The Ruble is losing value, and Western propaganda is quick to celebrate: 'Sanctions are working'

While the ruble falls, Western media and politicians praises sanctions. But Russia’s export-focused strategy and new currency alliances might turn the tables in its favor.

Following the sanctions imposed by the US and the EU, the Russian currency has returned to levels not seen since the start of the war. The Kremlin remains confident, stating, "Solutions will be found; it is impossible to block a country like Russia completely." Meanwhile, Western media has already begun its narrative: "The financial response to Putin's military threats has hit the mark."

When discussing currency and monetary systems, the Western propaganda machinery often operates within the realm of deception. This creates a situation where the rush to provide the public with information that supports those in power, combined with the ignorance of those tasked with spreading it, frequently leads journalists and bloggers to celebrate news that, in reality, should be cause for concern.

The Russian ruble, over the past few months, has been losing ground in the currency exchange markets against both the dollar and the euro. Recently, according to reports, it experienced a significant devaluation of 5.45% against the dollar and 7.05% against the euro.

Let’s be clear: it is hardly surprising that a non-convertible fiat currency (like the ruble), which relies on flexible exchange rates to function properly, experiences fluctuations. It’s a bit like being surprised by the presence of waves in the ocean.

However, when amazement is coupled with collective excitement over the devaluation of the currency of a country that is one of the world’s leading energy exporters—especially when, due to sanctions we imposed, we’ve decided to stop importing our main energy source from them—it’s honestly hard to understand where the supposed "great advantage" is that should make us jump up on the couch cheering.

What I’m trying to say is that Europe today isn’t benefiting from the devaluation of the ruble. In theory, this could have led to cheaper gas and oil, but only if they were still able to buy energy from a country that, again, is one of the top energy exporters in the world.

In fact, given what we’ve just observed, the fact that countries not imposing sanctions on Russia are still able to take advantage of these lower energy prices is, for us, a misfortune. This cheaper energy will benefit their economies in two key ways: first, their exports will become more competitive as their products will cost less to produce, and second, their domestic markets will benefit from lower household energy bills.

I keep wondering what all the hype is about, which has been dominating the media and online discussions for days now.

From what I've read, the excitement seems to stem from the fact that, according to Western propaganda, the drop in the ruble is being seen as proof that sanctions are working. The reasoning goes something like this: by sanctioning a country that provides your economy with its most valuable resource at a low cost (gas), and then refusing to accept anything in return but bank statements in your own currency, you're supposedly pulling off a brilliant move. This is a tactic only the Western world’s top thinkers could execute.

Let me remind these people that Russia is a net exporter. Those who follow a mercantilist economic policy have always had to adopt monetary policies that devalue their currency in order to keep their products competitive. A good example of this is Germany, which, operating under similar economic policies, rushed to join the eurozone to ensure a permanently devalued “mark.”

For Russia as an economic system, the ruble’s decline is not a disaster. In fact, it actually helps Russia gain ground in the global energy market. And as I’ve pointed out before, it makes Russian oil and gas exports more competitive for its trading partners. It's clear that, within the emerging multipolar world that is taking shape in opposition to the United States and Europe, the ruble’s devaluation is a blessing for countries in the BRICS Plus group, which have commercial agreements with the Kremlin.

In March of this year, Russian Minister Alexander Novak, in the documentary Petrolio on the Premier online platform, stated that the Russian oil and gas industry was already conducting 80% of its transactions in rubles and yuan.

"By the end of 2023, over 90% of our deals with China were made using national currencies—rubles and Chinese yuan. Speaking specifically about our oil and gas sector, we export about 40% of our products in rubles and about 40% in Chinese yuan. The remaining 20% is in other currencies," Novak said.

This means that the share of the dollar and euro in Russia’s economy, especially regarding energy exports, has been significantly reduced. So, once again, where is the advantage for Europeans in having imposed sanctions? A favorable exchange rate could benefit the private sector, but only if you have the ability to exchange your currency for products from a country whose currency is devaluing. But as highlighted, since such exchanges aren’t taking place, it’s clear that there is no real benefit.

If we look at this from the perspective of the Russian people—always using the logic of Western mainstream propaganda, which claims a drastic drop in the ruble would cause the population to turn against their “dictator”—we are still in the realm of fantasy. For ordinary Russians who earn and spend in rubles, the fluctuations in the ruble's value against the dollar and euro matter little or not at all. First, because, thanks to appropriate fiscal policies from the Kremlin, these fluctuations don’t affect their lives. Second, even if they wanted to travel and spend in Europe or the United States, as we know, they are blocked from doing so by the very sanctions that the media so eagerly praises.

Let’s dive into the specifics and set aside the propaganda. What exactly does the strengthening of sanctions imposed by Washington entail following the nuclear threat posed by Russia's hypersonic missile, "Oreshnik," which Putin launched on Ukraine in response to attacks authorized by Joe Biden and those pulling the strings?

Unfortunately, for those celebrating, the actions taken by the Biden administration have not targeted Russia as intended, but instead have hit Europe squarely once again. The new sanctions imposed last Thursday by Washington primarily involve a near-total ban on Gazprombank’s access to the Swift system—this is the key bank that facilitated Russia’s gas exports to Europe.

In simple terms, the United States has effectively blocked the Russian bank from handling any new energy transactions, potentially cutting off the only way European clients can pay for Russian gas.

It’s clear that the main reason “the ruble continues to decline,” as stated by Yevgeny Kogan, a professor at the Higher School of Economics in Moscow, is the sanctions on Gazprombank, which was a crucial institution for exporters.

However, as with any economy, especially when it comes to imports and exports, the principle of "debits and credits" applies. By preventing Russia’s exports, the same will inevitably apply to imports, which will reduce the demand for foreign currency from Russian businesses. So, in the short-to-medium term—unless there are some peculiar monetary maneuvers from the central bank or the usual players in Western finance (and I don't think Putin will just stand by)—the ruble's exchange rate will eventually stabilize.

What more can I say? I’m open to hearing if anyone can point out a benefit to the European people coming from the “collapse” of the ruble. If so, I’ll be ready to eat my words.