Cheated again: Putin actually lost all profits from oil sales to India - Newsweek

3 min.2813

About 40 billion dollars are stuck in Indian banks, and there is no way to get them out.

Russia has actually lost about $40 billion that it earned from selling oil to India in recent months. It turned out to be simply impossible to withdraw this money from the Indian financial system, writes Newsweek .

The publication notes that the disaster with “oil rubles” was a powerful blow to the attempts of Russian President Vladimir Putin to do without the US dollar in foreign trade.

Commodities such as oil, gold and wheat are typically traded around the world in US dollars. However, due to Western sanctions, the Russian financial system was effectively isolated from the rest of the world by banning the use of the dollar in official international transactions.

The Kremlin tried to get around this restriction by selling oil to China and India for their local currencies – yuan and rupees, respectively. A secondary goal of this was an attempt to undermine the role of the US dollar as the main world currency.

However, it later became clear that the Russians were unable to take their earnings with them. Especially with regard to the Indian rupee, the circulation of which is tightly controlled by the government to maintain internal financial stability in India. Russians are simply not allowed to withdraw billions of rupees they earn abroad, and it is impossible to spend them in India on goods Russia needs – they are not available in such quantities.

According to Reuters, as a result of these restrictions, the equivalent of about $39 billion in Russian rupees is likely stuck in bank accounts in India. The other day, Russian Foreign Minister Sergei Lavrov admitted that Moscow had already lost hope of withdrawing this money and would invest it in India itself.

“In the current situation, many billions of rupees have accumulated that have not yet found their application, and our Indian friends assured that they will offer promising industries where they can be invested,” Lavrov told the TASS agency the day before .

Last month, former Russian Finance Minister Mikhail Zadornov suggested that the failure to return these export earnings to India is “the direct reason for the depreciation of the [ruble] this summer.”

“Russia supplied $30 billion worth of oil and petroleum products to India in the first half of the year, and our imports from India are estimated at about 6-7 billion per year. We have nothing to buy from India, but we cannot return these rupees because the rupee is inconvertible currency,” he said.

(C)UNIAN 2023