Russia’s weapon against the West: the ruble

The Geopolitical Role of the Ruble in the Russia-West Rivalry

In the ongoing tension between Russia and the West, the ruble is playing a significant role in reshaping commercial dynamics.
Ever since Moscow’s invasion of Ukraine in February 2022, a series of sanctions, restrictions, and bans have defined the strained relations between Russia and major European and American economic powers.

This geopolitical landscape has led to the formation of two opposing blocs: one led by Russia alongside China and countries not aligned with sanctions against Moscow, and the other spearheaded by Western forces aiming to isolate Russia economically.

Putin’s Strategy with the Ruble

In response to these challenges, President Putin has been proactive in mitigating the evident damage to both state and private coffers, especially concerning the substantial gas sales to Europe.

During the St.
Petersburg International Economic Forum, Putin stated that nearly 40% of the country’s commercial turnover is now in rubles, reducing reliance on “unfriendly” Western currencies like the dollar and euro.
He emphasized the growing importance of trade with Russia’s “friendly countries,” which already account for three-quarters of their trade volume.

Furthermore, Putin signaled a shift towards increasing transactions in currencies of BRICS countries (Brazil, Russia, India, China, South Africa), highlighting the diminishing use of “toxic” currencies from unfriendly states for Russian exports.

The Rise of the Ruble

In response to restrictions on using the dollar, Russia has significantly increased its use of the yuan for international transactions, facilitated by sympathetic trading partners who have been disrupted by the weaponization of the dollar by the US.

As a result, the ruble’s share in Russia’s international trade has notably surged.
Transactions in rubles now represent 49% with the EU, 35% with South America, and a more than doubled 48% with Africa.

Additionally, Russia has eliminated the dollar and euro from its gross international reserves, held mostly in gold, yuan, and other friendly currencies.
This strategic move underlines Russia’s efforts to diversify its economic partnerships amid Western sanctions.

New Horizons for Russian Trade

At the St.
Petersburg Forum, Russia sought to cultivate new relationships with countries in Asia, Latin America, and Africa willing to engage in business disregarding geopolitical tensions.
These include nations in Eastern Europe and key oil and gas clients like Slovakia and Hungary.