Russia and the West… An expanding war and a new international exchange system
Russia and NATO decided to enter into an open confrontation in the Ukrainian war, a confrontation with known goals, but unknown ceilings and results, and what it can reach, so the most affected is the Russian citizen, the Western European and American, under the pressure of inflationary waves and the fiery rises in the prices of basic commodities, food, services, fuel, electricity bills, public transportation, etc.
It is the arena of confrontation that does not seem to be confined to Ukraine only, despite the ferocity of destruction, fighting and destruction, but the biggest confrontation is in the oil and gas energy war, on which the two sides rely heavily economically and financially, as one of the most prominent weapons in the current open war. Russia relies on energy in the accumulation of hard currency that flows into its coffers, amounting to more than 100 billion dollars annually, and the West depends entirely on energy in operating the industrial and production sectors, generating electricity and running public transportation, and in every wheel of its life.
Russia decided to escalate its position as a result of the expansion of Western sanctions, and put forward high-ceilinged conditions to stop war and destruction, and stopped exporting gas to some European countries that want to pay for it in Russian rubles, after their budget lost dollar reserves and treasury bonds that the West and its banks put its hands on, which amount to 300 billion dollars, on the pretext that it is among the sanctions measures against Moscow, which wants to impose conditions for selling gas in rubles, not dollars and euros, on buyers, or else cut supplies, which happened despite the huge risks surrounding this step, including the loss of the Russian budget for billions of dollars, and Moscow’s payment Huge fines for countries that buy Russian gas, as they have violated the terms of the contracts that stipulate that the currency of paying deals be in dollars or euros, and not in the Russian currency. Moscow also knows that cutting gas is a painful and dangerous step for the European countries that Washington supports in its retaliatory steps against it, Such as successive economic sanctions, the ban on the purchase of Russian oil and gas, and the freezing of $300 billion of Russia’s reserves with Western banks. Therefore, the world today is in front of changing the lines of production relations again, based on the international balance of power that will be produced by the Russian-Ukrainian war.
Russia knows and realizes that what afflicts the West the most these days is cutting off natural gas, which paralyzes the industrial sector, and all productive and economic sectors, especially with the lack of quick alternatives for Europe, and it is costly at the same time, and it will also confuse global energy markets through the frightening rise, which is What happened where prices increased by 24% in one day.
And with it, the West realizes that it will not stand by and watch Russia cut off gas supplies from it, although some European energy companies have opened accounts in rubles to import Russian gas, to avoid cutting off gas, and not to create confusion among the productive sectors, but Europe is preparing to impose a comprehensive ban on Russian energy imports from Oil and gas, which will constitute a blow to the Russian economy, and Putin’s war plans in Ukraine, as Europe calls it, because Russia receives more than one billion dollars from Europe every day, as a result of its exports of oil and natural gas to the countries of the continent, which is a huge amount that this Russian budget needs. The days after the freezing of half of Russia’s foreign exchange reserves, and Russia’s need to finance the open war in Ukraine so far.
This energy war is escalating, and the Russian and Western parties know each other’s need for the other, knowing that any profit-making for one party at the expense of the other requires time and patience, military and political tactics, and taking wise and painful decisions together in that open economic war.
European energy companies face difficult choices, between paying for Russian gas imports in rubles, because it is the Russian economy, and the exchange rate of the ruble, or facing a severe fuel crisis during the coming winter, turmoil in the energy market, and more inflation, as it seems that Europe has now succumbed to pressure According to informed sources, the British newspaper “Financial Times”, the major energy distribution companies in Germany, Austria, Hungary and Slovakia are preparing to open accounts in rubles in the Russian “Gazprom” Bank in Switzerland, to avoid entering into an energy crisis, Major European groups importing Russian gas began to open similar accounts in rubles, and some of them actually opened accounts, and others made payments in rubles.
Bloomberg Agency also revealed that ten European companies that buy Russian natural gas have already opened accounts in Gazprom Bank to meet Russia’s demand for payment in rubles.
Western reports also revealed that the Italian company Eni is preparing to open accounts in rubles at the branch of the Swiss “Gazprom Bank”, as European energy groups consider opening these accounts as a precautionary measure, in anticipation of a confusion in the gas market that threatens gas supplies, and raises its price to unexpected levels.
So, it is the Ukraine crisis, which puts Russia, Western Europe and America in front of two borders, and at a crossroads: between its interests in providing energy supplies for natural gas from Russia and the risks resulting from pumping this huge money into the Russian treasury, going directly to finance the Russian invasion of Ukraine.
Europe continues to buy Russian oil and natural gas, and daily pays about one billion dollars to the Moscow treasury, through the state-owned company Gazprom, and this is an important amount that strengthens the Russian economy, which is experiencing collapse and deterioration after Western sanctions, and directly contributes to supporting the value of the exchange rate of the Russian ruble against currencies. Which has risen remarkably, since President Vladimir Putin decided to force European companies to pay the price of energy in the Russian currency, as European companies pay 60% of the value of Russian oil and gas imports in euros and 40% in dollars, and this means that making the payment in rubles requires an inspection of a bank that is able to Convert euros or dollars to rubles. In principle, Russia forced European companies to pay for gas in rubles in order to circumvent Western sanctions, and open a loophole in the wall of tight sanctions in the sale of oil and gas. This will also cause Gazprom problems as it will remain without a balance of foreign currencies to pay its foreign needs in hard currencies.
Exchange system development
Russian economists consider and prefer to settle gas deals through bartering for goods that Russia needs from the ruble payment process, since it is not dealt with in most international banks at the moment, especially since it is not yet known to estimate the market value of the ruble against the dollar or the euro, as the Russian Central Bank is one of the determines its value, and this in itself is a dilemma facing European energy groups contracting to buy Russian gas.
The Russian Central Bank, according to Russian economists, has predetermined that the ruble is pegged to gold, as one gram of gold is equivalent to 5,000 rubles, but Russian economists are skeptical about this, as there is in fact no gold standard for the Russian currency, since the central bank buys a gram of gold. for 5,000 rubles, but it does not necessarily mean that he will sell gold for 5,000 rubles or any other quantity.
On the other hand, American experts and economists believe that European companies paying for Russian gas in rubles will be cheaper for them than the dollar and the euro, because the ruble is a collapsing currency, and this is in their favour.
As Bloomberg data indicated, the move by major European companies to open accounts in rubles has led to relative calm in natural gas prices, with the start of providing studies to buyers that would enable Europe to obtain oil and gas supplies from Russia, without violating sanctions. Noting that natural gas futures contracts fell by 3.5% after they rose by about 16% in the past.