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Arthur T Knackerbracket has processed the following story:
Russia’s Gazprom has told customers in Europe that it cannot guarantee gas supplies because of “extraordinary” circumstances, according to a letter seen by the Reuters news agency, upping the ante in an economic tit-for-tat with the West over Moscow’s invasion of Ukraine.
The Russian state gas monopoly said in a letter dated July 14 that it was retroactively declaring force majeure on supplies from June 14. The news comes as Nord Stream 1 (NS1), the key pipeline delivering Russian gas to Germany and beyond, is undergoing 10 days of annual maintenance scheduled to conclude on Thursday.
The letter added to fears in Europe that Moscow may not restart the pipeline at the end of the maintenance period in retaliation for sanctions imposed on Russia over the war in Ukraine, heightening an energy crisis that risks tipping the region into recession.
Known as an “act of God” clause, force majeure is standard in business contracts and defines extreme circumstances that release a party from their legal obligations. The declaration does not necessarily mean that Gazprom will stop deliveries, rather that it should not be held responsible if it fails to meet contract terms.
[...] Russian gas supplies have been declining via major routes for some months, including via Ukraine and Belarus as well as through the Nord Stream 1 pipeline under the Baltic Sea.
[...] The grace period for payments on two of Gazprom’s international bonds expires on July 19, and if foreign creditors are not paid by then the company will be technically in default.
(Score: 1) by khallow on Friday July 22 2022, @04:02AM (3 children)
Try buying something with them then - say like cheap dollars. That's the real test.
(Score: 2) by legont on Saturday July 23 2022, @04:59PM
Actually, Russia demands the West pays for gas and oil in rubles.
The problem is not to buy dollars with rubles - that's easy - but where to get them if one does not export anything to Russia for rubles.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 2) by legont on Saturday July 23 2022, @06:32PM (1 child)
Let me explain how and why this happened.
Before the war, Russia had a "budget rule". Any proceeds from oil above $40 were sent back to the US as a reserve. Say oil is at $60, Russia would get $40 then Central Bank would print and sell rubles to get $20 and it would put them on deposit in the US. This created a serious down pressure on ruble.
Since the US confiscated the reserves, the rule is broken and ruble gets a push up.
Another factor was oligarchs exporting dollars from Russia. Yes, anybody who has ruble account can buy as much dollars as he wants even now, but what to do with them? One can't buy foreign toys because of sanctions. One can't move dollars out in fear of confiscations under sanctions. One can't even get paper benjamins because the US does not provide them to Russia any more. One can just keep them on account I guess, but what is a dollar account in Russia? For example Tinkoff - the best online bank over there - customer dollar accounts are simply a deposit at Manhattan branch of Chase. I even happen to know the account number. Any day Tinkoff could end up on sanction list and all the client's dollars would disappear.
This is why ruble goes up and in spite of desperate efforts of Russian Central Bank it does not slow down. This has some consequences such as government budget looks bad and exporters suffer, but it's the worst for oligarchs. Meantime ordinary people are happy. They feel rich and local business is booming as it got double push - currency and removing of competitors. Common Russians love it. In fact the sanctions package - some believe - is the best thing ever that happened to Russia since perestroika. Death to oligarchy and power to the people. More real economy instead of commodity exports. Most folks praise and love Putin for this.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 1) by khallow on Saturday July 23 2022, @11:20PM
I thin that assumption is completely broken. Sure, if you're able to get rubles at the above official exchange rate and buy dollars or something else valuable with them, then go crazy with that. But it sounds like there's a black market with vastly weaker deals for those rubles when people aren't so well connected.