Because the West has sealed the decline of the US dollar by restricting Russian assets, President Vladimir Putin’s rouble payment method for natural gas is the blueprint that the world’s largest country would apply to other important exports, according to the Kremlin.
Russia’s economy is in the grip of its worst crisis since the Soviet Union’s demise in 1991, thanks to severe sanctions imposed by the US and its allies in response to Putin’s Feb. 24 invasion of Ukraine.
So far, Putin’s main economic response has been an order on March 23 mandating that Russian gas exports be paid in roubles; however, the arrangement permits purchasers to pay in the agreed currency, which is subsequently converted into roubles by Gazprombank.
‘It is the prototype of the system,’ Kremlin spokesman Dmitry Peskov said of the rouble for gas payment system on Russia’s Channel One state television.
‘I have no doubt that it will be extended to additional classes of commodities,’ added Peskov. He did not specify a time range for such a move.
The West’s decision to freeze $300 billion of the central bank’s reserves, according to Peskov, was a ‘robbery’ that would have already expedited the shift away from reliance on the US dollar and the euro as global reserve currencies.
According to him, the Kremlin desired a new system to replace the parameters of the Bretton Woods financial architecture established by Western powers in 1944.
‘It is obvious that we will come to some new system – different from the Bretton Woods system,’ Peskov added, ‘even if this is currently a distant vision.’
He claimed that the West’s sanctions against Russia have ‘increased the erosion of confidence in the currency and euro.’
Putin has stated that the ‘special military operation’ in Ukraine is required because the US was using Ukraine to threaten Russia and Moscow needed to defend itself against Ukraine’s persecution of Russian-speaking people.
Ukraine has rejected Putin’s accusations of persecution, claiming that it is engaged in an unjustified war of aggression.
Russian officials have frequently stated that the West’s attempt to isolate one of the world’s largest suppliers of natural resources is an unreasonable act that will result in increasing consumer prices and a recession in Europe and the United States.
Russia has long sought to lessen its reliance on the US dollar, despite the fact that its principal exports – oil, gas, and metals – are valued in dollars on global markets. The dollar is by far the most traded currency in the world, followed by the euro, yen, and British pound.
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