Michael MacKay, Radio Lemberg, 14.10.2017
Russia devalued its currency on October 12. The Central Bank of the Russian Federation didn’t do it in the usual way countries devalue their currency, by changing the fixed rate of exchange against a reserve currency like the US dollar. Instead, the Russians cheapened their money by printing images of a country outside Russia, Ukraine, on a new banknote. The obverse of the 200 ruble note shows a scene from Sevastopol, Ukraine; the reverse of that note shows a scene from Khersones, Ukraine. 200 Russian rubles are currently worth about 3.49 US dollars or 2.95 euros or 92.77 Ukrainian hryvnias. Sevastopol and Khersones are in the southernmost part of Ukraine, in Crimea. Crimea was invaded by Russia on 20 February 2014 and soon afterwards claimed to have been ‘annexed’ to Russia. The illegal occupation by Russia of this part of Ukraine continues to this day.
Russia is the de facto but not the de jure sovereign power in Crimea. The Putin regime may think it is solidifying its hold over part of Ukraine by printing images of it on a banknote, but the effect will be to weaken the power of Russian currency because it advertises illegality. A banknote is a promissory note: the bearer promises to convey value, backed up by the ability of a sovereign state to tax and borrow. Russia isn’t sovereign in Crimea: Ukraine is. Russia is showing its weak sovereign power on a promissory note that is nothing but a symbol of sovereign power.
The devaluation of the Russian ruble has begun, starting with the National Bank of Ukraine (NBU). The NBU has forbidden Ukrainian banks to conduct transactions with Russian banknotes and coins that feature images of places in Ukraine that have been invaded and are occupied by Russia. Starting on October 17, when Decree No. 103 enters into force, the 200 Russian ruble note won’t be real money in Ukraine.
Other central banks need to follow the example of the NBU. A United Nations General Assembly resolution, “Territorial Integrity of Ukraine,” affirmed the “the sovereignty, political independence, unity and territorial integrity of Ukraine within its internationally recognized borders.” The UNGA resolution adopted on 27 March 2014 called upon member states “not to recognize any alteration of the status of the Autonomous Republic of Crimea and the city of Sevastopol … and to refrain from any action or dealing that might be interpreted as recognizing any such altered status.” The European Union, the United States, Canada, Australia, Switzerland, Norway, Japan and others have sanctions regimes against Russian individuals and entities because Russia invaded Ukraine. Crimea is Ukraine; central banks are obligated by the United Nations and by the laws and regulations of their own countries to say so. Central banks like the Federal Reserve in the US, the Bank of Canada, the European Central Bank, the Bank of England, the Bank of Japan, the Swiss National Bank, Norges Bank and others should follow the lead of the National Bank of Ukraine: forbid transactions in Russian banknotes and coins that depict the illegal occupation of Ukraine by Russia.. Russia’s 200 ruble note is not legal tender, and should not be exchanged anywhere in the world for anything of value. It’s worthless, just like Russia’s claim to Crimea.