A Perfectly Workable Plan

This will be the last article I’ll write on the subject of the rubles  for gas deal that went into effect on April Fool’s of 2022—until  something dramatic happens. As far as the dramatic event that has  already happened (the emergence of the ruble as the world’s only  energy-backed currency) the picture was fuzzy at first but has by now  come into very sharp focus. Russia’s plan is as simple as it is  brilliant: the EU nations (a.k.a. “unfriendly nations” in contemporary  Russian official terminology) may continue to pay for gas in euros; all  they have to do is open specific (K-type foreign currency) bank accounts  in a specific Russian bank (Gazprombank, which is not under any  sanctions). Gazprombank will then exchange these euros for rubles on  Russia’s internal foreign currency market and deposit the proceeds (if  any) into corresponding (K-type ruble) accounts. It will then transfer  these rubles to Gazprom, which will then let flow a corresponding  quantity of natural gas. Superficially, nothing has changed; the  Europeans are still paying for Russian natural gas in euros and the rest  is some Byzantine Rube Goldberg that Putin has thought up and makes no  difference to anyone but him. Right? Wrong! This is a trap! Please allow  me to explain.

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