 Yet another week into the war in Ukraine, we are seeing a lot of developments not only on the ground, not only in terms of military conflicts and fighting, but also the international scenario. Earlier this week, we had two top US officials visiting Ukraine, but the most important development has been the decision by Russia to not supply natural gas to Poland and Bulgaria because they have refused to pay in rubles. Now, Russia had earlier indicated that certain unfriendly countries would have to pay in rubles. What are the implications of all this? We will be discussing on this episode of Mapping Fault Lines. We are joined by Pravir Purkayas. So like I said, a lot of developments in addition to what I had mentioned, the UN Secretary General also visiting both Moscow and Kiev, some concern being expressed as they were attacked when he was in Kiev. But the most important news of the week, especially from a global level, seems to be the issue of natural gas, again, and energy supplies. So Gazprom saying that it will no longer supply natural gas to two key countries, Poland and Bulgaria. And many other countries now having to make this crucial choice, whether to pay in rubles or not, many other European countries, that is, some have already agreed. And certain other companies have set up accounts with Gazprom. So how do we understand the energy situation in midst of all this? Has Russia's gambit that way worked? Let's step back a bit. If we take the war in Ukraine, as you see it, there are really three kinds of war taking place. One is a physical war. People have characterized it not just a war between Ukraine and Russia or Russia's attack on Ukraine, but also NATO's expansion to the east. So de facto, it's a war between NATO and Russia being carried out by Ukrainians on one side. And as people have said, NATO is willing to fight this war to the last Ukrainian. So that's one way of looking at the war. We'll take a step back from that because that's something that is another discussion for another day. But if we look at the other two wars, one is the information war, which is of course the West is winning hands down because they control the Internet, they control the largest digital monopolies today, and of course the major newspapers, news organizations in the world. The other third war, which is what we have talked about, is essentially the economic war of which the energy war is a part. And there, Russia's always had a strong hand because without Russian gas, even oil and coal, the European Union is going to be at risk. At risk of its financial sector coming, industrial sectors coming down. And you could see a scenario where a lot of the industries will shut down, cascading effects of the economy is taking place. And Germany is of course at risk, but so is Italy, so is Spain. So to a lesser extent, so is France. So this has been the way Russia has held a strong hand. The fact that it is a supplier of energy to European Union, it's the largest supplier of gas to European Union. So I think 40% of their gas comes from, more than 40% comes from Russia. So that's something that whatever they say cannot be taken out. And energy experts have said even take out oil from European Union, Russian oil from European Union is not going to be easy. So given that, what happened was initially when sanctions were there on Russian central bank, it meant that even if Russia received payments, those dollars or euros it would receive would not be accessible by Russia. That it would lie essentially in accounts with European banks and therefore be under sanctions to the extent that the earlier $300 million of Russia's foreign exchange reserves are. This is what Putin had said when he announced the ruble for a gas mechanism that we're not stupid, that we're not going to give you gas for free because that's what it really meant. That we will give you gas, you will pay us in euros and then money will stay in your banks. So though Ursula Wendell Lane has been saying blackmail, etc., etc., but nobody has tried to answer what Russia has been saying, that effectively if we give you gas and you don't pay us in rubles, but you pay us in your bank account, which then you've already seized once and you can seize again. And even those banks will not be able to deal with Russia because Russian central bank is under sanctions. So given that your basic argument that you will not pay us in rubles is basically saying that you will take gas but you'll keep the money. So Russia has worked out a clever mechanism and what experts are saying it does not violate the EU sanctions. It says gas from bank, you open an account there, dollar account, you also open a ruble account and the transfer between Russia, do dollar and ruble would be made by gas from bank and not you. And therefore that does not come under sanctions. Now I'm not a financial person, so I don't know how this works. But I have seen for instance in naked capitalism, Eve Smith has been writing on this for quite some, I'm sure she understands finances better than you and I do. And she said yes, this makes sense, it works. And this is what we now see that European Union has made a statement saying yes, this may not violate EU sanctions. And we have a set of companies who are now lining up to open gas from bank, dollar and ruble account and make the payments through that. So we have German companies, Italian companies, other companies lining up to that. And it seems that the next set of transactions will take place in May. So it's a little time at the moment