The 'Petro Ruble' Is Here

Russia Makes Coupon Payments — Russia Strikes — Seizing Assets is Unwise — The Petro Ruble is Here

Austrian Peter

RUSSIA MAKES COUPON PAYMENTS:  It was reported last week that Russia made coupon payments due on its bonds issued to foreign investors, most of whom were US based. This is a very important step. Nations who default do not honor their bond payments. Thus, Russia has demonstrated that it is a reliable financial partner, even during a very challenging Geopolitical crisis and while the US is seizing offshore Russian assets and banning Russian banks from the SWIFT payment system.

RUSSIA STRIKES:  Russia took another decisive step last week. They insisted that payments for Russian natural gas supplies by unfriendly customer nations must be settled in Rubles, instead of with Euros and US Dollars. Austria was stunned and reportedly said something like “this is very confusing”.

BOOM cannot see any reason for such confusion. If a client nation wishes to side solely with the US in Geopolitical matters and sees Russia as some sort of existential enemy, then they have a choice — they can freeze to death or they can make their payments for natural gas to Russia in Rubles, the Russian currency. Crystal clear, don’t you think?

Russia supplies about 45 % of Europe’s imported natural gas, essential for heating homes in the bitter winters and for cooking. Russia now includes the US, UK and all of the European Union nations in its list of “unfriendly nations”. Nations cannot operate their economies without energy and the vast bulk of energy for heating, transport and food requirements comes from oil and gas — not electricity.

Russia’s patience with US interference in European affairs has clearly been exhausted. They have warned NATO for 8 years (or more) not to move military installations closer to Russia’s borders. And they have built the Nordstream 2 pipeline to Germany to allow increased supplies of gas. But the US has insisted that Germany block the Nordstream 2 pipeline and, through NATO and Jens Stoltenberg, have consistently interfered in the affairs of Ukraine and moved more and more military installations closer and closer to Russian borders.  If Russia was doing all of this in Mexico, the US would be screaming “aggressive expansion” at the top of its lungs and taking practical steps to stop it. But when the shoe is on the other foot …..

SEIZING ASSETS IS UNWISE:  Russia is clearly unhappy with the seizure of its offshore assets by the United States and its cooperative partners. And it is clearly unhappy with US interference in the SWIFT financial messaging system, based in Belgium. So it has decided to play hard ball with how natural gas payments should be made. It is a natural consequence of the foolish actions of the Western alliance of so-called democracies that are presumably capitalist economies.

BOOM has previously described recent moves by the Governments of Canada and the US to seize financial assets as extremely unwise. The stark foolishness of such actions is evident if one considers that the core philosophy of western democracies is one which enshrines the sanctity of private property. If the State can seize private property on any whim, then the entire edifice of democracy and capitalist economics collapses.

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