Dr W P Cockshott 28 april
What is the difference the new payment arangement for Russian gas made since the European firm still has to transfer Euro to a Russian bank?
The key difference is that there has to an immediate transfer into Roubles bought on the spot market in Moscow. Previously the Euro would just be transfered
to the account of the Russian state bank. These would actually have been held as deposits by the Russian state bank with the ECB. But those proved liable to confiscation.
Now, any risk is taken by the private money market in Moscow. Dealers there will not be happy to build up large Euro accounts. Without a willingness of the Russian state bank to sell Roubles for Euro, what the private money market has to do is purchase Roubles from firms operating there who want Euro : basically this means firms either from Europe, or more probably from Asia who have exported goods to Russia.
Prviously Russia ran a large trade surplus. As subsequent events have shown, a nation running a large trade surplus with either the US or EU is effectively subsidising the latter two economies. In return for actually commodities they obtain Dollar or Euro, whose exchange value rests on these Dollar or Euro being the sole acceptable form of paying US or European taxes.
Since Russian and Chinese firms do not pay such taxes, the Euro accounts are only of use if they wish to purchase goods in Euros from firms which are subject to such tax.
That is to say they are only of use if Russia or China anticipates a future trade deficit with Europe.
Failing such a turnaround in the balance of trade, the trade surplus run up by Russia with Europe was just a disguised subsidy to Europe. Once the recent hostilities broke out and the Euro accounts of the Russians were effectively confiscated, the disguise was stripped from the subsidy.
Under the new arrangement it becomes unlikely that Russia will run a trade surplus. The available Roubles on the Moscow spot market will be controlled by the flow of real commodity exports to Russia, since it will only be firms that have completed deliveries to Russia an need Euros who will be in a position to sell Roubles to the EU Gas firms. In other words, the new arrangements mean that there will be no more disguised subsidy of the EU economy through uncompensated exports of energy.