18 votes

How Russia rescued the ruble

11 comments

  1. [4]
    ThatFanficGuy
    Link
    A few days ago I saw headlines about how Europe doesn't technically need to pay in rubles directly: — CNN So Putin gets to maintain his bullshit macho posturing and continue to scramble to...

    A few days ago I saw headlines about how Europe doesn't technically need to pay in rubles directly:

    According to the decree signed by Putin on Thursday [March 31, one day before the cutoff ultimatum — TFG], foreign buyers must open accounts at a Russian state-controlled bank, instead of dealing directly with state gas giant Gazprom. They would deposit euros into one account. The bank would sell the euros for rubles and transfer those into another account in the buyer's name to be used to pay for gas.

    CNN

    So Putin gets to maintain his bullshit macho posturing and continue to scramble to maintain the economy he himself left to rot in the decades prior.

    Initially I'd assumed that this would be a good way for him to get USD and EUR without lifting a finger, given that the inflow of these currencies is now largely cut off. Still not sure how true that is if where the euros flow is an in-country bank account. I'm not all that well-versed at how countries pay each other.

    6 votes
    1. [3]
      skybrian
      Link Parent
      I'm wondering how that deposit works and how a Russian bank can make payments in Euros. What payment methods still work, given the sanctions?

      I'm wondering how that deposit works and how a Russian bank can make payments in Euros. What payment methods still work, given the sanctions?

      1 vote
      1. [2]
        ThatFanficGuy
        Link Parent
        Not a lawyer nor an economist but am a loudmouth so here goes: From what I understand, paying in USD and EUR still works. What Russia's been hit with is the lack of ability to acquire new USD /...

        Not a lawyer nor an economist but am a loudmouth so here goes:

        From what I understand, paying in USD and EUR still works. What Russia's been hit with is the lack of ability to acquire new USD / EUR and had its foreign-held USD / EUR supplies frozen via sanctions.

        In other words, they have USD / EUR, but the bill count is dwindling every day. (It certainly did not help that people'd spent day and night cashing out their currencies in the very early days of the war. You can't cash out USD now: you can only cash out its equivalent in RUB, or put new USD in.)

        Also, most banks have been disconnected from SWIFT but not all. Even if they were all disconnected, Russia could still make hand deliveries of cash, which would be fucking absurd but one of the few remaining possibilities.

        Also, fun fact: there's very little regulation in the area of crypto in Russia, which is how I was able to have a friend of mine from the US help me with the fees and such. This is not so much for the government but for the ordinary Russians.

        (Also also, right after the war's start there were black markets set up where you could buy physical USD and EUR for almost 2× the price. Some people clearly thought it wise enough to do so, given the initial panic and the fleeing of the better-off Russians.)

        5 votes
        1. skybrian
          (edited )
          Link Parent
          I'm no expert either; I learn stuff from reading Matt Levine and Patrick McKenzie. But here's how I think about it: From a physical cash flow perspective, I don't think a Russian bank getting...

          I'm no expert either; I learn stuff from reading Matt Levine and Patrick McKenzie. But here's how I think about it:

          From a physical cash flow perspective, I don't think a Russian bank getting payments in armored trucks driving thousands of miles, only to ship them off again to the foreign exchange, makes sense, or at least not yet. Banks handle cash mostly to supply retail customers, along with businesses with cash registers.

          SWIFT itself is apparently a non-issue. If two banks want to do a million euro transaction, they can call each other on the phone and make arrangements. They need secure communication, but there are backup methods. The real question is what transactions will banks be willing to do without getting in trouble with their governments, and banks are often risk-adverse.

          To be willing to do a transaction, they need confidence about how they can settle up later. From Russia's perspective, how do they keep the ability to make payments to foreigners in other countries, for imports or just to trade currency, without running the risk of having lots of money in a foreign account that ends up frozen?

          One way to think of it is that each bank is sort of running its own mini electronic currency and you don't want to end up with funds in the wrong place if the music stops. I'm guessing the squabbling over rubles versus euros is hiding some deeper struggle about who loses if there are more government restrictions.

          Edit: also, from the bank's point of view, having frozen bank accounts in your bank is good, at least in the short term, because someone has given you a loan that doesn't have to be paid back until the account is unfrozen. You've been paid, but you don't have to pay anyone. Normally this would be very illegal but now you're doing it because the government told you to do it.

