The articles I've seen about this say it's a significant move, but what exactly will it mean for Russia and its economy? Will it also impose costs on western economies? What exactly are those?
You could go for a fancy money transfer option. Western Union, Ria or transfer wise would be options at the top of my head. If those get shut down as well it is likely that continued business with Russians would be in violation of sanctions anyways so you might want to consult a lawyer.
Alternatively you could just mail the money there. As in, put it in a letter and hand it to your national postal service. That said, this is not possible in all countries and sometimes restrictions apply that may make this unusable.
That said, if you are hellbent on continuing to use that contractor crypto is an option. I recommend something more modern and easy to use than Bitcoin though.
Bitcoin. People may complain about the volatility, but you only have to hold it long enough to send it, and they only have to hold it long enough to sell, if that's what they care to do.
PayPal still works as far as I know. But yeah. Bitcoin is the go to. Ironically I have workers in both and I send bitcoin to ukraine because all other means are expensive and get questioned a lot.
Yeah I have workers in both too. The two I’ve got in Ukraine I've run through Upwork as they seem to have had that handled in the past and we cover the Upwork percentage.
I’ll have to check with the comfort level of my guys taking bitcoin but that seems like an option at least. Don’t want to think about the accounting issues we will have to figure out but thanks for the idea.
It won’t. But it might make them sell it cheaper somewhere else, resulting in lower spend on the army. Also, think of all Russian businesses loosing money. Their owners will be pushing the government to fix the situation. At the end of the day, money is power, you don’t want to loose it.
Ma’s case is not a good example though. The guy was alone and his empire didn’t vanish, just changed ownership.
I’m not an expert on Russia, but I’m sure that they’re not self sufficient and that to be able to trade with anybody, they’ll need to exchange their currency. Alone, they might end up like Jack Ma
Paying more for energy means your economy gets rekt too. It's hilarious people think only the seller's will be hurt, the buyer's will be hurt too. It's a two way street.
Not to mention the political upheaval you'll see. High energy prices, especially gas prices, are highly correlated with election results - especially here in the US. It's why Trump and everyone before him was so desperate to keep gas prices low.
It's gonna be tough. Germany was opposed to the measure for a long time not just because they wanted to play softball, but because it effectively meant saying good bye to up to 55 billion dollars of credit.
Not a German, but their official language on "turning point" is very precise. The close relationships between government and industry means everyone has accepted to take their medicine. Germans are better at doing this than others.
It will mean little or nothing to Russia. They’ve been working on autarky for years.
If the EU wants gas it has to offer something material in return. Or Russia won’t supply the gas. Why should it?
A country exports in order to gain imports. If there are no imports on offer then the people engaged in the export businesses are better engaged producing import substitutes.
What you're describing is the North Korean playbook: completely cut yourself off from the rest of the world and let your people starve in order to hang on to power. North Korea shows that it is possible--in North Korea. But is it possible in a country over a hundred times the land area, between five and six times as large in population, with many different ethnic groups, run by an oligarchy of businessmen who depend on, well, business, that now will have to deal with a never-ending Ukrainian insurgency without any exit plan to speak of, and, most importantly, without China willing to spend the vast resources necessary to prop them up? I'm extremely doubtful, as is the West, and that's why the sanctions are being imposed.
> without China willing to spend the vast resources necessary to prop them up
Why wouldn't China be willing to do this? They already said they're going to increase their wheat purchases to make up for what the West isn't buying anymore.
What's in it for China? Unlike North Korea, Russia isn't a buffer state between US military installations and the Chinese border. And it would cost far more to prop up Russia than it does to prop up North Korea.
How are the people going to starve in Russia? They supply the world with wheat. They have an excess of food, energy, manpower and natural resources.
The businessmen don't need to sell to you. They can engage their people producing armaments and output for the Russian war machine instead.
The person who loses out then is you. Nobody else. You haven't got your Russian gas, which means you don't have fertiliser or warmth and you either starve or go cold.
The more land area you have, the more likely you are to be able to be self sufficient.
