The articles I've seen about this say it's a significant move, but what exactly will it mean for Russia and its economy? Will it also impose costs on western economies? What exactly are those?
Have to look at running them through a different system maybe? Any ideas I’d take them.
Seriously though if your business is impacted by sanctions I'd suggest consulting a lawyer before trying to get creative with payment methods.
Alternatively you could just mail the money there. As in, put it in a letter and hand it to your national postal service. That said, this is not possible in all countries and sometimes restrictions apply that may make this unusable.
That said, if you are hellbent on continuing to use that contractor crypto is an option. I recommend something more modern and easy to use than Bitcoin though.
I’ll have to check with the comfort level of my guys taking bitcoin but that seems like an option at least. Don’t want to think about the accounting issues we will have to figure out but thanks for the idea.
Putin has a firm grip on power within Russia, I don't see this move changing that calculus. It only will escalate the situation.
Ma’s case is not a good example though. The guy was alone and his empire didn’t vanish, just changed ownership.
I’m not an expert on Russia, but I’m sure that they’re not self sufficient and that to be able to trade with anybody, they’ll need to exchange their currency. Alone, they might end up like Jack Ma
This is likely to end poorly for the entire world.
Not to mention the political upheaval you'll see. High energy prices, especially gas prices, are highly correlated with election results - especially here in the US. It's why Trump and everyone before him was so desperate to keep gas prices low.
If the EU wants gas it has to offer something material in return. Or Russia won’t supply the gas. Why should it?
A country exports in order to gain imports. If there are no imports on offer then the people engaged in the export businesses are better engaged producing import substitutes.
Or war goods.
Why wouldn't China be willing to do this? They already said they're going to increase their wheat purchases to make up for what the West isn't buying anymore.
The businessmen don't need to sell to you. They can engage their people producing armaments and output for the Russian war machine instead.
The person who loses out then is you. Nobody else. You haven't got your Russian gas, which means you don't have fertiliser or warmth and you either starve or go cold.
The more land area you have, the more likely you are to be able to be self sufficient.
Russia is leading wheat producer so the people might not actually go hungry but the rest will suck big time. Their tech / industry infra will be ruined.
The fantasy of the dollar hegemony is a western myth. They are about to find out that they are completely irrelevant.
If nobody is selling anything to you then you don’t need to settle in foreign currencies.
However Russia could demand roubles in payment for its gas and then ban foreigners from holding them. Which would mean the EU couldn’t settle its gas bill.
And we all know what happens when you fail to pay the gas bill.
Always remember that a country only exports to obtain imports. If there are no imports to be had then there is no need to export anything.
The gas will stay in the ground and the world will have even less supply than it does now.
> are not dependent upon imports.
Russia imports hundreds of billions of dollars worth of goods each year. Source: https://tradingeconomics.com/russia/imports
> The fantasy of the dollar hegemony is a western myth.
The hegemony of the dollar is actually very real. The dollar is the de facto global currency for cross border transactions and settlements. And it will remain so as long as the United States remains the world's dominant superpower, which is forever. https://palladiummag.com/2020/12/05/why-the-us-dollar-could-...
> However Russia could demand roubles in payments for its gas.
And buyers could put their foot down and demand to pay in dollar. If Russia refuses, said buyers will simply look to other producers.
> and then ban foreigners from holding them.
No one outside of Russia wants to hold roubles. Everyone wants euros, dollars, or pound sterlings. The rouble is not a significant currency in the global economy.
> Which would mean the EU couldn't settle its gas bill.
The EU can import gas from the United States, the United Kingdom, and the Middle East. US exports of natural gas to Europe are already rapidly increasing: https://www.reuters.com/business/energy/europe-remains-top-d.... Gas isn't the leverage you think Russia has.
The rest of the world needs Russia less than Russia needs the rest of the world. For gas, or anything else.
They do, but do they need to do that or are they just nice to have.
And what that means is that the West is down by hundreds of billions of dollars of earnings. Where else are they going to sell that output now? There isn't a magic source of demand in the rest of the world, and unlike Russia, we don't have new jobs springing up supplying a war machine.
In real terms we lose, and Russia's export system frees up manpower that can be redirected to War.
""The dollar is the de facto global currency for cross border transactions and settlements. "
That isn't the case. Everybody pays in the currency they have, and receives the currency they need - particularly the one they need to settle taxes.
The US dollar is used only because it is convenient to do so. Once it stops being a convenient hop for getting from one currency to another, they will use some other method.
"If Russia refuses, said buyers will simply look to other producers."
Which other producers. Gas prices are going up. That means there is insufficient supply.
"Gas isn't the leverage you think Russia has."
Really. So why are gas prices going up then if there is an excess of supply?
Why is the UK's gas price cap looking at going up by 50%?
There is no magic porridge pot in the world. The world of excess supply ended with Covid - and the restrictions in place have crippled supply chains.
It's going to take time to replace the power supplies.
There is a wonderful pamphlet called "How to pay for the war" by JM Keynes. You may wish to read it.
Because I can guarantee Putin has.
The people who want rubles are those who have to pay taxes in rubles, which Putin imposes on the promise of a trip to the gulag if you don't pay them.
Just because something is generally priced in dollars, doesn't mean that it is paid for in dollars. Contracts to supply anything can be in any denomination.
In all international transactions people pay in the currency they have and receive the currency they require. Everything else is just protocol layers.
In addition to the fact that Russia’s biggest import is heavy machinery which makes it very difficult for them to actually access said raw materials, Russia must import many raw materials required for modern industry. Aluminum Oxide, plastics, and chemical feedstock are major imports for Russia that they no longer have access to. To say that Russia has raw materials essentially ignores anything that isn’t energy.