On December 15, Putin said: “The ruble is among the strongest currencies in the world.” Then, the collapse: -9.4% in one week and an entire Russian economy collapsed.
“The attempt by the West to destroy the Russian economy has failed. The ruble is among the strongest currencies in the world,” Putin said. And immediately afterwards the ruble collapsed: -9.4% in a week and -14% in a month against the US dollar. The “Wall Street Journal” calculated that «the decline of the currency in December is the most marked among the 49 monitored. The ruble is one of the world’s worst-performing currencies this month as the oil and gas windfall that helped insulate the country from Western sanctions is now fading.
The tsar had spoken on December 15, linked by video with the Strategic Development Council and Country Projects e just as the European Council in Brussels was discussing the European reaction to the Russian invasion of Ukraine. “An unprecedented economic assault against us,” he complained. As if instead it was normal to provoke the first war in Europe since 1945 with the aim of annexing another state, moreover in flagrant violation of the Budapest Memorandum (with which Russia undertook to respect the integrity of Ukraine in exchange of its renunciation of the nuclear arsenal inherited from the Soviet Union). Taken up by the Russian press, the speech of Putin had praised the “resilience of Russian finances” against the attempt to “crush our economy in a short time, depleting our national currency and causing destructive inflation. But the ruble has become one of the strongest currencies in the world in 2022, also thanks to the transition of payment for gas in rubles. The price level in Russia, after a sharp increase in March-April, has practically not changed since May.
He hadn’t said that! Indeed, for some months the increase in hydrocarbon prices compensated for the collapse in exports thanks also to alternative markets, in particular India and China (where Russia has supplanted Saudi Arabia as the leading exporter). The surplus current account thus more than doubled in the first nine months of the year to exceed $198.4 billion: about 120 billion dollars more than in the same period of 2021 and more than double the previous one record of 2008. This has allowed Moscow to inject liquidity into the economy and even make the ruble appreciate by 30% against the euro and the dollar, after the initial nosedive.
The downside of this surplus but it is a collapse ofimport from sanctions, which in addition to consumption has invested heavily in industry – warfare in particular, as well as automotive and aeronautics – due to the lack of technological components. Putin had predicted that after the break with Russia we would go towards “the deindustrialization of Europe”, but it was instead precisely the Russian military effort that was compromised. There are numerous signs in this direction: the frantic request for drones from Iran, the use of chip of refrigerators and dishwashers in tanks, the wave of thefts of Swedish speed cameras to obtain cameras from drones.
Meanwhile India has hoarded so much Russian crude at bargain prices that it now has full stockpilesindustrial production in China has collapsed due to the recovery of the Covid while western sanctions on oil have started in earnest since the beginning of the month.
by Maurizio Stefanini