Putin willing to compromise in pursuit of greater ruble

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Analysts have downplayed the significance of Russian President Vladimir Putin’s new instruction of de-dollarization as a means to retaliate against US sanctions.

The Kremlin said on its website that the government is poised to approve legislation making the ruble the main currency of exchange at all Russian seaports by next year in a bid to protect the interests of stevedoring companies with foreign currency obligations, according to an RT report on Tuesday.

While there is potential for this to be understood as the latest move in a tit-for-tat exchange between the US and Russia, two experts told CGTN’s The Point (@thepointwithlx) that it is just the Kremlin’s way of protecting its own currency, the ruble, despite the compromises facing Putin.

Christopher Chambers, a professor at Georgetown University, said that he didn’t see Putin’s move posing “any immediate threat” to the dollar regime.

“The US dollar is still a bedrock form of trade currency,” Chambers noted. “Russia unilaterally is not going to make any difference unless it can align itself, somehow, with the real player, China.”

Pavel Felgenhauer, a Russian military analyst, told The Point there has been a “tariff battle” inside Russia for a long time, adding that Putin’s Kremlin is an arbiter in the tariff confrontation.

“There are very important, very powerful monopolies led by people who are Putin’s friends and have opposing views on this,” he said.

Monopolies like Novorossiysk, Russia’s largest state-owned seaport operator, are likely to “use the virtue of equivalent dollars for figuring out their tariffs,” according to Felgenhauer. “The ruble-dollar exchange rate is volatile and investment in the new port will be affected.”

He said “there’s going to be some compromise” given some monopolies’ “staunch resistance” to the measure that was first proposed by Putin a year and a half ago.

Back then, Putin also stressed the importance of not using the US dollar in international trade, a goal that has been on the Kremlin's agenda since the deterioration of relations with the US over Ukraine, RT said.

The Point with Liu Xin is a 30-minute current affairs program on CGTN. It airs weekdays at 9.30 p.m. BJT (1330GMT), with rebroadcasts at 5.30 a.m. (2130GMT) and 10.30 a.m. (0230GMT).