To “hostile states”
Russia only pays in rubles

03/07/2022 21:23

Russia is now reacting to Western sanctions by announcing that it will only settle financial obligations to “hostile states” in rubles. To do this, the countries would have to open a clearing account in a Russian bank. However, these are subject to sanctions.

In response to Western sanctions, the Russian government has decided that financial obligations to “hostile countries” will only be settled in rubles. The list includes Germany and all other EU members, as well as many other countries. These include Ukraine, Switzerland, Japan, Great Britain and Canada, as well as other countries, as the Moscow government announced.

So far, only the United States and the Czech Republic have made the list. It is a response to countries’ sanctions against Russia for Kremlin chief Vladimir Putin’s war against Ukraine. In concrete terms, the step means that Russian citizens, companies, the state itself or municipalities will only pay obligations in other currencies in rubles. In addition, states would have to set up a clearing account with a Russian bank, he said.

The West had imposed sanctions on numerous Russian banks and also decided to exclude numerous financial institutions from Swift’s banking communications network. This makes transfers and other banking transactions much more difficult. According to the Russian central bank, Russia has external debts of 478.2 billion US dollars, as of January 1, 2022. The Russian ruble has been falling sharply for days, and this Monday it also fell significantly against the dollar and the euro.

Following a decree from Putin, the Russian government began compiling a list of “hostile states” last year, with the United States and the Czech Republic appearing first. The embassies of both countries were no longer allowed to employ Russian citizens as employees. As a result, the work of diplomatic missions, which depend on local Russian personnel, is significantly restricted.