‘Ruble unstable for artificial reasons’
RT:Bloomberg's article indicates that there's investor optimism about the future of the Russian economy. What are the reasons for that?
Paul Craig Roberts: Russia’s economy is essentially debt-free. Russia has strong export earnings from energy. So because of sanctions, these earnings will now be used to develop the Russian economy instead of being wasted on imports of Western goods.
RT:Is it fair to say that, although sanctions have hit the Russian economy hard, that they have inadvertently helped some Russian firms?
PCR: I don’t think the sanctions did hurt or hit the Russian economy hard; they hit the financial markets because they are subject to disruption by Western speculators. The sanctions have helped Russian confidence, and more generally, the sanctions have helped the overall economy by creating import substitution in a process so that the Russians now are starting to make more of their own goods rather than use their earnings from energy sales to purchase Western goods. This is a very good development. Sanctions have helped to develop the Russian economy.
RT:So are the sanctions doing the damage intended by Washington?
PCR: Washington said that the purpose of the sanctions was to hurt the Russian economy. However, the real purpose is to break up the Russian- European political and economic relationships. Washington is concerned that those developing relationships would eventually pull Europe out of Washington’s orbit and Washington would lose control. In other words its vassal states would become independent because of their developing relationships with Russia. So that is the main reason for the sanctions.
RT:What role has Central Bank policies such as amending interest rates and dealing with currency supply played in investors' optimistic outlook?
PCR: The ruble can be stabilized by Western currency speculators. Remember how George Soros destabilized the British pound? So what stabilizes the ruble is not the Central Bank but its Russia’s internal development and Russia’s disengagement from the West, its economic disengagement from the West. The best way to stabilize the ruble is to demand payment in rubles for energy exports. As Russia develops its trade with China and the BRICS nations the ruble will automatically stabilize. As long as you are connected to the Western dollar payment system you are subject to destabilization.
RT:How did the rubble decrease affect the Russian economy?
PCR: The speculators knocking the ruble down have raised the price of imports. Therefore this has helped the Russia economy. So Russian firms themselves can step in and fill more of the Russian demand for goods and services… Russia has still the smallest ratio of debt to gross domestic product [GDP] of any Western country. That is far below anything in Europe or the US. So that automatically means a stable ruble. Russia has very strong export earnings from natural gas and oil. The only reason the ruble is destabilized is because of Washington and the currency speculators…[Ruble] is a stable currency and has very reason to be: very low debt, very strong export earnings, that is the mark of stable currency.
RT:In your opinion, who is to blame for the ruble destabilization?
PCR: I don’t think the ruble is unstable for real economic reasons. It was unstable for artificial reasons. It was an environment created by Washington and propaganda. And it was created by the belief that all this money would flow out of Russia and leave Russia. Generally speaking, money doesn’t flow out of countries that have extremely low debt and strong export earnings.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.