This is huge. Ruble already almost back to where it was pre-conflict even before this announcement.
Yeah, if Europe is forced to buy energy from Russia in roubles that will help ensure its stability and also turn it into a globally traded currency.
That’s a very laconic “if”.
Really should be a when, it’s not like Russia has anything to lose by doing that.
Makes sense from their perspective
With the current change it would be equivalent to paying with Monopoly money
Not really. If the Europeans pay for gas with Rubles, that will drive the price of Rubles higher.
And yet he can force them to do it.
I’m not actually sure he can, since some of the contracts are written in Euros.
What are they gonna do if he broke the contract’s terms? Sanction him?
It’s a bit of a game of chicken. Countries might press harder to get off Russian gas and oil if it’s clear that contract terms will be broken.
The sanctions already broke those contracts.
The question is how do they procure rubles. The EU have 4 options:
- exchange gold for rubles with Russia
- sell goods to Russia
- exchange euros for rubles on forex market
- buy rubles from Russia’s central bank with euros/USD
Let’s see how these options play out:
- gold is sanction proof and has tangible value
- is impossible without lifting sanctions
- will cause the ruble to appreciate against the euro, something the US is vehemently fighting against
- Russia may not accept USD/euro given the ways their holdings have been weaponized against them
If 4 occurs, this will force unfriendly countries to first purchase an intermediary currency, like the Yuan. The prospect of being forced into purchasing Yuan is something the west has been anticipating but has little defence against.
5 Search alternatives to the Russian Gas, that is what they are currently do.
Going to be a long search given that there aren’t any realistic alternatives. Europe gets around 40% of its gas from Russia, and you can’t just create this new capacity out of thin air. Countries that produce LNG, are already producing it at their capacity right now. LNG is also an order of magnitude more expensive than pipeline gas as well as being subject to market fluctuations. Pipeline gas from Russia is the only reliable way for Europe to have a steady energy supply at a predictable cost.
It’s absolutely shocking to me that European leaders did not think of this when they went along with US sanctions. It’s pretty clear that the reality is starting to set in now at least in Germany.
US LNG imports and let the proles freeze to death. Like a good US puppet state.
Seems like that was the plan all along. Europe was getting too cozy with Russia and China economically, and now they’re entirely dependent on US.
It is certainly not a global alternative that is resolved tomorrow, although in particular dependence on Russian gas is quite relative in many of the countries and depends more on certain particular interests than on real needs. An example is Spain, which hardly depends on Russian gas, but also has problems with energy prices, because electricity prices are dependent on the price of gas at European level, even though they are not directly related. The account is ridiculous and works the following way. The MWh produced by renewable energy costs between 30-40 Euros, but the MWH by fossil energy, to which Russian gas also belongs, reaches 350 Euros. This means that all the energy produced, regardless of whether they come from renewables or fossils, amounts to 350Euros / MWh, also in countries where almost all production is renewable. It’s crazy and the electric companies are earning a golden nose with this trick. That is to say, it is not so much the gas problem, if it would be treated differently, distributing the cost to the different members of the EC and making it independent from the electrical ones, It is a simple political question and the only impediment is to turn off the tap to the energy monopolies that regulate the price in their own interests. Things and consequences of the capitalist system and its privatizations of essential supplies, where lobbies and not the citizen set the rules.
Thing is that the countries that depend more on Russian gas are the ones that have industry and manufacturing. For example, Germany will likely start becoming deindustrialized going forward because the cost of manufacturing will skyrocket.
Germany tried to push into renewable energy, and shut down most of their reactors. The reality was that renewable energy was not meeting the needs, and that’s why Germany asked Russia to build nord stream 2 in the first place. Building up any sort of alternative infrastructure will literally take years, and it’s not clear what the plan is in the meantime.
Furthermore, it’s not just gas and oil that Europe depends on. It’s stuff like precious metals, food, fertilizer, and so on.
I completely agree that a lot of the problems are indeed tied to capitalism. However, there isn’t a clear path towards getting rid of capitalism in Europe either. What’s even more worrisome, is that economic turmoil is starting to fan the flames of fascism. A number of European countries, such as Hungary and Poland, either have right wing parties in power or have growing right wing movements as we’re seeing in France and Germany. The recession that Europe is now pretty much locked into will only accelerate the rise of these movements.
In any case, this crisis with Russia has moved in 2 weeks more than 15 years of negotiations on climate change and renewable energy. Certainly there are some raw material dependencies, but this can also provide others, apart from specific things there is not a crisis in this regard. Russian gas is naturally exorbitantly priced, but making gas independent of electricity can well distribute these expenses, even in German industry gas is not the primary source of energy, it only has this impact by determining electricity prices for this idiot fix. Now inventions are even coming out from under the rocks, such as obtaining fuel through CO2 and solar energy and similar things. Apparently this kick in the ass has at least served a purpose, creating needs that were previously lost among lobbies, politicians and bureaucracy.
I’m just sad that it isn’t moving things faster here in the US where we’re lagging behind Europe.
I think the good news is that there might really be a serious push to get off fossils, but I do think there is going to be a very rough period for the next few years and people need to prepare for that.