for both to see how this works. But for, by all accounts, these companies are now falling in line. Bulgaria and Poland were outliers because they both have very small amounts of gas they were buying from Russia. Poland has not been buying, has been making alternative supply sources. They have been also doing a lot of LNG regassification. So they have already decided that they will move away from Russian gas for quite some time, not recently. And Bulgaria has access to other sources. Therefore, they are not really affected. And Germany is believed to be buying more to actually offset some of these also. There is the reverse flow as it's called in the Yamal pipeline. Instead of gas coming from Russia through Poland to Germany, Germany is sending some gas back to Poland. But even then, Poland and Bulgaria are small players at the moment, how much they are buying from Russia. So the big player, and that's always been the big issue, is Germany. Then you have Italy. Then you have other countries in the European Union. None of them are going to risk their economy. So as far as the ruble for gas is concerned, Russia seems to want this hand. What it has also done is stabilized the ruble. If you see the sharp drop in ruble, which really tanked immediately after the nuclear sanctions, as we call them, the nuclear economic sanctions that is imposed on the Russian central bank and other banks, Russian banks, the ruble tanked. But it has come up now and it is trading virtually the same level and did before this economic sanctions are imposed. So yes, Russia has lost $300 billion, which is still frozen by the West. What they will do with it, we don't know. Afghanistan, we saw what Biden did with it. But nevertheless, this round, it seems we have to say, is Russia's round. What happens for other primary commodities? What happens to inflation in the European Union? We don't know because gas prices have gone up by 20 percent, which makes even if Russia drops its supplies by a fraction to European Union, they still get more money. In fact, in the last two months of war, Russia has made, got more money by selling gas to European Union. Even after the sales have come down, then they did before. So in that sense, gas price coming up offsets for the reduction of gas supplies. So both things taken together, we have to say on this issue, Russia has scored, but much bigger threats to the world exist because we have now fertilizer crisis. We have food crisis in India. We have a cold crisis, for example. All this are also consequences of the war in Ukraine. So Praveen, to ask a bit of a crystal ball question, the West had a plan which was that they would impose these nuclear sanctions. As you said, there would be a drastic collapse in the Russian economy. The rubles value would go, of course. There would be scarcity shortages. There would be huge internal resentment. Putin would face the pressure and there would be some kind of regime change. Seems to be the larger hope because if you look at some of the pronouncements, that's what seems to have been the intention. But do we see that the Russian economy has managed to weather this crisis and attain somewhat stability even within wartime? And when you can consider examples like Iran or Venezuela, these methods really haven't ever worked. You know, apart from the fact that these methods of sanctioning countries, economies, hoping that therefore there will be regime change, has never worked. As you said, either Iran and Venezuela are classic examples of that. So I don't think in Russia's case also this is likely to happen because there seems to be widespread support in Russia for what Putin has done. And this tends to happen during wars and we know that. So that is a far cry. It can happen only if there is a strong opposition in the beginning and be if the war aims are seen to be obviously not being fulfilled and therefore the questions of why this happened. I don't think that is also likely to be true because basic stake in Russian people is the Donbas region and people who identify themselves as Russian speakers if not ethnic Russians. So there is a solidarity there, which is what Putin is playing on. So I don't think the war is going to rebound on him, provided the economy holds. And here is the biggest mistake that the Americans seem to be making because they think they have been convinced by their own propaganda that Russia is nothing but a gas station. Russia is a primary producer of a whole range of commodities including food and fertilizers, something which is basic to everybody. It is also produces the metals. A lot of the metals primary commodities again are produced in Russia. Its military manufacturing is almost entirely indigenous. They don't buy from others. So in that sense a military capability that Russia has built up is going to continue. They can continue to manufacture missiles and whatever they need for the war. And for what we can see China does have their back. So if it is a question of chips and other things that Russia may require it appears that China and even countries like India were buying gas and oil from Russia would be willing therefore to supply those goods. Maybe buy it from others and send it to Russia. So as long as Russia still remains in unsanctioned by I think 90% of the countries in the world it's only about a small number of West European and North America which is sanctioned Russia. Given that I think the idea that it will be completely starved of all things it requires is a far cry. If that doesn't happen