REAL INDEPENDENCE IS FROM DOLLAR HEGEMONY

Russia strives to exclude the dollar from energy trading

Фото: РИА Новости

Russian press reports that the country's Ministry of Finance is ready to greenlight a plan to radically increase the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. Governmental sources believe that the Russian banking sector is "ready to handle the increased number of ruble-denominated transactions".

According to the Prime news agency, on April 24th the government organized a special meeting dedicated to finding a solution for getting rid of the US dollar in Russian export operations. Top level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia.

The"de-dollarization meeting” was chaired by First Deputy Prime Minister of the Russian Federation Igor Shuvalov, proving that Moscow is very serious in its intention to stop using the dollar. A subsequent meeting was chaired by Deputy Finance Minister Alexey Moiseev who later told the Rossia 24 channel that"the amount of ruble-denominated contracts will be increased”, adding that none of the polled experts and bank representatives found any problems with the government's plan to increase the share of ruble payments.

It is interesting that in his interview, Moiseev mentioned a legal mechanism that can be described as"currency switch executive order”, telling that the government has the legal power to force Russian companies to trade a percentage of certain goods in rubles. Referring to the case when this level may be set to 100%, the Russian official said that "it's an extreme option and it is hard for me to tell right now how the government will use these powers".

Of course, the success of Moscow's campaign to switch its trading to rubles or other regional currencies will depend on the willingness of its trading partners to get rid of the dollar. Sources cited by Politonline.ru mentioned two countries who would be willing to support Russia: Iran and China. Given that Vladimir Putin will visit Beijing on May 20, it can be speculated that the gas and oil contracts that are going to be signed between Russia and China will be denominated in rubles and yuan, not dollars
Read more: http://voiceofrussia.com/2014_05_13/Russia-strives-to-exclude-the-dollar-from-energy-trading-5138/

Russia can switch to payments with India, China in national currencies crushing dollar amid sanctions - experts

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Experts believe that the wish of the West to restrict Moscow’s cooperation with Brussels and Washington will play into the hands of the Russian economy. Wisdom and presence of mind are two components that will guarantee success for a new spiral of Russia’s cooperation with eastern countries. Also, this will allow us to counter-balance the risks that the European market is exposed to.

The European economy, experts point out, still remains in the grip of a crisis, while China, for example, is prosperous. The West, including the US, has begun to curtail the profitable relations with Russia on the background of Ukrainian problems, which has nothing to do with the East. And business always develops in the environment of stability and mutual interest. It is reasonable that at present the Russian economy – that is investments, exports, imports and technology – is speeding up its advance in the eastern direction, President of the Centre of Strategic Communications Dmitry Abzalov says. Instead of America and Europe, our target is South-East Asia now.

Russia has decided to develop cooperation with Asian countries. India, for example is our partner in issues of the military-industrial complex, in the high-tech segment. Cooperation with China is based on the raw materials sector, engineering, military technology. Recall that the Russian president’s visit is due in May.

Most likely, agreements on natural gas will be signed. Actually, bearing in mind that China will become the world’s largest economy in the near future, the development of the eastern vector will guarantee that a considerable part of extra profits and the growth of the home market will be generated in the South-East Asia.

Analysts believe that western sanctions could provide stronger positions to the developing countries, one of which is Russia itself. This is especially true of the high-tech sector, both in the regional and global market. In particular, Russia is practicing phase-out of imports.

The national industry is expected to develop faster due to external factors. Discussing the reasons for the imposed sanctions, experts say that at present the western elites are seizing the opportunity to dictate their terms to the Russian economy. Actually, this happened on the past as well but the situation became especially strained when Russia started talking about the Customs Union, head of the Centre of Economic Research at the Institute of Globalization and Social Movements Vasily Koltashov says.

European elites are rather short-sighted and oriented at controlling the markets, including the Russian economy, especially the raw materials sector. They never lost interest in that sector. For this reason, they will always be in conflict with Russia, especially after Russia announced the establishment of the Customs Union. Still, it is wrong to say that Russia is in conflict with the EU. On the contrary, Russians are extremely tired of the permanent economic crisis in the EU, the aggravation of that crisis and the austerity policy.

Speaking about the priorities of the eastern vector for Russia, experts point out that the establishment of new stock exchanges in South-East Asia is not far off and they can become serious competition for London or New York. And for Russia as a resource-dependent country this is one of the determining factors. The more so, because the Chinese economy grows fast, constantly increasing its consumption of oil and gas. Thus, in 1980 China consumed only 3% of the global oil production. Now it consumes 10%, leaving Japan behind. Only the US is still ahead. If this trend persists, China will inevitably start thinking about the establishment of an alternative oil and gas market.

