Professor Veli-Pekka Tynkkynen of the University of Helsinki considers the ruble tightening to be part of Russia’s information warfare, in which stakes are being raised all the time.
President of Russia Vladimir Putin signed a decree on Thursday that “unfriendly countries” will have to pay their gas bills in rubles from today.
For those who do not agree to this, the gas tap would be turned off. The situation is unprecedented – oil and gas have flowed in Europe even during the Cold War.
Is Putin’s ruble tightening a bluff after all? At least in the natural gas market, there is doubt about that. The price of gas is high, but not nearly as high as a couple of weeks ago (switch to another service). From this it can be concluded that the gas is believed to flow.
– Yes, they probably believe and there is also a good reason to believe so, he says Laura Solankowho is a senior advisor at the Bank of Finland ‘s Emerging Economies Research Institute.
– If Russia stopped exporting gas to Europe, that gas could not be exported anywhere else. Gas pipelines are physical structures that cannot be turned overnight. A cut-off of gas would mean that Russia would completely lose its export revenue from gas.
If Russia wanted to blackmail Western companies into using the ruble, it would have a better chance of succeeding in oil products, Solango said. However, the oil can be moved with tankers.
“Very hard to see the benefits”
It has always been unclear to the Bank of Finland’s experts what Russia believes it will achieve if gas trade were to start in rubles.
– It’s very difficult to see any benefit. It has been said that the use of the ruble could have an impact on the exchange rate of the ruble, but already now Russian companies have to repatriate 80 percent of their export earnings in rubles. The fact that one hundred percent would come in rubles in the future would not change anything in the overall picture, Solanko says.
According to Solango, the Kremlin has forgotten that agreements between companies are not changed by government orders.
– If the billing currency is to be changed, the gas company Gazprom should contact each of its European customers and start negotiations. The European company will not change its operations on the orders of the Kremlin.
Solanko reminds that the use of the ruble would also require an agreement on the exchange rate of the ruble. Currently, the value of the ruble is completely artificial.
No more soft influences
Professor at the University of Helsinki who studied power politics between Europe and Russia Brother-Pekka Tynkkynen considers the ruble blackmail to be part of Russia’s information warfare, in which stakes are being raised all the time.
– Economically, the transition to the ruble does not make much sense, but Russia can prepare for the next steps with its demands. For example, in their own propaganda, they can tell the people that the ruble will be raised among the major currencies, Tynkkynen says.
The ruble claim can also be put forward as a legitimate retaliation for the fact that Russia has been subject to economic sanctions.
– On the other hand, if Russia ended up closing the taps, they could argue that it was justified because the demand was not obeyed.
The Bank of Finland’s Solanko does not believe in suspending gas supplies, but Tynkkynen of the University of Helsinki does not rule out an alternative.
– Energy has been primarily an instrument of soft power for Russia. Now that hard energy weapon is being flashed.
The situation is very exceptional.
– If we think about the flow of oil and gas to Europe, Russia has always delivered what it has promised in the agreements – except for the interruptions that took place in Ukraine in 2006-2009, Tynkkynen says.
Gasum: No contacts
Gasum, a gas company, is told that natural gas flows normally across the eastern border and that the situation has not caused any extra heartbeat.
– We have been following the situation quite calmly, says the Director of Communications Olga Väisänen.
– We have an agreement in euros and in euros. To date, the other party has not contacted the party.
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