Is Russian rouble defying sanctions – after all?


 

The unexpected recovery of the Russian rouble by more than 42% in one month has, undoubtedly,  left the decision makers in the West in an uncomfortable lurch, especially when the expected outcome was the exact inverse. 

Making matters worse for the policymakers, the anticipated oil and gas revenue by Russia in 2022, much to the dismay of the former, has gone up significantly too;  some analysts estimate it to be more than a third of its revenue in 2021.

As for the recovery of rouble, President Putin’s calculated gamble seems to be paying off: a few weeks ago, he wanted the countries in the EU and other ‘hostile nations’ to pay for the Russian fuel in rouble, if they wanted an uninterrupted supply.

Initially, the countries in question just ignored Russian decision in unison, branding it ‘blackmailing’; they went on to say that the decree violates the contractual agreements.

No sooner had the EU responded collectively than the cracks started appearing in the alliance: Hungary, for instance, came out in favour of paying in rouble; the newly elected prime minister of Hungary, after all, was known to be on good terms with the Russian president for decades.

 

 

In addition, the Chancellor of Austria paid an unannounced visit to the Kremlin and met President Putin in person this week. Austria, a non-NATO member of the EU heavily relies on Russian oil and gas too. 

Although he did not disclose the full content of his talks, he implied the anticipation of a quick end to the Russia-Ukraine war is pretty premature. 

Moreover, Germany, the economic power house of Europe,  does not seem to be very keen on looking for substitutes in order to turn its back on Russian oil and gas; the German politicians, simply, are not willing to take risks while staring into the abyss of recession.

Even those who are very critical of Russia in the EU say they are looking at the ways in reducing the reliance on the former next year, despite the harsh rhetoric; the position of the Netherlands is a case in point.

The Asian countries, some of which are major global consumers, are , meanwhile, being attracted to Russian oil in droves, mimicking a magnet despite the US appeals not to do so. They justify their position while referring to the high oil and gas prices.

Against this backdrop, having sensed the pulse of the many in the EU, the officials now say paying for Russian oil and gas in rouble does not violate the nitty-gritty of the sanctions by the bloc against Russia!

In yet another blow to the intended effect on Russia over the war, the media reports that Germany and France are still selling arms to Russia despite their unequivocal commitment to sanctions; they could easily justify the move by referring to the terms of the contracts signed before the war broke out.

In short, there seems to be a pattern of participants of sanctions against countries naturally being smart enough to find the loopholes in agreements and slip through – nowadays.

The survival of Iran, despite years of heavy sanctions, is a case in  point. Not only does it manage to sell its oil to some extent, but also let its economy grow at a reasonable pace, defying all odds.

All in all, if Russia does not suffer economically despite the unprecedented sanctions, there are sufferers elsewhere. 

In this context, those who paid the price are global consumers and the ordinary citizens in Ukraine: the former suffer from high energy prices and ballooning cost of living crises; the latter are suffering while going through immense hardships, wanton humiliation and above all, the loss of motherland.



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