Also, chances are that Russia, as one of the largest suppliers of oil and gas, will soon switch to mutual payments with India and China in the national currencies – roubles, yuans and rupees. In this case the dollar and the euro will gradually retire into the background.
Read more: http://voiceofrussia.com/news/2014_05_04/Russia-can-switch-to-payments-with-India-China-in-national-currencies-crushing-dollar-amid-sanctions-experts-8018/

Russia prepares to attack the petrodollar

Фото: РИА Новости

The US dollar's position as the base currency for global energy trading gives the US a number of unfair advantages. It seems that Moscow is ready to take those advantages away.

The existence of "petrodollars" is one of the pillars of America's economic might because it creates a significant external demand for American currency, allowing the US to accumulate enormous debts without defaulting. If a Japanese buyer wants to buy a barrel of Saudi oil, he has to pay in dollars even if no American oil company ever touches the said barrel. Dollar has held a dominant position in global trading for such a long time that even Gazprom's natural gas contracts for Europe are priced and paid for in US dollars. Until recently, a significant part of EU-China trade had been priced in dollars.

Lately, China has led the BRICS efforts to dislodge the dollar from its position as the main global currency, but the "sanctions war" between Washington and Moscow gave an impetus to the long-awaited scheme to launch the petroruble and switch all Russian energy exports away from the US currency .

The main supporters of this plan are Sergey Glaziev, the economic aide of the Russian President and Igor Sechin, the CEO of Rosneft, the biggest Russian oil company and a close ally of Vladimir Putin. Both have been very vocal in their quest to replace the dollar with the Russian ruble. Now, several top Russian officials are pushing the plan forward.

First, it was the Minister of Economy, Alexei Ulyukaev who told Russia 24 news channel that the Russian energy companies must ditch the dollar. "They must be braver in signing contracts in rubles and the currencies of partner-countries," he said.

Then, on March 2, Andrei Kostin, the CEO of state-owned VTB bank, told the press that Gazprom, Rosneft and Rosoboronexport, state company specialized in weapon exports, can start trading in rubles. " I've spoken to Gazprom, to Rosneft and Rosoboronexport management and they don't mind switching their exports to rubles. They only need a mechanism to do that ", Kostin told the attendees of the annual Russian Bank Association meeting.

Judging by the statement made at the same meeting by Valentina Matviyenko, the speaker of Russia's upper house of parliament, it is safe to assume that no resources will be spared to create such a mechanism. " Some ‘hot headed' decision-makers have already forgotten that the global economic crisis of 2008 - which is still taking its toll on the world - started with a collapse of certain credit institutions in the US, Great Britain and other countries. This is why we believe that any hostile financial actions are a double-edged sword and even the slightest error will send the boomerang back to the aborigines," she said.

It seems that Moscow has decided who will be in charge of the "boomerang". Igor Sechin, the CEO of Rosneft, has been nominated to chair the board of directors of Saint-Petersburg Commodity Exchange, a specialized commodity exchange. In October 2013, speaking at the World Energy Congress in Korea, Sechin called for a "global mechanism to trade natural gas" and went on suggesting that " it was advisable to create an international exchange for the participating countries, where transactions could be registered with the use of regional currencies ". Now, one of the most influential leaders of the global energy trading community has the perfect instrument to make this plan a reality. A Russian commodity exchange where reference prices for Russian oil and natural gas will be set in rubles instead of dollars will be a strong blow to the petrodollar.

Rosneft has recently signed a series of big contracts for oil exports to China and is close to signing a "jumbo deal" with Indian companies. In both deals, there are no US dollars involved. Reuters reports, that Russia is close to entering a goods-for-oil swap transaction with Iran that will give Rosneft around 500,000 barrels of Iranian oil per day to sell in the global market. The White House and the russophobes in the Senate are livid and are trying to block the transaction because it opens up some very serious and nasty scenarios for the petrodollar. If Sechin decides to sell this Iranian oil for rubles, through a Russian exchange, such move will boost the chances of the "petroruble" and will hurt the petrodollar.

It can be said that the US sanctions have opened a Pandora's box of troubles for the American currency. The Russian retaliation will surely be unpleasant for Washington, but what happens if other oil producers and consumers decide to follow the example set by Russia? During the last month, China opened two centers to process yuan-denominated trade flows, one in London and one in Frankfurt. Are the Chinese preparing a similar move against the greenback? We'll soon find out.
Read more: http://voiceofrussia.com/2014_04_04/Russia-prepares-to-attack-the-petrodollar-2335/