>"completely cut yourself off from the rest of the world and let your people starve in order to hang on to power. North Korea shows that it is possible"
Russia is leading wheat producer so the people might not actually go hungry but the rest will suck big time. Their tech / industry infra will be ruined.
It will have next to no effect on Russia because they have their own currency and, unlike Iran, are not dependent upon imports.
The fantasy of the dollar hegemony is a western myth. They are about to find out that they are completely irrelevant.
If nobody is selling anything to you then you don’t need to settle in foreign currencies.
However Russia could demand roubles in payment for its gas and then ban foreigners from holding them. Which would mean the EU couldn’t settle its gas bill.
And we all know what happens when you fail to pay the gas bill.
Always remember that a country only exports to obtain imports. If there are no imports to be had then there is no need to export anything.
The gas will stay in the ground and the world will have even less supply than it does now.
Much of this comment is wrong. Cutting off some Russian banks from SWIFT will have significant consequences on the Russian economy. The fact that Russia prints its own currency doesn't change anything.
> The fantasy of the dollar hegemony is a western myth.
The hegemony of the dollar is actually very real. The dollar is the de facto global currency for cross border transactions and settlements. And it will remain so as long as the United States remains the world's dominant superpower, which is forever. https://palladiummag.com/2020/12/05/why-the-us-dollar-could-...
> However Russia could demand roubles in payments for its gas.
And buyers could put their foot down and demand to pay in dollar. If Russia refuses, said buyers will simply look to other producers.
> and then ban foreigners from holding them.
No one outside of Russia wants to hold roubles. Everyone wants euros, dollars, or pound sterlings. The rouble is not a significant currency in the global economy.
> Which would mean the EU couldn't settle its gas bill.
The EU can import gas from the United States, the United Kingdom, and the Middle East. US exports of natural gas to Europe are already rapidly increasing: https://www.reuters.com/business/energy/europe-remains-top-d.... Gas isn't the leverage you think Russia has.
The rest of the world needs Russia less than Russia needs the rest of the world. For gas, or anything else.
"Russia imports hundreds of billions of dollars worth of goods each year."
They do, but do they need to do that or are they just nice to have.
And what that means is that the West is down by hundreds of billions of dollars of earnings. Where else are they going to sell that output now? There isn't a magic source of demand in the rest of the world, and unlike Russia, we don't have new jobs springing up supplying a war machine.
In real terms we lose, and Russia's export system frees up manpower that can be redirected to War.
""The dollar is the de facto global currency for cross border transactions and settlements. "
That isn't the case. Everybody pays in the currency they have, and receives the currency they need - particularly the one they need to settle taxes.
The US dollar is used only because it is convenient to do so. Once it stops being a convenient hop for getting from one currency to another, they will use some other method.
"If Russia refuses, said buyers will simply look to other producers."
Which other producers. Gas prices are going up. That means there is insufficient supply.
"Gas isn't the leverage you think Russia has."
Really. So why are gas prices going up then if there is an excess of supply?
Why is the UK's gas price cap looking at going up by 50%?
There is no magic porridge pot in the world. The world of excess supply ended with Covid - and the restrictions in place have crippled supply chains.
It's going to take time to replace the power supplies.
There is a wonderful pamphlet called "How to pay for the war" by JM Keynes. You may wish to read it.
The people who want rubles are those who have to pay taxes in rubles, which Putin imposes on the promise of a trip to the gulag if you don't pay them.
Just because something is generally priced in dollars, doesn't mean that it is paid for in dollars. Contracts to supply anything can be in any denomination.
In all international transactions people pay in the currency they have and receive the currency they require. Everything else is just protocol layers.
It’s really hard to pay in rubles internationally right now as a Russian. Like, your bank won’t let you.
In addition to the fact that Russia’s biggest import is heavy machinery which makes it very difficult for them to actually access said raw materials, Russia must import many raw materials required for modern industry. Aluminum Oxide, plastics, and chemical feedstock are major imports for Russia that they no longer have access to. To say that Russia has raw materials essentially ignores anything that isn’t energy.
