Posted on 04/03/2022 8:04:57 AM PDT by SeekAndFind
Saddam, Gaddafi, Iran, Venezuela – they all tried but couldn’t do it. But Russia is on a different level altogether.
The beauty of the game-changing, gas-for-rubles, geoeconomic jujitsu applied by Moscow is its stark simplicity.
Russian President Vladimir Putin’s presidential decree on new payment terms for energy products, predictably, was misunderstood by the collective west. The Russian government is not exactly demanding straightforward payment for gas in rubles. What Moscow wants is to be paid at Gazprombank in Russia, in its currency of choice, and not at a Gazprom account in any banking institution in western capitals.
That’s the essence of less-is-more sophistication. Gazprombank will sell the foreign currency – dollars or euros – deposited by their customers on the Moscow Stock Exchange and credit it to different accounts in rubles within Gazprombank.
What this means in practice is that foreign currency should be sent directly to Russia, and not accumulated in a foreign bank – where it can easily be held hostage, or frozen, for that matter.
All these transactions from now on should be transferred to a Russian jurisdiction – thus eliminating the risk of payments being interrupted or outright blocked.
It’s no wonder the subservient European Union (EU) apparatus – actively engaged in destroying their own national economies on behalf of Washington’s interests – is intellectually unequipped to understand the complex matter of exchanging euros into rubles.
Gazprom made things easier this Friday, sending official notifications to its counterparts in the west and Japan.
Putin himself was forced to explain in writing to German Chancellor Olaf Scholz how it all works.
Once again, very simple: Customers open an account with Gazprombank in Russia. Payments are made in foreign currency – dollars or euros – converted into rubles according to the current exchange rate, and transferred to different Gazprom accounts.
Thus it is 100 percent guaranteed that Gazprom will be paid.
That’s in stark contrast to what the United States was forcing the Europeans to do: pay for Russian gas in Gazprom accounts in Europe, which would then be instantly frozen. These accounts would only be unblocked with the end of Operation Z, Russia’s military ops in Ukraine.
Yet the Americans want the war to go on indefinitely, to “bog down” Moscow as if this was Afghanistan in the 1980s, and have strictly forbidden the Ukrainian Comedian in front of a green screen somewhere – certainly not Kiev – to accept any ceasefire or peace deal.
So Gazprom accounts in Europe would continue to be frozen.
As Scholz was still trying to understand the obvious, his economic minions went berserk, floating the idea of nationalizing Gazprom’s subsidiaries – Gazprom Germania and Wingas – in case Russia decides to halt the gas flow.
This is ridiculous. It’s as if Berlin functionaries believe that Gazprom subsidiaries produce natural gas in centrally heated offices across Germany.
The new rubles-for-gas mechanism does not in any way violate existing contracts. Yet, as Putin warned, existing contracts may indeed be stopped: “If such [ruble] payments are not made, we will consider this to be the buyers’ failure to perform commitments with all ensuing implications.”
Kremlin spokesman Dmitri Peskov was adamant that the mechanism will not be reversed under the current, dire circumstances. Still that does not mean that the gas flow would be instantly cut off. Payment in rubles will be expected from ‘The Unfriendlies’ – a list of hostile states that includes mostly the US, Canada, Japan and the EU – in the second half of April and early May.
For the overwhelming majority of the Global South, the overarching Big Picture is crystal clear: an Atlanticist oligarchy is refusing to buy the Russian gas essential to the wellbeing of the population of Europe, while fully engaged in the weaponization of toxic inflation rates against the same population.
This gas-for-rubles mechanism – call it Rublegas – is just the first concrete building block in the construction of an alternative financial/monetary system, in tandem with many other mechanisms: ruble-rupee trade; the Saudi petroyuan; the Iran-Russia SWIFT- bypassing mechanism; and the most important of all, the China-Eurasia Economic Union (EAEU) design of a comprehensive financial/monetary system, with the first draft to be presented in the next few days.
And all of the above is directly linked to the stunning emergence of the ruble as a new, resource-based reserve currency.
After the predictable initial stages of denial, the EU – actually, Germany – must face reality. The EU depends on steady supplies of Russian gas (40 percent) and oil (25 percent). The sanction hysteria has already engineered certified blowback.
