 It's been a week of continuing warfare in Ukraine and intense diplomatic activity across the world. From the time we met you last week, Russia's offensive operations have continued with a focus on Mariupol. Meanwhile, diplomats crisscrossing the world, engaging with leaders and prime ministers and presidents, making all kinds of promises, sometimes even threats. We'll be talking about all this in this episode of Mapping Fault Lines. To take a quick look at the operations, we do know that Russia's military offensive is largely focused now around the city of Mariupol as well as the regions of the east, the Donbass region, the Donetsk and Luhansk provinces. So this seems to be the current focus of the Russian military. Of course, there are also operations going on near Kiev, Kharkiv, towards Kerson as well, Kerson as well. So all that has been happening. Not too much of a change on the ground in the past one week. Of course, the humanitarian disaster is quite intense. Meanwhile, like I said, there's been a lot of diplomatic activity, a lot of activity about the world of finance and commerce and trade. To talk more about this, we have with us Pravir Purkayasam. Pravir, so when we discussed this issue last week, Vladimir Putin had said that if certain unfriendly countries would have to buy oil in rubles. And now over the past week, we've seen a lot of developments happening, a lot of clarity emerging on the situation right now. So first of all, let's take a look at this issue of the rubble and buying oil in it as far as various countries are concerned. How does he plan to structure it or what is his proposal? Well, let's take a step back before we get into that. Clearly, what is at stake was the price of the rubble itself. Rubble had crashed to something like 140 against the dollar. Now it's regained its price and it's almost trading at the level it was before the sanctions started taking effect. So what we are really seeing is an aspect to the oil price that you were talking about is an aspect of the larger economic war, which the western countries have really launched against Russia. So I think this, the question of oil is in some sense the fulcrum around which this entire economic war is to be seen. Now, the fact that Russian currency has recovered, what does it indicate? When it went down to the basement, they said, okay, Russian rubble has become rubble. That was one of the statements which was made. Now that it has come back, there doesn't seem to be much recognition of the fact that it has come back and what does that indicate? Looking at the oil issue and oil and gas together, the question is the European Union cannot live without Russian gas at the moment. Even if the disengaged as they're threatening to do, it's going to cause a huge dislocation, both their domestic industry and of course for their people, from heating to a whole bunch of things depend on the gas supply that comes to people's homes. So at the prices going up is a huge concern for the domestic economy of these countries. So the fact is, how do they buy it and at what price they buy it? These are the two questions and for the west, the issue was that we will give you euros against what you buy, but we hold the euros. Now the basic problem that is underlying this agreement, so to say to buy and sell gas, is the fact that already European Union has seized Russia's euros, which were in European banks. The sanctions that had been done meant expropriation and it's not a question of freezing as it is being talked about loosely. It's really in some sense expropriation of the Europe, of the euros that Russia held, the foreign exchange reserves of Russia, both in dollars and in euros, but European Union has participated by seizing Russia's reserves as well. Now if they want to pay in euros, the question is not whether they can pay or they cannot pay in euros, the question is who holds the euros and what Putin's latest proposal is. Okay, you can pay to a Russian bank in Germany, for instance, Gasprom Bank, which is not sanctioned. So it will make Gasprom Bank sanctioned proof, if that is the conduit of the transaction. You pay that money into Gasprom Bank in an euro account, you have a ruble account, so Gasprom Bank will convert through presumably Russian counterpart in Russia or the Russian Central Bank, will convert that euro into rubles and then from the ruble account it will transfer the money into Russia for gas payments. What it means leaving aside all of this and really for most people this is completely opaque territory, we don't understand what it means, but the net result is this now appears as a euro entry into Russian bank's khata book so to say and that is in Russia so it is sanctioned proof meaning that euro cannot be seized by the European Union. So really all this is how foreign exchange transfers takes place and in fact the whole euro dollar, but dollars being held abroad in other countries and the rise of the euro dollar was one of the things that happened when dollar becomes a global currency that you have a category called dollars which are held by European countries. So if that is possible therefore euros being held in Russian banks is obviously possible. The consequences that the Russian bank that is involved in the transaction becomes virtually sanctioned proof because that is the way they will get the payment for the gas and that's how the European countries can pay for the gas. They are unhappy because they thought that whatever they pay for they still will have Russia in a tight fist because those euros then will be with the European countries banks and therefore Russia will still have to give gas but not receive the payments which will they could still receive the payments and use it, but under the threat of any point of time it being seized and this is what Putin has said that this is like you're asking for gas free you already seized the money which we had which was for your gas payments which we have given you so effectively you have seized the money what was our gas payments. Now you want to do that again and it would be rather foolish on Russia's part if they're allowed to have it done again after having suffered the consequences once. So full me once okay full me twice now that is what the really the issue is but this is really a deal breaker if the European Union says that they won't accept it because if they're talking about payment in euros this is payment in euros if it's mint payment in rubles to Russia yes it payment in rubles to Russia