Putinomics orchestrating the energy of division and the story of the rise of the ruble -Prof (Dr) Manoj Joshi, Deepmalya Datta
Energy is linked to socio-economic and environmental sustainability. Rather, the reader is gripped by the ambiguity, deep in thought, when contextualizing this thought, in connection with Russia’s protracted and ongoing geo-eco-political special military operations over Ukraine. Does energy unite or divide by nature? Will the event itself catalyze the emergence of a new world order?
The global economy was on the threshold of an upward trajectory, after nearly two years of the devastating Covid-19 pandemic. But it was a short-lived affair as Russia, to its best understanding and belief, launched its special military operations. The world has plunged into a new phase of volatility and uncertainty. Clearly, the energy segment was the first to suffer the consequences, leading to a surge in global oil and gas prices.
The economic scenario
While the sweeping economic sanctions imposed by the combined global forces on Russia were aimed at calming and calming the frictional heat, Russian leaders remained steadfast, ready to tread the parched paths. The sharp sentiments exchanged under the aegis of the United Nations (UN) did not metamorphose into a tangible de-escalation, this was followed by multiple resolutions of the European Union, showing support for Ukraine by visits of leaders Europeans and other world leaders, followed by the decisions taken at the recently concluded G7 meeting in Germany. Regardless of all that, hostilities have entered an intensified engagement now in its fourth month.
Retaliatory economic sanctions have a double-edged sword. As Western nations began to impose financial and economic restrictions on Russia to force its hand to defuse the escalation, they also exposed themselves to the Russian energy salvo. Has Russia done its homework in terms of the economy of anticipation? Apparently, it seems so.
A medico-legal reflection is necessary on the aspect. The year 2021 has seen European imports of Russian gas amount to around 40% of its consumption. Crude imports from Russia accounted for around 25% of Europe’s needs. While the hectic diplomatic channels were exercised to end the escalating dispute, there was initially no harm to interests on the energy front. Russian gas pipelines account for about 70% of export volume to Europe and the mutually agreeable arrangement was continuous with no loss of pumping.
As the situation on the ground dragged on and sanctions began to pinch the Russian economy, Russia opened its second front. It was an economic challenge. Citing sweeping sanctions imposed by the West, Russia has instructed its agencies to request payment in Russian rubles for Russian gas supplies. It obliges foreign buyers to open accounts in Russian banks, to transfer the currency of their choice to recover the ruble equivalent for the payment of goods and services in the energy sector. The game-changing approach was triggered simply by a tacit act of changing currency for accepting payments. This decision by Russian leaders has created a paradox for many. As expected, the European conglomerate opposes the unilateral Russian decision and this may later be pending before international bodies, but the immediate effect of this decree for energy payments in ruble has stimulated the Russian currency, which had hit new lows after its military action. . Is this meant to share the Big Bro name! Interesting, isn’t it?
Without succumbing to global pressure, OPEC has firmly refuted calls to increase its oil production, and the United States is still evaluating the use of its reserves to stabilize the energy supply chain. As an example, alternative arrangements for energy supply can be put in place for Europe, but escalating costs can mutate new complexities into the high-stakes game. Since the pipeline route is the least expensive logistically, all other means of transport are bound to create new propulsions in the prices of petroleum products. The initial response from players in a seemingly cohesive global front has caused geoeconomic hardship for Russia, but the use of energy as a countermeasure can potentially lead to a stake through this collaborative act of unity.
What happens next has yet to be revealed! Assuming that, in the near future, the dire need for energy security is sure to influence global decision-making on warring parties. After all, before supporting the territorial integrity of other nations, the economic security of a nation itself is paramount. Although there are now signs of a collaborative approach by EU countries to impose a formal embargo on Russian oil/gas, long-term adherence will be the result of multidimensional factors. As a quote, to reduce its reliance on Russian gas supplies, Germany has reverted to coal for many of its power plants, which is like going back to square one for its energy plan. action against climate change. From a leader in energy transition initiatives, he is suddenly forced to make an unexpected pit stop and retreat into the race. Many of these examples may come from other nations as well. Experiential strategic instances prove that tunnel vision is tantamount to compromising one’s own sustenance. Hence the need to respond to the call for strategic foresight. Slow, subtle and steady frameworks of geopolitical dependencies for energy must be concretely erected, thus preparing the future for the actor-actors. The planet can no longer be a place of sequestered existence. In an amorphous criss-crossing of global ties, breaking requires calculated cost optimization. From a subjective perspective, creating autonomy will build resilience, but not necessarily isolation from the butterfly effect.
Energy surreptitiously conceals its divisive nature by acting as an instrument to forge strong associations and foster human development. This in no way alters its true heat generating potential, it is only the application for which this heat is used that creates the clandestine distinction. The era of choosing clear sides and concerted acts of unity may be over, given the geopolitical reality of transitional dynamics, ambidextrous organizational skills are instead a prerequisite. Countries whose energy security is at the heart of their economies and who have a high stake in the ongoing fracas, they are already navigating uncharted territory of turbulence. The rise of the “Ruble” can simply cut the wind for them. Is contesting the economy the new Russian chessboard of Putinomics?
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