President Vladimir Putin said on Friday that Turkey is about to sign a contract committing it to pay for 25% of its purchases of Russian natural gas in roubles. During a meeting at the Shanghai Cooperation Organization summit, Putin revealed the agreement, according to Reuters. He didn’t say when the agreement would go into effect, only that it will “in the near future.”
Since being subject to western sanctions, Russia has been seeking to establish comparable payment agreements in an effort to safeguard financial flows while being cut off from global payment networks.
One of Russia’s biggest consumers of gasoline, China, has agreed to pay for gas mostly in yuan and rubles. In July, an agreement was scheduled to be finalized under which India, another significant consumer of Russian petroleum, agreed to pay for shipments in United Arab Emirates dirhams rather than US dollars.
Additionally, Russia is prepared to impose penalties on its other natural gas consumers that disobey its payment requirements. It cut off a delivery to one Asian customer for failing to sign a contract that promised to accept payment in a currency other than the US dollar. Flows from Poland and Bulgaria were stopped earlier this year after the nations refused to pay in roubles.
These actions have raised interest in Russian currency. The ruble has gained 40% so far since the beginning of the conflict, but some economists believe it might actually work against Russia’s economy since a stronger rouble implies less demand for its oil and gas exports, which account for over half of its GDP.
In addition to providing its Asian energy consumers with substantial discounts, the Bank of Russia reduced interest rates by 150 basis points in July to control the value of the ruble. Later, the central bank of Russia stated that it was looking to increase its holdings of Chinese, Indian, and Turkish currencies while decreasing its holdings of “toxic” currencies, primarily the US dollar and the euro.
When will the Wall Street market manipulators and white collar traders get it? NO significant market is still under their grip. Why do you believe the West and our economy have collapsed?
Turkey’s economy is in shambles, its government is becoming more authoritarian, there are issues with Greece, difficulties with Finland and Sweden joining NATO, and now there is an agreement with Russia. They do have value as a mediator and link to Russia, but that value is quickly eroding due to the fact that they are no longer a Western-style culture. Once they start with Greece, NATO will be done for them. They appear to be quite okay with this.
Alliances between authoritarian regimes and democracies typically don’t survive very long since both groups keep together. The ease with which authoritarian governments might seize power and the difficulty with which democracies can establish themselves is scary. The US has spent a lot of money and resources opposing authoritarian governments, but South Korea is the one place where we have actually been successful. A few hundred people at the top appear to crave wealth and power so badly that billions of others frequently wind themselves living in poverty and terror.
