Ruble Gas Payments Help Russia Avoid Dollar-Related Risks, Bolster National Currency: Professor

Russian President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan agreed that Ankara would pay for 25% of the gas that it imports from Russia in the Russian national currency last week.

Payment in rubles for part of the gas supplied from Russia to Turkey will help Moscow avoid dollar-related risks and strengthen the Russian national currency, Professor Chen Fengying of the China Institutes of Contemporary International Relations (CICIR) told Sputnik.

She said that on the one hand, such payment is a “coercive” step because Russia is currently under western sanctions, including a ban on the use of the SWIFT international payment system.

“Using the dollar, the euro, the yen or other currencies in trade with Russia will be recorded in the SWIFT system, which may lead to secondary sanctions. The use of the ruble prevents such a scenario,” Chen pointed out.

On the other hand, the US dollar is currently a high-risk currency, which may even completely depreciate in the future, according to the professor.

This uncertainty, she added, remains the most serious problem, “and in these circumstances, scrapping the use of the dollar in transactions is mainly based on reducing risks in international trade.”

“Both Turkey and other countries will most likely reduce the use of the dollar when it comes to trade deals. This includes Russia using the ruble in transactions, which will allow Moscow to shun risks pertaining to the use of the greenbacks US, as well as to support the Russian national currency,” Chen stressed.

Her remarks followed Turkish Energy Minister Fatih Donmez telling reporters on Monday that the central banks of Turkey and Russia will start work to arrange partial payments for Russian gas supplies to Ankara in rubles, as agreed by the presidents of the two countries.

Russia sends its natural gas to Turkey via two major pipelines - Blue Stream and TurkStream. The pipelines, which run under the Black Sea, have a total capacity of over 46 billion cubic meters of gas per year, allowing the Russian energy giant Gazprom to use part of the network to send gas further west to Europe.

Russia accounted for about 45 percent of Turkey's natural gas imports in 2021, and the two countries have been seeking to expand bilateral cooperation in the energy sector.

After Moscow launched its special military operation in Ukraine on February 24, western countries slapped harsh sanctions targeting Russia’s economy, finances, media and culture. The restrictive measures, however, have had a significant impact on the West's economy as well, triggering record-high inflation and soaring gas prices.

Russian President Vladimir Putin admitted that the sanctions damage the country’s economy and many risks still remain, but underlined that the restrictions had backfired against those who imposed them.