America’s trusted television pundits are once again screaming about how important it is to maintain sanctions against Russia.

Did they not get the memo? Russia doesn’t expect sanctions to be lifted any time soon. Instead, it’s forging its own path towards financial sovereignty.

With America now in full meltdown mode over the ongoing Trump “sanctions conspiracy” with Russia, we thought it would be prudent to ask if there is any real evidence that Russia is desperately trying to fully reintegrate itself with the western-controlled financial system, or if instead there are signs that Moscow is pursing a completely different path — one of self-sufficiency and financial sovereignty. (Maybe we are seeing signs of both.)

After all, it would only make sense for the Kremlin to conspire with Trump to remove sanctions unless it was a life-and-death situation for Russia’s economic viability. Think about it: Why would a “Kremlin puppet” make lifting sanctions his first priority, unless it was a top national security issue for Moscow?

The truth is that western sanctions cut both ways for Russia.

The western sanctions regime has restricted foreign lending and capital flows, hurting investment and innovation in many Russian sectors. Credit, especially for Russian consumers, has dried up or has become prohibitively expensive to obtain. Old loans pinned to foreign currencies such as the dollar or euro are now financial nightmares. And for Russian companies who used to import products for 30 rubles — they now have to fork over double that amount.

It’s not all doom and gloom, though. As Putin pointed out when the value of the ruble began to tank:

Our budget is not calculated in dollars, but in rubles. The value of the ruble has fallen by about 30%. For example, where we earlier traded something that was worth $1, we would receive 32 rubles in exchange. So now we sell for $1, but receive 45 rubles in return.

The profits in our budget have actually increased.We are resolving our social issues and will continue to do so competently, and we are more than capable of sustaining any military-defense output. Why? Because we operate independently, and we have a program in place to replace imports.

We have had a lot left to us from the previous generations, as well as modernizing thoroughly over the past 15 years. We can resolve these questions independently.

Do the sanctions cause us harm? Yes, they do, but they are not fatal.

We’ve written extensively about how Russia’s response to western sanctions — specifically in the form of counter-sanctions — has reinvigorated the country’s agriculture and manufacturing sectors. Be we would like to return to our original question: Can Russia survive (and thrive) without bending the knee to the western financial establishment? And is there evidence that Moscow is already heading in this direction?

Last week we highlighted a controversial opinion offered up by Bloomberg: If the eurzone broke apart, the rammifications for Russia would be severe.

Bloomberg’s arguments doesn’t sit well with those of us who want to see Russia tear itself from euro/dollar hegemony, but there’s no point in trying to hide the fact that euros currently account for 40% of Russia’s total foreign currency reserves. What this would mean if the eurzone were to suddenly collapse is up for debate. What it means right now, with 100% certaintly, is that Russia needs relies upon Europe to make its economy work.

Right now, Russia needs euros to pay for European goods. Furthermore, at least for the time being, no one in Europe is interested in accepting rubles as payment.

Herein lies Russia’s greatest challenge: How can it shield itself from western speculation and economic warfare, while also staying competitive in a market where money is literally created out of thin air?

Sergey Glazyev, an advisor to Putin and member of the Russian Academy of Sciences, explains how these two goals conflict with each other:

The ruble is the most gold-backed currency in the world, and our currency reserves are excessive — twice as much as our monetary base. As the most undervalued currency in the world, the ruble is five times undervalued in terms of purchasing power parity, and it’s also the most volatile, driving us artificially into stagnation. 

Developed countries’ monetary and industrial policy floods the economy with money. In the last eight years, there has been an unprecedented issuance of dollars, euros, yen and yuan. The value of the world currency in dollars, i.e. the amount of the dollar mass, has grown fourfold since 2007.

Our financial system is shrinking while the West’s expands. The interest rate is being raised while the West innovates. According to Schumpeter, the interest rate is a tax on innovations and investments. We are killing the transition to a new technological system by our macroeconomic policy while strengthening our dependence on foreign sources. Our economy goes where the money is, and because money doesn’t come from here, the economy shrinks.

Here’s where the “gold ruble” comes into play.

For us, the “gold ruble” is just a useful euphemism for a much larger concept: Russia is focusing on giving its currency real value that will be recognized throughout Eurasia (and perhaps the rest of the world).

This seems to be a common strategy shared among most BRICS nations. Emerging economies understand that if they want to free themselves of the “dollar yoke”, they  must create confidence in their own currencies.

In this context, Russia and China’s gold-buying sprees make sense:

As they sharply increase their gold reserves, China and Russia are selling off their U.S. Treasuries, with their hunger for the metal coming amid a strict diet excluding dollars. Gold is appealing to these countries because it shields them from the U.S. government’s ability to control the value of their holdings. Gold is a country-less currency. A continuing trend of reserve buildup and Treasury sales might weaken the dollar and pressure gold prices higher.

China and Russia have officially added almost 50 million ounces of gold to their central banks while selling off more than $267 billion of Treasuries.

And we are already witnessing the results: Russia and China now feel confident enough to trade with each other using their own currencies:

Russia’s state budget strongly depends on oil export dollar profits. Ironically, because of the role of the dollar, the central banks of China, Russia, Brazil and other countries diametrically opposed to US foreign policy, are forced to buy US Treasury debt in dollars, de facto financing the wars of Washington that aim to damage them.

That’s quietly changing. In 2014 Russia and China signed two mammoth 30-year contracts for Russian gas to China. The contracts specified that the exchange would be done in Renminbi and Russian rubles, not in dollars. That was the beginning of an accelerating process of de-dollarization that is underway today.

We don’t believe there will ever be a “gold ruble”. But we do believe that Russia has no expectation that western sanctions will be lifted any time soon.

Which can only mean one thing: They are planning on “going it alone”.

It’s a bold gambit — but will it work? Again, Glazyev explains what’s at stake:

The economic situation is increasingly chaotic. The world economy is out of control. We target inflation, and it doubles. Talk about transitioning to a new direction results in a further degradation of the economy. ‘De-offshorization’ got us more foreign equity in our corporations and industries. Import substitution resulted in further price rises.

This growing crisis is due to two things: our increasing dependence on the America-centric financial system, and American aggression, which we must resist. There’s clearly a dissonance between our financial and economic dependence on a foreign system and the  need to pursue a sovereign foreign policy in order to survive.

This is the ultimate challenge for Russia. The Russians will always be able to defeat an armed invader — especially one as sad as NATO. But can Moscow forge an economic path that will lead to growth while also safeguarding against western economic warfare?

Should Russia look to Asia, or hope that a eurozone collapse will create a new paradigm — despite the short-term setbacks?