Maxim Oreshkin, Russia’s economy minister, told the Financial Times that Russia wanted to minimise its exposure to the US by attracting more investors through rouble settlements.
“We have a very good currency, it’s stable. Why not use it for global transactions?” Mr Oreshkin said in an interview.
“We want [oil and gas sales] in roubles at some point,” he said. “The question here is not to have any excessive costs from doing it that way, but if the broad . . . financial infrastructure, is created, if the initial costs are very low, then why not?”
Kremlin-controlled Gazprom exported $51bn worth of natural gas to Europe last year, while state-owned Rosneft exported 123.7m tonnes of oil.
Moscow has looked to offset its exposure to US economic sanctions through a “de-dollarisation” scheme that has seen the finance ministry’s bond programme issue all new debtin euros and roubles. The central bank has reduced its holdings of US treasury debt from $96bn to just $8bn in the past 18 months.
Mr Oreshkin said the popularity of Russia’s domestic bonds among foreign investors — who own 29 per cent of its rouble debt — suggested that Moscow would be able to sell its energy exports in local currency.
“EU companies, investors are buying rouble assets. If you look at the popularity of the domestic bond market, it’s pretty huge. It means that rouble assets are already on the balance sheet of European investors,” Mr Oreshkin said. “So at one point in the future energy companies also could use rouble assets.
“You have negative rates in euros and you have positive rates in roubles with stable and predictable inflation,” he added. “There’s no capital controls, it’s fully flexible, you can get in or get out at any time.”
The state-owned oil and gas companies that dominate Russia’s economy are already exploring alternative currency settlements in the face of continued geopolitical tensions with the US.
Rosneft has priced its September and October spot tenders in euros, while Gazprom in March sold its first ever cargo of natural gas priced in roubles to a western European company.
Switching oil and gas revenues, which account for around half of Russia’s budget, away from the dollar would mark a sea change for the country, which is expected to record a 2019 budget surplus worth 1.5 per cent of gross domestic product, thanks partly to a favourable rouble exchange rate.
Mr Oreshkin also said the government was prepared to spend a “limited amount” of the Rbs8.2tn National Wealth Fund, saved since 2017 by banking extra revenue on all oil sold at more than $40 per barrel, domestically.
The Kremlin hopes the extra spending will kick-start Russia’s moribund growth, which is projected to fall below 1 per cent of GDP this year and has been propped up by an unsustainable consumer lending boom.
“When oil prices come down, this means that there is insufficient foreign currency supply for the economy. You need to cover it with the foreign currency assets you have,” Mr Oreshkin said of the wealth fund, adding that any excess above a level sufficient to cover a fall in oil prices could be spent.
Mr Oreshkin had originally called for the money to be invested overseas in a Norway-style sovereign wealth fund. The recent shift in policy towards domestic spending, he said, would be done in line with additional private investments and seek to mitigate the central bank’s concerns over a possible spike in inflation.
Mr Oreshkin also said Russia intended to ramp up bilateral trade with the EU. In recent months, leaders such as Emmanuel Macron, the French president, have called for political rapprochement and the restoration of business ties with Moscow after five years of sanctions imposed over its 2014 annexation of Crimea.
“When Mr Macron was [French] economy minister, he was heading the developmental commission between Russia and France. He knows now how to reach out and have joint projects,” Mr Oreshkin said.
The EU wants to ensure companies such as Nokia and Ericsson can compete with China’s Huawei in Russia’s burgeoning market for 5G mobile communications, and food producers hope to return to Russian markets fenced off by protectionist measures in response to the European sanctions.
But Russia is unlikely to readmit EU food exports unless Brussels eases Moscow’s access to the European market in return, Mr Oreshkin said.
“There are also a lot of barriers on the European side with agricultural subsidies, technical regulation, which limits the access of Russian produce on the European market and so on,” he said. “If you are talking about free trade, it should be real free trade and not partly free trade.”