The Kremlin notes that all major Russian exports could soon be in rubles

LONDON (Reuters) – The Kremlin signaled on Wednesday that all Russia’s exports of energy and goods could be priced in rubles, hardening President Vladimir Putin’s attempt to make the West feel the pain of sanctions he imposed over the invasion of Ukraine.

With the Russian economy facing its most serious crisis since the 1991 collapse of the Soviet Union, on March 23 Putin responded to the West, ordering that Russian gas exports be paid for in rubles.

That move forced Europe’s largest economy, Germany, to announce on Wednesday an “early warning” that it could be heading toward a supply emergency. Germany imported 55% of its gas from Russia last year.

In the strongest sign yet that Russia may be preparing for a tougher response to Western sanctions, Russia’s top lawmaker suggested on Wednesday that almost entirely Russian energy and goods exports could soon be priced in rubles.

Asked about the statements of Parliament Speaker Vyacheslav Volodin, Kremlin spokesman Dmitry Peskov said: “This is an idea that must definitely be worked on.”

“It may well be worked out,” Peskov said of the proposal.

Peskov said the dollar’s role as a global reserve currency had already been damaged, and that a move to price Russia’s largest export in rubles would be “in our interest and those of our partners.”

Europe, which imports about 40 percent of its gas from Russia and pays mostly in euros, says Russian gas giant Gazprom has no right to re-withdraw contracts. Read more

“If you want gas, look for the ruble,” Volodin said in a post on Telegram. “Moreover, it would be right – where it will be beneficial for our country – to expand the list of export products priced in rubles to include: fertilizers, cereals, edible oil, petroleum, coal, minerals, timber, etc.”

Russia exports hundreds of billions of dollars worth of natural gas to Europe every year. The euro makes up 58% of Gazprom’s exports, the dollar 39% and the pound sterling about 3%, according to the company.

However, the exact way the payments could be made remained unclear as of Wednesday.

Peskov said that Russia would not immediately require buyers to pay for its gas exports in rubles, and promised a gradual turnaround. Read more

Sanctions “Boomerang”

Russian officials have repeatedly said that the West’s attempt to isolate one of the world’s largest producers of natural resources is an irrational act of self-harm that will drive up prices for consumers and push Europe and the United States into recession.

Russia says the sanctions – in particular the freeze on the Russian Central Bank’s roughly $300 billion of reserves – amount to declaring economic war.

Putin says the reserve freeze was a failure to meet the West’s obligations to Russia, which would hurt confidence in the US dollar and the euro.

Former President Dmitry Medvedev said sanctions have “rebounded” once again to undermine the economies of Europe and North America, driving up fuel and heating prices and eroding confidence in the dollar and euro.

“The world is waking up: confidence in reserve currencies is melting like morning fog,” Medvedev said. “Abandoning the dollar and the euro as the world’s major reserves no longer seems like a fantasy.”

Medvedev said that “crazy politicians” in the West sacrificed taxpayer money on the altar of an unknown victory in Ukraine. “The era of regional currencies is coming.”

Russia has long sought to reduce dependence on the US dollar, although its main exports – oil, gas and minerals – are priced in dollars on world markets.

Globally, the dollar is by far the most traded currency, followed by the euro, the yen, and the British pound.

(Reporting by Guy Faulconbridge). Editing by Conor Humphreys, Frank Jack Daniel and Thomas Janowski

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