Russian civilisation will actually become stronger after banning these useless Western imports of goods and ideas.
Congratulations to them. Hopefully we will also find an excuse to expell Western worshippers as well
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Discussing long term impacts of Ukraine crisis
- Thread starter sndef888
- Start date
Congratulations to them. Hopefully we will also find an excuse to expell Western worshippers as well
A lot of stuff there which promote the idea of a Sino-Russia split.
Seeing how the West wants us to do this is one more reason to deepen our partnership with Russia.
Rule number 1:
Whatever the West wants you to do, do the opposite
I am puzzled by Russia's demand of being paid in rubles. The only place Europeans can get large quantifies of rubles will be with Russia's central bank. At the end of the day it seems to me that the Russian Central Bank will end up holding the same USD, Pounds, Euros etc... that it will get regardless of demanding payment in rubles.
The only thing I can think of is that Russia will come up with a two tiered exchange rate
The ruble today is trading at aroound 100 rubles per USD.
In a two tiered ruble rate, the regular ruble will continue trading at around 100 rubles per dollar (althou it will quickly appreciate if a two tiered rate is implemented) and create a second rate for the ruble which will apply exclusively to payments for gas and shortly after for oil, at any arbitrary exchange rate the central bank deems reasonable. Who knows, 40 rubles to the dollar?, 50 rubles to the dollar?
All the idiots in Europe will scream "breach of contract", happibly ignoring they stole Russias cash in banks.
The clear effect is that Europe will have to disburse say 250 USD equivalent to buy one unit of gas, or oil.
I am really looking foward to see Europe having to buy rubles at 40 rubles per dollar.
THIS WILL BE AN ATOM BOMB IN EUROPE'S ALREDAY IN SHAMBLES ECONOMY.
This is a more in depth explanation of what it means for Europe to pay for gas in rubles, and its implications.
Recently, Russian President Vladimir Putin announced that Russia is switching from euros and dollars to rubles in payments for natural gas supplies to buyers from unfriendly countries. He cited the fact that Western currencies, traditionally used to pay for Russian gas, have "compromised" themselves. Putin has made it clear that this is only the beginning. Later, Deputy Prime Minister Alexander Novak also said that it had become unreliable to trade oil for dollars and euros, and in the future it is necessary to switch to settlements in national currencies here as well.
Europe, of course, is furious with the Kremlin's decision, since there is a big risk of being left without gas if the Russian proposal, which is a de facto ultimatum, is rejected. The Russian president said that other terms of the contracts would not be reviewed. This means that the pricing formula will remain exactly the same as before. Buyer companies will buy Russian gas in the original dollar price.
The new procedure for paying for gas with Europe is that, if previously foreign companies directly settled with Gazprom in dollars and euros, now they will transfer these currencies to certain companies on the stock exchange in exchange for rubles, which will go to Gazprom bank accounts. In fact, a new link is added to the gas chain. From a technical point of view, no problems should arise with Russia's new payment proposal. But, difficulties may arise when European companies look for companies on the stock exchange from which they can buy rubles, since Europeans will, first of all, have to make sure that these companies are not under sanctions.
Although the easiest way would be to buy a chunk of Russian rubles from the Central Bank of Russia, the Europeans themselves placed this bank under sanctions, which negatively affects them. The Russian ultimatum "pay for gas in rubles" is a matter of principle for the Kremlin, as half of its Central Bank's gold and foreign exchange reserves have been frozen. This is about $300 billion. This ultimatum is a definite message to Europe, which means: "If you remove sanctions on the Central Bank, you will live easier."
Gazprom will have to send a draft supplementary agreement to all its counterparties. Changes have been made to only one clause of the contract, which specifies the currency in which payments for the supplied gas are made. And if the companies sign this additional agreement, they do concede their dependence on Russian gas. In fact, reading between the lines, the Russian ultimatum is: "Either we switch to payments in rubles, or we don't sell gas to you."
