribe to read it. Worth the monthly sub. Go to ‘Club Orlov’ website for an entry point to Boosty. It needn’t cost you much at all. Excellent Russian perspective on what’s happening as we go through this global paradigm-shift…
Dmitry’s now considerable output - almost daily at times with the rapidly changing situation and a real bargain for a couple of quid per month - has been outstanding lately and with yet another piece this morning entitled “Europe doesn’t have any contracts for Russian natural gas” which gives latest developements inluding what’s just happened to Gazprom Russia’s relationship with Gazprom Germania,
Everyman, as far as I understand it it’s all about ‘the cut’. This is the commission charged by financial institutions if you’re doing deals in dollars, or maybe euros.
This commission is a relatively small amount of any given deal, yet when you’re talking about the global economy, mostly in dollars, it adds-up to a huge amount of money. It’s what’s kept the American economy floating on air for the last 50 years (and a large part of that has been the petrodollar).
The rubles for oil stuff that the Russians have now come out with effectively short circuits this. Yes, you can still use dollars or euros to buy Russian oil and gas, but you now have to first put those dollars and euros into the Russian banking system, to be converted into rubles. The Russian banking system now takes the commission, not the American banking system (and you’re talking about huge sums of money here).
Do you see how this works?
As always, international finance is a complicated subject. I never claim to be any kind of expert on it.
If you’re not familiar with it, Confessions of an Economic Hit Man by John Perkins is an excellent read.
I saw this little spoof recently, based on the five stages of grief postulated by Kubler-Ross: denial, anger, bargaining, depression and paying in roubles.
Karen, at the start of the Russian invasion, and all the resulting sanctions, the rouble fell through the floor.
The rouble is now through the roof (check it out). There’s a whole myriad of things in play here - not least all the poor bastards being killed in Ukraine. The main thing, perhaps, is that we’re looking at the very quick collapse of the American empire.
The power is now back on again where I am, and I’ve been able to have a proper shave.
You have to face infinity without flinching, and I prefer to do that clean-shaven.
Ok, Gazprombank gets a commission that otherwise would have gone to another bank. But my question stands, what does Gazprom bank do with all their euros?
Why doesn’t Putin just demand that the west just pay in rubles directly? Would that not do more for keeping the ruble strong and make it more of a reserve currency?
Simple. The Euros or other currencies are then used to pay for imports into Russia.
Late edit:
Of course the Russian need for Euros only continues until the bi-lateral trading (as currently being negotiated with India) is in place. Then, Russia will buy from India and pay in Rupees which they have accumulated from exports to India and vice-versa. Then, potentially, unless a country has a bi-lateral trade agreement with Russia, they cannot get access to Russian resources. Any country that applies sanctions to Russia, then are frozen out of access to Russian oil or gas.
Sorry, I don’t see it as ‘simple’. If the euros are used to pay for imports, what is the difference with the earlier system, (besides the possible ‘commission’ angle)? How does it hurt the EU countries if you keep buying stuff from them in their own currency? Won’t it help them? I mean, we assume that buying FROM Russia using Rubles helps Russia, so buying FROM EU countries using Euros should help EU also, right?
also, I thought the sanctions meant that Russia could NOT buy stuff from EU countries and USA and UK? If that is true, then what use are the Euros to the Russians?
Does Russia buy things from India with Euros? Any evidence for that?
You’re right. What use are Euros to the Russians. None at all while sanctions continue as all EU countries have applied sanctions. If the sanctions are lifted, trade can revert to normal, except for the wests freedom to speculate and manipulate the rouble.
I find it very confusing frankly, considering that Russia is supposedly fighting a war for its very survival as a sovereign state. As Craig Murray pointed out on twitter, Russia is still sending gas through the Ukrainian gas pipelines, paying Ukraine to do so, and the gas is going to Europe. If gazprom bank is going to be holding millions if not billions of useless euros, what’s the point? If Russia wanted to hurt EU, who is after all doing everything possible short of overt war to kill Russian soldiers, including weapons, advisors, intelligence sharing, why wouldn’t they at a minimum demand rubles directly for the gas and oil?
If anyone has some sourced answers on non paywall sites please post the links, thanks!
“…why wouldn’t they at a minimum demand rubles directly for the gas and oil?”
In the latest developements that is more or less what has just happened. (On Friday). Gazprom has dumped Gazprom Germany so Gazprom Germany can no longer get Russian gas and therefore can no longer supply it no matter what the currency. Germany will now have to buy Russian gas directly from Gazprom Russia with Rubles. And possibly oil at some stage and isn’t Uncle Sam going to love that!
Loads more about this on Dmitry Orlov’s excellent blog folks. Jesus wept it’s only a few quid a month ya tight buggers and a bargain t’boot! Plus you get to view the comments and comment yourselves. It’s a steal! I mean what’s not to like Hymie?
Its just smoke and mirrors, surely? For example a container load of saffron from Delhi is not paid for with a trunk full of rupees any more than it is bartered for a trainload of bulgar wheat. Electronic transfers pass to and fro, with an algorithm converting one set of numbers into a different “base”? At either end of the chain folks can withdraw paper money from their account, denominated in their legal tender, to buy turmeric or vodka. Pardon the clichés.