and it is self-sufficient in primary commodities well Western Europe is not. United States is better placed. So then we are going to see a European crisis and if there is a European crisis what happens we don't really know. So it is definitely going to weaken Western Europe significantly. They probably will surrender to United States militarily because if they want to build up their military capacities what they will do is buy weapons from the United States. So therefore bolstering really the military industrial complex in the United States. If that happens then Europe is going to be further weakened further in the grip of the United States vis-a-vis NATO. NATO really means in this case US leadership. So given all of that I think net loss in this is Western Europe's. Some gain for the United States because they control Western Europe more but I don't see Russia weakening. In fact I see Russia strengthening as a consequence of all of this and it does put a big question mark on the dollar hegemony in the world. Which country including India would like to now park all its reserves in United States or in dollars knowing that it can be seized at any point of time if the US disagrees with what that country is doing. So the basic underpinning of the global economy where the reserve currency is dollar I think that this has raised a very big question with respect to that. Absolutely. On the other hand of course for me it doesn't seem like the United States is willing to consider these options because like I said at Neblinken and Lloyd Austin were in Kiev they made some very powerful statements where they seem to indicate that the cause of the Ukrainians and the cause of the United States was pretty much the same. The V was the constant you know refrain and one of the things they seem to say also was that the aim was to make sure that the Russians really bled that they didn't it didn't seem like they wanted an end to this war at all. So do we see that also a continuation of this trend where the West is really trying to push this conflict to last as long as it's possible. Well as I said the attempt is to let Russia bleed and in this if the Ukrainians have to be sacrificed so be it. The fact is Ukraine the Ukrainian state seems to be captured by the United States after the what's called the Maidan Revolution and that is what the stranglehold of the United States of the Ukrainian state is there. Of course you have browsed a huge amount of nationalistic sentiments in Western Ukraine who seems themselves this themselves now distinct from Russians. So you have that chauvinistic basis. A lot of neo-Nazis very operating out of Ukraine as we know as of battalion is only one of them you have the right sector you also other formations. So given all of that there is this issue of how long Ukraine will fight and will it actually ask for peace. It's interesting initially the world peace moves by Ukraine there were negotiations financial time said the 15 point charter which is almost been agreed to it seemed after Zelensky had said certain things Russian said yes we are looking at possibility of peace and it pulled back from Kiev. Now what we see is the none of that is in play none of that is happening on top of that what we see also that globally though this is perhaps the most dangerous conflict that we have seen in our lifetime possibility of two nuclear armed powers getting into the act and therefore extremely dangerous particularly when countries like Prime Minister of UK Boris Johnson and his I think Deputy Defence Minister claims that you know it's all right to hit targets inside Russia and we will give them weapons to do so virtually that's the statement all of that is dangerous but there is another danger if European gas supplies are affected what you're going to see is the cutbacks that Europe has promised on for instance the emissions greenhouse emissions they're not going to be able to keep so they're going to go back to coal so all this talk about coal being cutback transition taking place is unlikely to happen that's always always what happens in a war the long-term goals are sacrificed for the short-term goals the United States probably doesn't even recognize there is global warming I don't think they believe in it so they would be quite happy to say forget about all those there goals at the moment our goal is to weaken Putin and Russia so let's get done with that so I think this with this we are in a very dangerous situation unfortunately we don't as we talked last time also we don't seem to have a global leadership today which is not United States not Russia not China not European Union which can then make appeals to both sides that you know please discuss negotiate come to an agreement because otherwise what you are doing is extremely dangerous for both you and for all of us that kind of international shall we say initiative doesn't seem to be appearing in any side and in the United States on Europe what we see is the war sentiment seem to have captured the states the state machinery completely and also the opposition as well as ruling parties given that we I think we are in an extremely dangerous situation as much of a nuclear war possibilities as with about global warming because we have a interregnum of about three years within which we can reverse this or we are looking at very bleak scenario thank you so much for talking to us that's all we have time for today we'll be covering many such issues in future episodes of mapping fault lines until then keep watching news click