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More Sanctions On Russia Will Destroy Europe
On February 21 Russia announced that it would recognize the Donbas republics. A day later it did so. The 'west' immediately announced sanctions which in fact had been prepared in advance. On February 24 Russian troops crossed the border into Ukraine.
The Russian ruble immediately took a big hit. It has since recovered a bit.
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Today's news will bring the ruble to a new heights.
Kommersant reports (machine translation):
Putin instructed to convert gas contracts with unfriendly countries into rubles
President Vladimir Putin instructed to issue a directive to Gazprom to convert contracts into rubles for unfriendly countries. In his opinion, supplying Russian goods to the EU, the USA and receiving payment in dollars and euros "does not make any sense for us." Against this background, the ruble moved to growth on the Moscow Exchange.
“Both the US and the EU have basically defaulted on their obligations to Russia. And now everyone in the world knows that obligations in dollars and euros may not be fulfilled. <…> It is quite obvious that in this regard, it makes no sense for us to supply our goods to both the EU and the USA and receive payment in dollars, euros and a number of other currencies. Therefore, I have decided to implement in the shortest possible time a set of measures to transfer payments for our natural gas supplied to unfriendly countries to Russian rubles,” Mr. Putin said at a meeting with the government.
The President instructed the Central Bank and the government to determine within a week the order of operations for the purchase of rubles on the domestic market by buyers of Russian gas. He claims that Russia will continue to supply gas "in accordance with the volumes and according to the pricing principles concluded in the contracts."
The dollar exchange rate on the Moscow Exchange fell below 100 rubles. for the first time since March 3rd. As of 15:37, the US currency is trading at 101.55 rubles. (-2 rubles). The euro exchange rate fell by 2.85 rubles to 111.65 rubles. The maximum dollar fell to 94.99 rubles, the euro – to 109.7 rubles.
The European Union, the United States, Great Britain and a number of other countries have imposed sanctions against Russia in response to the military operation in Ukraine, which has been carried out since February 24 on the orders of Mr. Putin. One of the measures was the freezing of about half of the Central Bank's gold and foreign exchange reserves ($300 billion).
To pay in ruble one first has to buy rubles. With higher demand for rubles and no change in supplies the price for the Russian currency will go up. As Russia is selling hydrocarbons and other resources for billions of dollars per day the ruble is likely to soon reach record heights.
On February 28 another round of sanctions hit Russia. The part of the Russian central bank reserves that were stored in the 'west' were frozen. The central bank immediately pushed its interest rate from 9% to 20% to prevent a flight from the ruble. This helped to lessen the damage but made credit expensive and has hit the future growth potential in Russia.
But with a high new rubles demand from the outside of Russia the central bank will soon be able to lower its interest rate to more normal levels. Credit conditions will ease and investment in Russia, to replace products that had so far been imported, will rise again.
Today's move to demand rubles for hydrocarbons is only on of the many steps Russia can, and likely will take, to retaliate for sanctions from the 'west'.
As I wrote previously:
All energy consumption in the U.S. and EU will now come at a premium price. This will push the EU and the U.S. into a recession. As Russia will increase the prices for exports of goods in which it has market power – gas, oil, wheat, potassium, titanium, aluminum, palladium, neon etc – the rise in inflation all around the world will become significant.
Meanwhile the New York Times writes:
As he heads to Europe, President Biden will press U.S. allies to help impose even more aggressive sanctions on Russia.
Biden demands that Europe suicides itself while he is protecting the U.S. industry. I hope that some people in the European capitals are still able to think clear enough to recognize the racket the U.S. is trying to run here:
Together with the economic devastation that U.S. and European sanctions on Russia are causing in their own economies this will end in regime-changes in several European countries. The U.S. is of course again protecting itself from as much as it can at the cost of others.
Source: Bloomberg – bigger
Tony Wood asks:
The question remains, why did all those who for so long foretold this war do so little to stop it, and so much to hasten the disaster Russia has now set in motion?
Indeed. Why didn't the government of Germany guarantee in writing that it would veto any additional NATO membership? It would have solved at least half of the problem. Why didn't any other NATO government do so?
