That has revived the value of the ruble, but as several analysts have pointed out, the currency’s newfound stability has come not because the marketplace suddenly found faith in the Russian economy but because of the extraordinary government interventions.
Mr. Putin’s demand that gas purchases be paid in rubles looked like another one of those interventions. Still, the insistence was puzzling. Russia could just as easily take the ongoing influx of euros and dollars paid by foreign governments and convert them to rubles.
Mr. Putin, of course, may revel in putting European governments in an uncomfortable position or flexing his power, but his demands may also reflect difficulties at home.
For example, he may not be able to ensure compliance with his mandate that companies, including the natural gas producer Gazprom, repatriate 80 percent of the dollars and euros they earn and sell them to Russian banks.
The problem is that “the government cannot enforce this rule,” said Michael S. Bernstam, a research fellow at the Hoover Institution at Stanford University. The “companies are cheating.”
“The only people the Russian government can trust is Western companies buying Russian natural gas and other commodities,” he added.
Aside from currency woes, Russia is struggling economically in other ways.
The country is already facing a deep recession, and several analysts estimate that the economy could shrink by as much as 20 percent this year. An SP Global survey of purchasing managers at Russian manufacturing companies showed severe declines in production, employment and new orders in March, as well as sharp price increases.
Article source: https://www.nytimes.com/2022/04/02/business/economy/russia-ukraine-sanctions-gas.html
Speak Your Mind
You must be logged in to post a comment.