The article which follows is translated from the current edition of Battaglia Comunista. It is a timely reminder that the death and devastation in Mariupol, Kharkiv and other Ukrainian cities are not the only features of total imperialist wars. As the article suggests, the power struggle is not primarily over gas supplies but financial control. This is why Gazprom demanded that “hostile” states in Europe pay for gas in roubles. The real issue here is financial domination. In terms of the value of trade and GDP it looks as though the world has three big players, the US, the EU and China. But when it comes to transnational payments there is only one game in town and that is the US because the vast majority are routed through US banks. This is because virtually every transaction is priced in just a few currencies of which the dollar is still by far the top dog. India, Brazil and South Korea, for example, all use dollars for 85% of their trade. This means that Washington controls access to the international financial system. And it gives it an extra weapon of war in financial sanctions.

Financial sanctions against the likes of Iraq, Iran and Afghanistan have allowed the US to impose misery, starvation and death to punish the people of those states who thwart its imperialist interests. And the Iran nuclear deal was scuppered by the US threatening sanctions against its European allies if they attempted to continue with it. Financial sanctions were also the first response against Russia for its annexation of Crimea in 2014. Arguably they may only have pushed Russia into the corner from which it launched its latest, and most risky, imperialist adventure in Ukraine.

With a per capita GDP below at least 69 other states in the world, the economic inferiority of Russia in world imperialist stakes is quite clear. It is even more obvious in the financial world. It is though endowed with a large number of primary products, the most lucrative being hydrocarbons, and its supply of gas and oil to European NATO members has become the one link which had not been breached until now. As the article below states, the insistence by Russia that European states should now pay for these supplies in roubles is an attempt to escape the financial strangulation of the dollar dominated world. And as the article also argues, the attempt to enforce it could cost Russia more than its rivals.

In fact the Russian calculation is that it will now make its own “pivot to Asia” where an expanding productive economy has the greatest need for oil and gas. As we have written elsewhere, China and Russia have not only increased military cooperation but now conduct most of their trade in anything but dollars. What this means is that the world is now heading towards a division which is almost as stark as that of the Cold War except this time the global capitalist system is already in a deep crisis. The Polish Government may claim that it has enough gas to cover two thirds of its needs already but this new source will come at a price, Meanwhile in Russia, the immediate loss of revenue will not affect the war machine but it will make life more difficult for workers. The price of all these financial imperialist manoeuvres will be paid not by oligarchs or the Oxford educated elite in the UK but by the working class all over the world. And when the economic price we pay in shortages and higher prices is not enough to resolve the problems of capital accumulation, the current war over Ukraine will be recognised as no more than a preliminary skirmish. We have been warned – it is time to get organised. The only war worth fighting is the class war to end the system of mass murder that is already marching us towards calamity.

Dollars versus Roubles: The Battle for Control of the Financial World

Governments everywhere are trying to counter the unmistakable crisis into which the so-called "real economy" is sinking. Meanwhile, "expert" analysts of the international monetary system are perplexed by various aspects of financial activity on a global level. Amongst them are the "acute observations" offered to us by G. Salerno Aletta, in an editorial by Tele Borsa, which quite a few internet left-wingers appear to follow. They concern the more than worrying advance of an oppressive and dangerous “paper economy” towards domination of what would be a completely virtual world, where the illusory expectations of capital continue to hold sway. This is a matter of life (growth of the system) or death (global crisis) for finance capitalism which, if it does not see a strong and constant growth in commercial transactions, begins to tremble. And while the US mourns the weakening of a monetary monopoly it has hitherto enjoyed (and to a large extent still enjoys), even the imperialist competition from Moscow and Beijing is not laughing very much.

Now, what to do just as the horizon darkens? As the ephemeral spirits of international currencies stir nervously, Russia now seeks to lean on the "underlying" physical reality of the abundant amount of hydrocarbons it has available. Now it would like to be paid in roubles. Imposing payment in roubles could even put an end to the monetary supremacy of the dollar!?

Now states "hostile" to Russia are threatened with having to pay for the gas they import entirely in roubles. But — beware — a possible closure of the taps would also be a disaster for Gazprombank, the Russian bank at the centre of the energy business that underlies the tanks and missiles. It is a must for Moscow to support the national currency and possibly raise the price of methane: this also to better finance the military operation against Ukraine. Gas sales bring almost a billion dollars a day into Moscow’s coffers. It should also be said that 58% of Gazprom's sales are in euros, 39% in dollars and 3% in sterling. Moreover, Gazprom is already obliged to pay 80% of the proceeds it earns in foreign currency to the Russian Central Bank, first exchanging them into roubles. At this point, applying a plaster to commercial and monetary wounds would not stop the fluctuations of the Russian currency. It would only help to undermine sales of Russian methane to the West, forcing the Russians to look to the East (China and other African and Asian countries). But in the meantime, devaluation of the Russian currency would still remain a difficult threat to avoid, and a serious recovery in the price of the rouble against the euro and the dollar would appear to be entirely transitory.

Although trade levels are far lower than at the start of the conflict in Ukraine, Putin thinks he can succeed with his move to counter the increasingly restrictive sanctions applied by Western countries and which could soon cause serious damage to the Russian economy. Russia is highly dependent on surplus value derived from the revenues of its energy resources, and will not easily give up its role of sole supplier of gas and oil to Europe. This is an important resource in the hands of Moscow, without neglecting the fact that the US also imports quantities of gas (about 20% of what it needs).

However, demand for roubles is drying up with dire forecasts from the rating agencies. (Russia's debts could trigger one of those defaults that — don't forget — basically worries everyone: we are talking about interest due from Moscow to foreign investors for $117 million and concerning two government bonds.)⁽¹⁾ In addition, in two weeks the rouble has halved its value against the euro, although a recovery in recent days has brought the exchange rate between the euro and the rouble from 112 to 107. Clearly then, one of the motives for the latest uptick in demand, is the attempt to contribute to a revaluation of the Russian currency.

However much it may be ... "brutal and very violent" (a pinch of hypocrisy does not hurt, when it comes to the ... humanitarian comments of journalists and rulers) the war unleashed on Ukrainian soil is part of the attempt by Russian imperialism — while China lines its own pocket — to improve its position ... as a capitalist power. But it does not appear to be solving its many economic and strategic problems.

From time to time, the threads begin to unravel.

(1) In terms of international financial transactions $117 million is a trivial number. In terms of the possible knock-on effects of a payment default it could trigger the downfall of the whole house of financial cards and all the players know this. So far then, the US Treasury maintains that US sanctions “do not prohibit the country from making payments to bondholders” (Financial Times 18.3.22) Since this article was written Russia repaid further interest payments on a $2bn bond (April 4th). The question now is what will happen after May 25th when US financial entities and individuals will be required to have a licence to such funds. We can guess! (CWO)