And what are they doing now? Where are their initiatives for peace?
Wake up. Otherwise this will end in disaster. Not for Russia but for the rest of Europe.
Posted by: gottlieb | Mar 23 2022 15:15 utc | 18
Nice simile. Well done.
Posted by: ScottinDallas | Mar 23 2022 15:58 utc | 44
As I like to say, “That Ain’t Gonna Happen.” Look at Gottlieb’s post at 18. This is how the US works.
Posted by: c1ue | Mar 23 2022 18:07 utc | 104
“It is like being in a boxing match where the opponent starts punching himself.
3 Stooges but as sovereign powers…”
LOL And people wonder why I think humans suck. Exhibit A, our dear leaders – all of whom were put in power by their electorates.
Posted by: DunGroanin | Mar 23 2022 18:13 utc | 106
Posted by: Alpi | Mar 23 2022 18:31 utc | 113
Posted by: DunGroanin | Mar 23 2022 19:34 utc | 134
This is indeed concerning. Which is why I recommended Russia send an armored column down the Polish border to forestall that move, close the Polish border so no more weapons and mercenaries entering Ukraine, and as a bonus seize Lvov to start the neo-Nazi cleansing sooner.
I passed this by Andrei Martyanov, and while his personal opinion was that such a move was not worth the life of a Russian soldier, he admitted he didn’t know what Putin and his team would do.
There is an interesing article over at The Saker by Rotislav Ishchenko on precisely this issue of Poland involving itself in Ukraine.
I do not think that Poles really want a part of the territory of Ukraine, because it is to get somewhere between 10-15 million Bandera for 35 million Poles. This is a lot. This is not the 2 million that Poland digested after the Great Patriotic War.
This can destabilize Poland very much, because such a minority makes up a third of the entire population, which is absolutely hostile to this population. Bandera massacred the Poles, and the Poles hate Bandera. And when these two cultures collide on the same territory in a non-abstract way, such as, everyone lives in their own country and both hate Russia; – and when they collide on the same territory it turns out that they also hate each other, – for Poland it will not be like a gift.
It is important for the Poles to maintain a Ukrainian buffer between themselves and Russia. Therefore, theoretically, by entering western Ukraine, they can try to preserve Ukrainian statehood at least in three, four, at least five regions, and this Ukrainian statehood will be due to the demarcation line, not making peace with Russia, but concluding a truce on the principle of the Minsk agreements. They will, because of the line of demarcation, all the time claim the entire territory of Ukraine, the Crimea, the Donbass and even the Kuban and Voronezh.
And Russia will always have this problem, a splinter sticking out in the boot, which will not allow much concentration against Poland.
Therefore, the Poles are making serious enough efforts to preserve Ukrainian statehood, in one form or another. Another thing is that they are also afraid, because you don’t understand that if they go out alone on their own initiative without any support, they will simply be kicked in the neck and thrown back, and this will end the liberation campaign.
But they understand that they cannot rely on the verbal, political support of the United States. That the United States will put pressure on their European allies to provide more help, and so on. And if all this works out, if the Poles know that they are not alone, but at least two or three of them, and that, for example, Germany, France, everyone else was forced to somehow help, for example, to send military equipment, transfer aviation , then they may well afford to venture into western Ukraine.
Ukraine somehow feels insecure in such a position, but the fact is that Russian forces are also unable to stretch indefinitely. You see, we are even dealing with Ukraine step by step. That is, not everything at once, although the configuration of the Ukrainian borders made it possible, given sufficient military resources, to complete the problem, to close the issue in three weeks, and after that to deal only with cleansing.
But our military resources are not unlimited. In order to create an appropriate army, it is necessary to mobilize. which no one wants to do, because we still have a special operation not a war. If Polish resources are connected to these Ukrainian resources, which are now opposing Russia, then the problem of promotion will be even stronger. If other NATO countries are looming behind Poland, then the question arises whether we can grind all these armies that are potentially opposing us with the help of available forces, or we need to either mobilize or resort to nuclear weapons. Especially since any NATO country entering into a conflict is a country of a bloc that has nuclear weapons. In accordance with the Russian military doctrine, we can strike such a bloc with a nuclear strike even first.