By the way, Russia is most criticized by those countries whose contracts with Gazprom expire in 2022. These include Poland and Bulgaria. For them and other European countries, a dramatic situation is emerging - the heating season ends, and they leave it with devastating gas storages. European countries now just need to buy a lot of gas in order to prepare for next winter.
If the European Commission, for example, intervenes in this issue and makes a decree banning the transfer of payments for gas to rubles, Russia can take this as a sanction and say: "Since you do not send us rubles, it means you refuse to pay for gas, then we turn it off." First, such an approach by Europe to the Russian ultimatum may lead to a breakdown in gas purchases. Second, Russia may impose a ban on the supply of oil and coal, which will lead to a global energy crisis. Europe ditching Russian gas and oil will result in very serious consequences for the Europeans themselves. On one hand, this is an inevitable rise in gas prices around the world. On the other, it will lead to power outages in Europe, since part of the electricity supply is produced using gas. This begs the question - how will Europe prepare for next winter without Russian energy supplies? In this case, Europe will have to stock up on coal, but will Russia supply coal to European countries? Russia is one of the largest suppliers of coal on the world market, second only to Indonesia and Australia in terms of volumes. As of 2019, Russia is the largest coal supplier to the EU with a 47 percent share.
So economy-wise, not only Russia itself will suffer from the sanctions, but also European countries. The interests of the EU will also suffer from a political point of view, since the economic war declared on Russia will further strengthen the position of the United States in Europe, increase the dependence of European countries, especially Germany and France, on the United States.
As a point, the statement of French President Emmanuel Macron that Europe should create its own army to protect themselves will be recalled. Germany also supported the idea of creating a single European Armed Forces. This idea turned out to be just a figment of their imagination, and I do not think any of the European politicians will dare to mention it in the future. Because in the new emerging world order, Europe will have tough days ahead. Europeans will have to endure serious economic difficulties. The EU has suffered a geopolitical defeat and will for a long time lick the wounds inflicted on themselves with the help of the United States.
It's funny how desperate the West wants its population to believe that China will split with Russia...tells you all you need to know. As for stance of the Chinese population, I think the comments of any video regarding Ukraine should tell you more than enough...such as this one.
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Why didn't Russia transfer their reserves back home? Or if not that to China or a more friendly country?The harshest sanctions imposed on Russia are the theft of its foreign currency reserves. Ten years ago the SWIFT sanctions would cause panic, not anymore. All the other sanctions are punctual and really do not cause THAT much harm to Russia's economy.
The companies which are fleeing Russia are leaving valuable assets behind which the Russia government will soon make it keep running under new ownership. Unless I am mistaken, it seems to me that all branches of McDonald's, Burger King, Starbucks, etc... etc... are functioning full steam with the benefit of not having to pay for royalties to the franchiser.
In the first few days, there was panic with people queing around the block to draw against their bank accounts.
But let's analyze a little bit about the harshest of those sanctions, the theft of the FX reserves. How do they affect the Russian economy.
Those reserves are, for all practical purposes, the equivalent of an individual's savings account. He has accumulated those savings throughout a given period in order to maybe use them in a rainy day. But mind you, those are SAVINGS!!! They are not to be used on a daily basis. On a daily basis you use your regular paycheck. You use whatever you earn on a weekly, quarterly, or monthly basis. You actually don't NEED your savings. They were just quietly sitting there at the bank. You don't die if you lose your savings.
If you have accumulated savings (or reserves in the case of countries) , it means that you earn MORE THAN YOU SPEND.
So, again, if a country accumulates reserves it means that it is exporting more than it is importing. It means your "salary" covers all you monthly expenses and there is a little to be kept aside at the end of the month.
Well, Russia was acccumulating reserves with gas prices much much lower than today's prices. It was accumulating reserves with oil prices much, much lower than today's prices.
What conclusion can one arrive at?