Natural gas accounts for 50 percent of the needs of Germany’s chemical and pharmaceutical industries. There’s no feasible replacement, be it from Algeria, Norway, Qatar or Turkmenistan. Germany is the EU’s industrial powerhouse. Only Russian gas is capable of keeping the German – and European – industrial base humming and at very affordable prices in case of long-term contracts.
Disrupt this set up and you have horrifying turbulence across the EU and beyond.
The inimitable Andrei Martyanov has summed it up this way: “Only two things define the world: the actual physical economy, and military power, which is its first derivative. Everything else are derivatives but you cannot live on derivatives.”
The American turbo-capitalist casino believes its own derivative “narrative” – which has nothing to do with the real economy. The EU will eventually be forced by reality to move from denial to acceptance. Meanwhile, the Global South will be fast adapting to the new paradigm: the Davos Great Reset has been shattered by the Russian Reset.
The views expressed in this article do not necessarily reflect those of The Cradle.
If Europe wants to win this one, they’ll have to give up their green lunacy. So far, Biden has shown that no amount of pain or pressure will allow him the freedom from his lefty-green masters to even approve a pipeline. So, how can crazy Europe who have gone nuts for solar in a country with insufficient sun and no coal or nuclear in countries that have both in abundance? The Greens will either step up to the plate, lose out entirely, or, bow to Putin. Those are the options, Greens. Pick one.
Russia could also just make energy cheap within their own country. Not ridiculously so, and not for everyone - but for utilities, and particularly, industry.
Energy use and GDP are in a nearly perfect 1:1 ratio. You can’t have an economy without it.
Cheap energy for manufacturers would attract a lot of global manufacturing and development. China did it with cheap labor, but they are losing that advantage, and China doesn’t have cheap energy. Russia could do it with energy.
Thankfully we can do without Russian oil quite easily. Europe on the other hand is screwed.
Sure it is.
The decline of the dollar as the world's reserve currency will be devastating to our standard of living. Make no mistake. Our children and grandchildren will pay the price.
The West is ruled by idiotic, fanatical perverts.
“Thankfully we can do without Russian oil quite easily. Europe on the other hand is screwed.”
Sure we can — only it’s 10 times more expensive.
Good idea.
Yep, as long as we do without Biden, Democrats and Prog Marxists, too.
Otherwise, like Europe, we're screwed, too.
Agree.
Agree.
Interesting Idea.
What this means in practice is that foreign currency should be sent directly to Russia, and not accumulated in a foreign bank – where it can easily be held hostage, or frozen, for that matter.
The Greens will either step up to the plate, lose out entirely, or, bow to Putin. Those are the options, Greens. Pick one.
It is already cheap and it is not news — this has been case for years.
And this already led to Europeans (Germans in particular) building various plants in Russia. Naturally this stopped now (sanctions) but the fundamentals did not change.
Obviously you have a solution. What is it?
Informative article, but the scale of influence of Russian resources has been completely blown out of proportion. It will impact us, and Europe, of course. But, Russia is not going to become the world’s economic superpower with the magic swoop of the hand anymore than Saudi Arabia.
Teaming up with America’s enemies and frenemies might do it - but there wouldn’t be much left of the world economy to enjoy it. I don’t think China and India are willing to make that trade over Ukraine.
Note* this article would’ve been more seriously considered without alluding to Zelinsky being elsewhere on “green screen”. I suppose that’s possible, but it reeks of bias.
True. Empires cost money. They over-extend, then decline.
Empires send their blood and treasure overseas, creating wealth for the ruling class, but for future generations, debt, refugees, and tyranny.
Pat Buchanan, and others, warned us about the cost of empire.
Banking is the whole game. Switzerland hasn’t had more than a century of neutrality because of its citizen army, it’s because of the Bank for International Settlements as an institution for govts to evade their own Trading with the Enemy acts. Gaddafi got Hillary’s “we came, we saw, he died” gleeful treatment because he was establishing a Pan-Islamic non-usurious/loansharking currency which would have removed Islamic petroleum producers from under the Oligarchs’ control. Larry Fink of BlackRock would have a much less commodious situation if Gaddafi hadn’t been liquidated
Nice summation, but the various leeches can live off the derivatives as long as they don't kill the host.
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