Putin says 'unfriendly countries' must buy Russian oil and gas in rubles.
Source: NY Times
On Wednesday President Vladimir V. Putin of Russia came up with a way to get his opponents to help prop up his currency, by demanding that “unfriendly countries” use rubles to buy the Russian oil and gas that is still flowing.
“I have made a decision to implement in the shortest possible time a set of measures to switch payments for … our natural gas supplied to the so-called unfriendly countries to Russian rubles,” Mr. Putin said on Wednesday.
Sanctions aimed at the Russian central bank effectively froze hundreds of billions of dollars of assets. The actions immediately drove down the value of the ruble as people frantically rushed to turn their rubles into a more stable currency, like the dollar or the euro.
...
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the action means that every time a Western country buys a barrel of oil it would be “propping up his domestic currency.”
“If you’re invoiced in rubles, you’ve got to go out and buy rubles,” he said. “I don’t know if there is workaround.”
Read more: https://www.nytimes.com/live/2022/03/23/business/stocks-oil-inflation-ukraine#putin-russian-oil-gas-rubles
The Russians have said this demand also applies to current contracts for Russian oil and gas that is still being delivered to countries in western Europe.
= new reply since forum marked as read
Mar 20, 2022 – 8.00pm
Are the days of US dollar dominance drawing to a close?
Concern is growing that Russia’s invasion of Ukraine will accelerate the demise of the international financial system, and dislodge the US dollar from its privileged status.
For many, reports that China and Saudi Arabia are now stepping up negotiations to price oil sales in yuan provided confirmation that the US dollar has now begun its ineluctable slide. As The Wall Street Journal reported last week, Saudi Arabia is now in active talks with Beijing to price some of its oil sales to China in yuan, a move that would dent the US dollar’s dominance of the global petroleum market.
The report comes as a growing number of analysts warn that Beijing’s determination to diminish the US dollar’s privileged position at the heart of international finance will have been bolstered by the sanctions imposed on Russia by the United States and its allies.
...
The problem is that if the US dollar and US government bonds are no longer deemed risk free, there will be a growing focus on assets that are presently outside the global banking system, such as gold and commodities, and cryptocurrencies.
Zoltan Pozsar, global head of short-term interest rate strategy at Credit Suisse, says a crisis unlike anything since Nixon took the US dollar off gold in 1971 is now under way, which will lead to the creation of a new world monetary order.
https://www.afr.com/companies/financial-services/are-the-days-of-us-dollar-dominance-drawing-to-a-close-20220320-p5a67o
It's clear that not only Russia but also, more importantly, China are actively planning to upend the world's existing international financial system, to their own perceived advantage.
As suggested in that article from the Financial Review.
The thing is, China is saying that is the same problem with the US.
They kinda have a point.
The United Nations secretary general, Kofi Annan, declared explicitly for the first time last night that the US-led war on Iraq was illegal.
Mr Annan said that the invasion was not sanctioned by the UN security council or in accordance with the UN's founding charter. In an interview with the BBC World Service broadcast last night, he was asked outright if the war was illegal. He replied: "Yes, if you wish."
He then added unequivocally: "I have indicated it was not in conformity with the UN charter. From our point of view and from the charter point of view it was illegal."
https://www.theguardian.com/world/2004/sep/16/iraq.iraq
https://en.wikipedia.org/wiki/United_States_withdrawal_from_the_Joint_Comprehensive_Plan_of_Action
https://www.cnn.com/2020/11/22/politics/us-withdrawal-open-skies/index.html
https://www.defense.gov/News/News-Stories/Article/Article/1924779/us-withdraws-from-intermediate-range-nuclear-forces-treaty/
https://www.reuters.com/article/us-usa-diplomacy-treaty-idUSKCN1MD2CP
That's a partial list I googled in 5 minutes.
You can add in the unprecedent scope and size of financial sanctions that the US has just invoked too, those are the reason China is claiming the US has "weaponized the international financial system."
Little things like freezing a country's foreign reserves, sanctioning transactions of gold reserves have many countries feeling less sure of the US as a trustworthy partner.
I had an auto-correct typo that I just fixed. The typo was "financial transactions" when it should have been "financial sanctions".
Sorry about that.
In any case this whole last paragraph does relate to the US's trustworthiness in international finance but you ignored it in your response:
Little things like freezing a country's foreign reserves, sanctioning transactions of gold reserves have many countries feeling less sure of the US as a trustworthy partner.
Care to address that also?
In any case, thanks for the discussion and have a good night.
Um, no. 
The United Nations secretary general, Kofi Annan, declared explicitly for the first time last night that the US-led war on Iraq was illegal.
Mr Annan said that the invasion was not sanctioned by the UN security council or in accordance with the UN's founding charter. In an interview with the BBC World Service broadcast last night, he was asked outright if the war was illegal. He replied: "Yes, if you wish."
He then added unequivocally: "I have indicated it was not in conformity with the UN charter. From our point of view and from the charter point of view it was illegal."
https://www.theguardian.com/world/2004/sep/16/iraq.iraq
https://en.wikipedia.org/wiki/United_States_withdrawal_from_the_Joint_Comprehensive_Plan_of_Action
https://www.cnn.com/2020/11/22/politics/us-withdrawal-open-skies/index.html
https://www.defense.gov/News/News-Stories/Article/Article/1924779/us-withdraws-from-intermediate-range-nuclear-forces-treaty/
https://www.reuters.com/article/us-usa-diplomacy-treaty-idUSKCN1MD2CP
That's a partial list I googled in 5 minutes.
I am shocked at how well.
Prior to the Russian invasion of Ukraine, the ruble was trading at ~78 rubles to 1 US dollar, as it was pretty much for the previous year.
On March 7th during the invasion of Ukraine, the exchanged rate reached its most unfavorable value hitting 135.5 rubles to 1 US dollar.
After Putin announced Russia is now demanding payment in rubles for its oil and gas, the exchange rate improved considerably and today is 89.5 rubles to 1 US dollar.
https://www.msn.com/en-us/money/tools/currencyconverter/fi-avys2w?ocid=ansMSNMoney11&duration=1D
Russia's finance minister told state-run media Thursday that the country fulfilled a debt obligation, and noted that it's up to the US as to whether the payment would be allowed. The Treasury said it would let the payment go through.
Reuters reported Thursday that correspondent bank JPMorgan received the payment and made a credit to the paying agent Citigroup, which is responsible for distributing the money to investors.
...
Putin's forces launched a full-scale attack on Ukraine last month, unleashing a wave of sanctions from the West that have largely cut off Russia from global financial markets and blocked it from accessing about half of its $640 billion in foreign currency reserves.
https://markets.businessinsider.com/news/bonds/us-treasury-allow-russia-bond-payment-go-through-avoid-default-2022-3
Well, Russia has enough Foreign Reserves to meet its relatively small foreign debt obligations AND the US has allowed the latest payment to go thru on March 16 even though it said those funds were frozen. Perhaps because not doing so would cause too much financial pain to western investors.
So, I guess we'll have to wait and see what transpires.
Oh, and enjoy your day.