Well, if Russia exported considerably more than it imported when it was selling gas and oil and wheat and minerals at much, much lower prices one can confidently say it is in a better situation today than it was before its reserves were stolen, i.e., its saving capacity today is much higher than it was before the war, befores being stolen and before commodities prices shoot sky high.
In fact, with the incredibly high prices Russia's commdities are being sold, it should not have any difficulties weathering the rough time it will face in the coming months.
It is certainly hard to face hardship such as a divorce, a car accident or fire in your home when you have no money in your pocket. But if you are granted a huuuugggeee salary increase, your life can quite quickly be rearranged.
It will have supply chain problems in those items that were imported. Russians will have a hard time buying Gucci and Dior bags or garments They may not be able to buy shortly any Louboutin shoes. They will also have difficulty buying German, French or Italian cars. They may not be able to open bottles of champagne in their restaurants or drink French, Italian or German wines. But... come on! They can live withou that without needing to starve or go naked.
More importantly, if you have a steady increased income, as a country, you will very shortly develop a very, very, very solid industrial park in order to substitute imports.
One of the ways countries can develop their industrial base is to replace imports.
If you are cash rich, this will not be a problem.
Mind you, Russia is self sufficient in energy, in food and has a highly educated population.
They will substitute imports very, very quickly and this will absorb a hell of a lot of people.
I can bet that in just a few months its economy will hire any and all people who may be un-employed because of the shock and aw of the sanctions and in a few months it will be running at full employment.
IF YOU HAVE A VERY HIGH INCOME FROM IMPORTS, you can develop very rapidly your country and absorb all people at working age by means of replacing imports.
Being self sufficient in energy and food. Exporting your products at a much, much higher price ... and being forced to replace imports. You have a recipe for exceptionally high GDP growth.
Meanwhile, Europe.... need I say anything?
It's like freezing assets is a new thing, the exact same thing was done to Afghanistan a few months earlier. Is the reason really that Russia didn't think the west would do this?
Also, what legal recourse does Russia have to get their assets unfrozen?
Might be physically impossible to transfer so many billions of usd into russia. Would also have been a sure indication that they are preparing for warWhy didn't Russia transfer their reserves back home? Or if not that to China or a more friendly country?
It's like freezing assets is a new thing, the exact same thing was done to Afghanistan a few months earlier. Is the reason really that Russia didn't think the west would do this?
Also, what legal recourse does Russia have to get their assets unfrozen?
They have little legal recourse. The hegemon will do what it wants since nobody can say otherwise.
It is an economical and financial war and as one says, in love and war everything is valid.They have little legal recourse. The hegemon will do what it wants since nobody can say otherwise.
I think everything is lost as far as Russia and the collective west is concerned. Those dollars, euros, pounds, swiss francs and yens are most likely lost forever.
If that is the case, and if I were to decide about this selling gas in rubles, I would create a two tiered rate exchange which would mean those "unfriendly countries" would have to pay much, much higher for my rubles in order to settle gas and oil and other commodities payments.
Gas prices are already exhorbitant. With a two tiered rate Europe may have to pay double the price for the gas and oil etc...
Let EU complain to the Pope that Russia is breaching contracts and charging exhorbitant prices for the gas and oil.
My two cents
If the West sanction goods and service purchases by Russia those dollars or euros are useless anyway. And the volume of foreign currency reserves Russia held abroad basically covers foreign debt. If they think this will be a windfall for them then they are wrong.Why didn't Russia transfer their reserves back home? Or if not that to China or a more friendly country?
I would be surprised if they unfreeze the Russian assets in our lifetime. If you look at Afghanistan they are already stealing the assets they froze with spurious lawsuits.Also, what legal recourse does Russia have to get their assets unfrozen?
This is a more in depth explanation of what it means for Europe to pay for gas in rubles, and its implications.
@jfcarli
So it looks like (non-sanctioned) Russian companies receive payment in EUR/USD, and then issue rubles to European gas buyers.
Presumably these non-sanctioned Russian companies can spend the EUR/USD as they wish.