As you understand, the issue is very difficult to resolve, and both of these decisions will be extremely disadvantageous, including for Russia. It doesn’t matter who wins later, but this also means big losses, and not only human, but economic, and so on and so forth.
I am still considering this. I think it argues for my position that Russia needs to “capture” all of Ukraine, and not let the western region fall away to its enemies, even if most of the population of western Ukraine are its enemies. I think that can be prevented effectively and further that the internal enemies can be controlled so as both not to be dangerous to the new Ukrainian government nor be easily available to the West as internal threats.
Posted by: Sushi | Mar 23 2022 21:04 utc | 159
“1) Poland will be informed it is free to march into Ukraine and be slaughtered by Mr Kaliber and Ms Zircon and neither the US or any other member of NATO will rush into the same charnel house.”
Correct about that latter point. Martyanov just mentioned that if Poland unilaterally invades Ukraine, or is “invited” by Zelensky, it can not trigger NATO Article V.
This is why I again recommend Russia send an armored column down from Belarus to forestall that situation. Couple with the probability that Russia will hit Poland as its forces mass on the border, that should make Poland think twice.
Posted by: ptb | Mar 23 2022 20:19 utc | 143
“As for what Poland or NATO might do… looks like speculation by the author.”
Obviously, because it hasn’t happened yet. Nonetheless, Andrei Martyanov also believes it is possible. See his blog on that.
Also, so does Lavrov. See this:
From RT (I cannot post the link):
Russia warns of potential trigger for war with NATO
Russian Foreign Minister Sergey Lavrov warned, on Wednesday, that if NATO agrees with a Polish proposal to deploy peacekeepers to Ukraine, the move could trigger a military conflict between the US-led bloc and Moscow.
Lavrov also claimed that Warsaw may desire to establish a foothold in the large western Ukrainian city of Lvov and remain there after the conflict is over. “Why not, they had such thoughts, and not only thoughts, this occurred in the past,” he said. The diplomat also warned the Baltic states against sending their “little battalions” to fight Russian troops in Ukraine.
“Our Polish colleagues have already stated that there will be a NATO summit now, and peacekeepers should be deployed. I hope they understand what is at stake. This will be a direct clash between the Russian and NATO armed forces, which everyone not only wanted to avoid but said that it should never take place in principle,” he outlined.
Earlier last week, the prime ministers of Poland, the Czech Republic, and Slovenia reportedly traveled to Kiev to meet with Ukrainian President Volodymyr Zelensky. Afterwards, Polish Deputy Prime Minister Jarosław Kaczynski declared that NATO should deploy a peacekeeping mission to Ukraine while the EU should grant Kiev official candidate status. “I believe that a NATO peacekeeping mission is needed, a mission that can defend itself and that will operate in Ukraine,” said Kaczynski.
And then there’s this (also from RT):
Poland to expel 45 Russian diplomats
The country’s domestic security agency accused them of being spies
Posted by: Patroklos | Mar 23 2022 21:12 utc | 163
Interesting analysis. I agree that there are smart and immoral people behind the dumb and immoral people in the front. I’m generally understanding of the former – even if I regard them as enemies as much as the latter people. Smart people deal with the world as it is, not as they want it to be. This is why they’re rich and successful and the rest of us are poor and unsuccessful. I’m trying to learn to think like them but at the same time act against them.
Not that I give a rat’s ass what Joe Rogan thinks, but… Also from RT…
Joe Rogan calls out U-turn on Ukraine coverage
The nation was perceived as the “most corrupt country in Europe” before Russia’s attack, the podcaster noted
Posted by: karlof1 | Mar 23 2022 23:26 utc | 210
Nice recap of Hudson’s views. I tend to agree with all of them. Have you seen this?
Renegade interviews Michael Hudson: Sanctions, the blowback
http://thesaker.is/renegade-interviews-michael-hudson-sanctions-the-blowback/
Posted by: Richard Steven Hack | Mar 24 2022 1:34 utc | 259
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