‘Gas for Roubles’: The Economic War the West Never Expected [VIDEO]

ER Editor: Alexander Mercouris does a deep dive into the bizarre and hypocritical nature of the western reaction to Russia deciding energy (gas and oil) must be paid for in rubles. As the basis for his analysis, he uses this Zerohedge piece by Mish Shedlock, who explains what ‘paying in rubles’ really means, and why it’s actually not a particularly unusual way of paying for these goods. So as Mercouris asks, why all the western hysteria?

See Shedlock’s article for a clear explanation of the payment method: Via Clever Tactics, Putin Gets His Way On Rubles-For-Energy Demand

We also recommend Kit Knightly’s piece from Off-guardian for a more big picture perspective on how the sanctions are designed to come back on us, not Russia. See Is Russia the REAL Target of Western Sanctions? Or Is It Us?

VIDEO NOTES

• It’s become a WORLD crisis as the Ukraine situation is having global ramifications. All recent wars have been localised (Vietnam, Iraq, Congo, Yugoslavia, etc.) but this one is different because the western powers made the decision at the end of February to engage in a sanctions war against Russia. Which is now developing into a war of economic attrition. It’s being waged on a FALSE understanding of the Russian economy: sanctions were expected to implode the Russian economy rapidly, which hasn’t happened. Now the Western powers find themselves in a grinding war of attrition that is having knock-on effects on the economies at home and around the world. Yesterday, the CEO of BASF sounded the alarm for Germany; many others are also sounding the alarm.
• Companies (not states or individuals) that buy energy from Russia are now required to open an account in corresponding Russian banks. This means the Gazprom Bank. Companies will pay as they always have into those accounts in euros or dollars. Then Gazprom Bank converts this into rubles and pays it into the accounts the companies have opened with the bank. Gazprom energy company then receives rubles for the gas. The western companies involved in importing gas are still handling euros, but when they pay money into GB, it’s converted into rubles first.
• This isn’t very different to what happens when monies get transferred around the world. So why are the Europeans so angry about this arrangement? They’ve been calling it a breach of contract. Yet when Russian goods are paid for in euros or dollars, eventually it’s converted into rubles. But that normal arrangement is going to end because Russia can’t be expected to hold large amounts of foreign currency in accounts for their exported energy because, sooner or later, the monies in those accounts will be frozen as part of the sanctions. So this is all very understandable, which returns us back to the question about European anger. They’re calling Russia’s action ‘blackmail’ when it clearly isn’t, or a breach of contract. It’s for the energy companies themselves to decide what a breach of a contract is and what they’ll do about it. Mercouris’ prediction: most of them will agree to pay in rubles. Western govts may worry about creating a reserve currency out of the ruble by having to pay for everything from Russia in rubles, but they should have expected this when they imposed sanctions.
• The German ARE shaking and insisting they won’t comply, but German business leaders are sending major warnings to them about the timely need for Russian energy. If energy is cut off or cut back (as some European politicians seem to want), a major recession will be triggered in Germany and France and other EU countries over and above the recession that is already coming.
• This episode demonstrates the extraordinary extent to which the entire world economy is being affected by an economic war that the Western powers CHOSE to wage against Russia. (He reviews these sanctions and how extreme they are.) So they have to understand that economic sanctions cut both ways. But now the sanctions are affecting western economies in ways their leaders didn’t realize.
• This is an ongoing situation …

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