what it is using is what appears to be a sanction proof bank then which handles the transaction by the way naked capitalism Yves Smith website runs with a couple of other people this has a very detailed account of all of this and I must say from the beginning what she has been saying is the right way to look at it that's what seems to emerge now. Absolutely, Praveen in this context also some discussions about the rubles being pegged to gold in some sense gold is re-emerged once again after decades as some kind of a metric by which currencies can be pegged so why is this discussion even coming up in the first place? Well I think that the gold becomes a via media if for instance we do not have euros and dollars as the international currency which is what what they were looked upon earlier how do we say have a ratio between rupees and rubles for instance do we do it in say ren bin b do we do it in some other currency otherwise any transaction between two parties needs a conversion factor so it seems the way Putin has placed it that he says 5000 rupees for a ounce or a gram of gold it means that he's really pegging this conversion factor to the price of gold so both sides can decide what is it that they had considered the price of gold negotiate maybe but that sets a kind of conversion between say rubles and rupees instead of having to go through a third currency this is more or less what seems to be the intent of it does it mean the transaction will take place in gold probably not it will be a rubles rupee exchange if India has a transaction with Russia but the ratio will not be a third currency but could be gold so it seems to be that's one of the way to look at it that's how the even the ruble euro exchange could take place and I think that's the purpose of talking about the gold price in rubles right absolutely coming to India probably like you mentioned we know that this has been a week of frantic diplomatic activity Sergey Lavrov was here Dilip Singh the deputy national security advisor of the US was here Liz Truss was here the interesting aspect seems to be the two aspects one of course India has been buying a lot of oil from Russia and the aftermath of the war quite a substantial amount actually and the second thing that Russia is pitching that India and Russia work together very closely to continue oil and other supplies through a rupee ruble mechanism and this is something the West is extremely unhappy about so what really are the options in front of India right now on this count you know the issue is a very simple one that if ruble is not accepted by world Russian oil is not bought by the world Russian economy is going to have a problem how does it import anything that it wants so that's a problem that Russia needs to solve and obviously oil is there really oil and as well as gas in the case of European Union is the trump card that Russia holds because every country except the oil rich ones which are only a few needs oil India needs 85% of hydrocarbon import hydrocarbon 85% of the hydrocarbons it uses is imported so for us it's a huge issue for India it's a huge issue and if India is such a large buyer of course if it breaks the barrier of buying from Russia then of course other countries can also follow suit so in that sense India becomes a test case because it's big enough as well as will then set the trend for the world as you know if you look at the map of the world most of the countries in the world have not sanctioned Russia I think the whole number would be something like 27 from European Union and probably another 10 odd ones so total number is probably about 37 38 maybe that's the number of countries we have sanctioned if you take the really the world map the larger picture largest population of the world has not sanctioned Russia given that India has emerged as a kind of fulcrum in all of this because if India can be bullied then maybe a lot of other countries would back away and India's stakes are very high if we look at the oil price it used to be something like 60 dollars a year back it went up to something like 130 dollars or so it's now come back to 104 105 that's where it seems to be hovering at the moment it's still a very steep price for us to pay so Russia has given a lot of incentive for us to buy Russian oil and this is therefore we don't know what the actual amount of discount that we are enjoying but it is probably discounted to about 20 25 percent perhaps it's discounted to that figure it's still about 80 80 plus for India which means 20 more than what it was so it's still a high price for us but maybe we can bear that oil shock but not if it goes to 110 20 dollars the second part of it for Russia Russia still earns a lot of money because Russia as we know breaks even at 40 dollars so therefore 60 dollars it makes a handsome profit and 80 dollars really makes a lot of profit makes profits hand over fist so this actually is the reason also you can see the rubble coming up you see the oil price not going up as it was doing earlier because Russian oil is back into the market so there's not that much of scarcity so all of this means that the kind of sanctions that the west wants to impose on Russia the breaking point of that is what does India do and therefore India's self-interest of course is to see that its economy doesn't crumble the way for the Sri Lankan economy has gone and a lot of other countries economy is Bego food rights and oil two critical elements are at stake so in that sense India doesn't want to follow in that so it has taken a path of what initially the Modi government didn't want to do back to a non-alignment back to kind of bricks kind of structure so I think we are seeing a walking back of India from close proximity to the United States which was a very China-centric policy walking back towards a more independent position friendship with Russia being an important element to that also friendship with the west when it comes to China so can India's hue this narrow line that's a question for the future but it is clear that the one-dimensional foreign policy of really becoming very west-centric that is something they have been driven back from by the objective reality of what's happening in Ukraine and the west versus the rest issue that we can see again on the back thank you so much Rubel it's been a week of dynamic developments and the coming days are likely to see more such events happening as well we'll be tracking all of this on mapping fault lines until then keep watching NewsClick