Russia is expanding its counterattack against Western sanctions by warning that “unfriendly” states may be forced to pay for most Russian exports with rubles.
Late last month, Russian President Vladimir Putin began the process of forcing states that have placed sanctions against Russia – “unfriendly” states – to pay for fuel exports with rubles. Refusal to do so will be considered a breach of contract with Russia. (Related: Russia could soon demand rubles for fertilizer, grains, minerals, timber and other commodities, not just energy.)
“If such payments are not made, we will consider this to be the buyers’ failure to perform commitments with all the ensuing implications,” said Putin. “It is absolutely clear that delivering our goods to the E.U., the U.S. and receiving payment in dollars, euros and a number of other currencies does not make any sense for us.”
Putin, through Kremlin spokesman Dmitry Peskov, later warned that the ruble payment scheme for gas is just a prototype, and more of the country’s major exports, such as metals, agricultural goods and other oil and gas products, could also be priced in rubles.
“Thus far, this has been a prototype of the system. But I have no doubt that in the future it will be extended to new groups of goods, and it will occupy more and more space in our foreign trade relations,” said Peskov during an interview with Russian state-owned TV station Rossiya-1. He added that unfriendly nations in Europe will have to open ruble accounts to pay for Russian exports.
“Russia values its reputation as a reliable supplier. Of course, we will not do anything that will undermine this reputation,” he said. “Therefore, everything will be fast, clear, understandable. But this must be done. These are the new rules, they must be followed. I reiterate that for European companies, nothing de facto will change. De jure, it will be a different system.”
Peskov explained that Russia’s decision to expand the ruble payment scheme was motivated by what he referred to as the West’s “anti-Russian” sanctions. The scheme, once fully implemented, will prevent Russia from being deprived of the income it used to receive from the dollar and euro payments it got from previous exports.
“What has happened? We see a frenzy of sanctions – the largest sanctions burden in history now falls on Russia. Besides, as you know, our foreign exchange reserves, which were in other countries, were arrested,” said Peskov.
He added that the West’s decision to freeze over $300 billion worth of the Russian central bank’s reserves held outside of the country was a “robbery” that will only accelerate the move away from the world’s reliance on the American dollar and the euro as global reserve currencies.
Peskov claimed that the West’s sanctions on Russia have also “accelerated the erosion of confidence in the dollar and euro.”
Furthermore, the demand for other countries to pay Russia in rubles is a way to fulfill the Kremlin’s desire of establishing a new financial system to replace the one established by Western powers near the end of the Second World War, known as the Bretton Woods system.
“It is obvious that, even if this is currently a distant prospect, we will come to some new system – different from the Bretton Woods system,” said Peskov.
Other Russian officials have long pointed out that Western attempts to isolate the Russian economy – one of the world’s largest producers of natural resources – is nothing more than an irrational act of economic warfare that will lead to soaring prices and more hardship for consumers in the West. They warned that it could even tip Europe and the U.S. into recessions.
Learn more about the economic war between Russia and the West at WWIII.news.
Watch this episode of the “Health Ranger Report” as Mike Adams, the Health Ranger, talks in detail about how Putin is challenging the petrodollar with the new “hydrocarbonruble.”
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