          It might not be good for business, though. You want your customers to believe they can get their money out (that is, that you're always ready and willing to make payments on their behalf).

          So if Russia can somehow get foreigners to accept payments as money in a Russian bank then that's good from their point of view. The foreigners won't want this, though.

          4 votes
  2. [6]
    cmccabe
    Link
    The White House is freaked out that Putin's next big win could be in Paris https://www.politico.com/news/2022/04/08/white-house-putin-paris-00024054 …

    The White House is freaked out that Putin's next big win could be in Paris
    https://www.politico.com/news/2022/04/08/white-house-putin-paris-00024054

    A possible victory by Le Pen, a Putin sympathizer, could destabilize the Western coalition against Moscow, upending France’s role as a leading European power and potentially giving other NATO leaders cold feet about staying in the alliance, according to three senior administration officials not authorized to publicly discuss private conversations.

    The worst-case scenario, according to White House officials, would be that Le Pen could win and then pull France from the coalition currently standing alongside Kyiv against Moscow. Macron’s government has already walked a fine line with Moscow, with the French president attempting to play the role of mediator in the days before Putin’s invasion. Since then, France has supported the Ukrainians with weapons and assistance, but they’ve been quiet about it, refusing to release details on what and how much they’re sending.

    6 votes
    1. [5]
      FrankGrimes
      Link Parent
      Can someone explain how Le Pen is neck and neck with Macron in France? She seems like a far right wing politician even for my U.S standards - I didn't think someone like that would get taken...

      Can someone explain how Le Pen is neck and neck with Macron in France? She seems like a far right wing politician even for my U.S standards - I didn't think someone like that would get taken seriously by such a large chunk of the population. What's her appeal? Is it Russia meddling in social media trying to get her elected with the same goals as they clearly had with Trump?

      5 votes
      1. cmccabe
        Link Parent
        I'm hoping to hear more context as well. But no matter what, it is clear that this type of discord within NATO countries was foundational to Putin's decision to invade Ukraine. He is 100%...

        I'm hoping to hear more context as well. But no matter what, it is clear that this type of discord within NATO countries was foundational to Putin's decision to invade Ukraine. He is 100% certainly banking on exploiting it and expending considerable resources to stir it up further.

        8 votes
      2. [3]
        nothis
        Link Parent
        It's so ridiculous we're still dancing around this: It's immigration. Any question like that in Europe comes down to immigration policies. The 2015 refugee wave was an organizational clusterfuck....

        It's so ridiculous we're still dancing around this: It's immigration. Any question like that in Europe comes down to immigration policies. The 2015 refugee wave was an organizational clusterfuck. And it coinciding with a series of abhorrent terrorist attacks done in the name of the religion most associated with integration problems did not help. The right smelled this and seized an opportunity for a populist uprising since it was politically impossible for the left to address this topic (partly because of naiveté, but also because of, you know... dignity). Now far-right parties just absorb every chance to mobilize old people and angry fringes, from covid-conspiracies to denying global warming. But the momentum always came from anti-immigration policies.

        Note that a version of this is true for many if not most European countries over the past years, Le Pen is just the French flavor of it.

        6 votes
        1. [2]
          stu2b50
          Link Parent
          I don't think the age part really plays out, though. From a YouGov poll Le Pen is actually getting her narrow margin overall from younger voters by far apparently. It's the older demographics that...

          I don't think the age part really plays out, though. From a YouGov poll

          18-24: Macron 44%, Le Pen 56%
          25-34: Macron 47%, Le Pen 53%
          35-44: Macron 47%, Le Pen 53%
          45-54: Macron 49%, Le Pen 51%
          55+: Macron 55%, Le Pen 45%

          Le Pen is actually getting her narrow margin overall from younger voters by far apparently. It's the older demographics that prefer Macron - perhaps a better memory of what Le Pen's party has done in the past.

          The immigration angle could still be correct, but it seems to really be fervor from the youth if anything.

          10 votes
          1. nothis
            Link Parent
            Depressing, I didn’t know they poll so we’ll with the young.

            Depressing, I didn’t know they poll so we’ll with the young.

            5 votes