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Sanctions and the ‘Gold Ruble’: Russia’s Gambit For Full Financial Sovereignty

Monday, February 20, 2017 16:42
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(Before It's News)

from Russia Insider:

The ruble is the most gold-backed currency in the world. Can this help Russia safeguard against western economic warfare?

America’s trusted television pundits are once again screaming about how important it is to maintain sanctions against Russia.

Did they not get the memo? Russia doesn’t expect sanctions to be lifted any time soon. Instead, it’s forging its own path towards financial sovereignty.

With America now in full meltdown mode over the ongoing Trump “sanctions conspiracy” with Russia, we thought it would be prudent to ask if there is any real evidence that Russia is desperately trying to fully reintegrate itself with the western-controlled financial system, or if instead there are signs that Moscow is pursing a completely different path — one of self-sufficiency and financial sovereignty. (Maybe we are seeing signs of both.)

After all, it would only make sense for the Kremlin to conspire with Trump to remove sanctions unless it was a life-and-death situation for Russia’s economic viability. Think about it: Why would a “Kremlin puppet” make lifting sanctions his first priority, unless it was a top national security issue for Moscow?

The truth is that western sanctions cut both ways for Russia.

The western sanctions regime has restricted foreign lending and capital flows, hurting investment and innovation in many Russian sectors. Credit, especially for Russian consumers, has dried up or has become prohibitively expensive to obtain. Old loans pinned to foreign currencies such as the dollar or euro are now financial nightmares. And for Russian companies who used to import products for 30 rubles — they now have to fork over double that amount.

It’s not all doom and gloom, though. As Putin pointed out when the value of the ruble began to tank:

Our budget is not calculated in dollars, but in rubles. The value of the ruble has fallen by about 30%. For example, where we earlier traded something that was worth $1, we would receive 32 rubles in exchange. So now we sell for $1, but receive 45 rubles in return.

The profits in our budget have actually increased.We are resolving our social issues and will continue to do so competently, and we are more than capable of sustaining any military-defense output. Why? Because we operate independently, and we have a program in place to replace imports.

We have had a lot left to us from the previous generations, as well as modernizing thoroughly over the past 15 years. We can resolve these questions independently.

Do the sanctions cause us harm? Yes, they do, but they are not fatal.

We’ve written extensively about how Russia’s response to western sanctions — specifically in the form of counter-sanctions — has reinvigorated the country’s agriculture and manufacturing sectors. Be we would like to return to our original question: Can Russia survive (and thrive) without bending the knee to the western financial establishment? And is there evidence that Moscow is already heading in this direction?

Read More @ Russia-Insider.com

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