Can Russia break dollar's spine? & Russia Announces Decoupling Trade from Dollar

Tony Gosling tony at
Wed Apr 9 20:50:57 BST 2014

Can Russia break dollar's spine?

Gas, oil and defense products for rubles. This is 
what Russian monopolists think to do on the world 
market. The initiative came from the head of VTB 
Bank, Andrei Kostin. According to him, the move 
to switch to payments in a different currency 
will strike a blow on the dollar system. The 
question is whether other market participants, in 
particular in the oil and gas field, are going to agree to such terms.

Russian bankers and big business, in light of 
recent threats from the West, may break the 
dollar peg of the world market. The initiative 
from the head of VTB looks too ambitious, but 
this is only an impression at first glance. There 
are Russian experts who believe that abandoning 
the dollar settlement in exports of gas and oil 
products, as well as the products of Russian 
defense enterprises, is quite simple. In this 
case, the omnipotent dollar system may incur 
losses. Thus, according to the Federal Service 
for Military-Technical Cooperation of Russia, as 
of the results of 2013, the volume of deliveries 
of Russian military equipment amounted to 15.7 
billion dollars. By early 2014, the order backlog 
reached $40 billion. That is, the demand on the 
products of the Russian defense industry has been 
growing. Yet, most payments are made in dollars, 
which means that the American system benefits 
from the Russian trade. Now that the U.S. 
introduces sanctions against Russia, wouldn't it 
be logical for Russia to abandon the widespread 
support of the American national currency?

"I think that this is a kind of a good initiative 
that tomorrow nobody will be able to realize, - 
chief editor of Arms Export magazine, Andrei 
Frolov, shared his opinion with Pravda.Ru. - 
There are contracts with a long term of 
execution, and if contracts are executed in 
dollars, it is highly unlikely that they would 
agree to recalculate them in rubles. It would be 
possible, though, if Russian rubles were used in 
trade with the CIS countries. If this lesson is 
successful, it would then be possible to apply it to foreign countries."

At the same time, according to experts, the 
process to switch to another currency may take 
years, even if Russian partners agree to take it 
up. The case in the oil and gas sector is even 
more interesting, which, as the head of VTB 
Andrei Kostin believes, should also be decoupled 
from the dollar. Of course, a game change on the 
market of "black gold" will allow Russia to give 
the US currency a punch. The US dollar has been 
strongly connected to the petrodollar system 
since the end of the last century. Gazpromneft 
already considers a possibility to replace 
dollars with euros in export transactions. The 
head of the company, Alexander Dyukov, said 
that  95 percent of buyers of Russian raw 
materials agree with the proposal, RBC reports. 
Of course, such a decision will not be made in 
the next few days, as it will cause quite big 
difficulties. Yet, if the US continues to press 
Russia with sanctions, the Russian big business 
will be forced to take such crucial measures. 
Will the buyers of Russian oil and gas companies 
agree to accept such conditions?

"Other players will somehow have to adapt to the 
seller, because there is no other place where 
they could buy fuel from,- leading expert of the 
Union of Oil and Gas Producers of Russia, Rustam 
Tankan told Pravda.Ru. - We have the following 
situation. Our main customers have been trying to 
get rid of us as suppliers for half a century 
already. European states decided 50 years ago to 
buy not more than one-third of energy carriers. 
It was at the time of the USSR, but now it's 
Russia, and Europe wants to get rid of these 
supplies. They have done everything that could be 
done to refuse from Russian deliveries??. Today, 
they do anything that can be done immediately, so 
consumers - those who buy Russian oil and gas - 
are forced to do it. They buy it not because 
there is a wide choice for them - they have 
nowhere to go. In this situation, if we want to 
pay in rubles or even yuans - they only want to 
buy. I do not think that the consumers of our gas 
and oil will have some problems from paying us 
Russian rubles or other currencies."

Gazprom currently analyzes the possibility of 
using the ruble more actively in its payments 
with foreign buyers. Although, according to 
Rustam Tankaev, the move to refuse from dollar 
settlements in exporting resources can not cause 
significant damage to the dollar system (because 
the share of Russian money in the turnover of 
funds on the global oil and gas market is not too 
large), there will surely be benefits received 
from it, especially for the Russian ruble. Ruble 
settlements would increase the liquidity of the ruble, the expert believes.

Elizaveta Polskaya

>From: Simon Fairlie <chapter7 at>
>Sadam Hussein's bid to ditch the petro-dollar 
>was allegedly a main reason for the US invasion of Iraq.
>On 9 Apr 2014, at 15:31, 
><<mailto:mike.mccarthy70 at>mike.mccarthy70 at> wrote:
>>wow!!! The more extreme social commenters on 
>>youtube have been speaking about this for a 
>>while now, I never actually thought it would 
>>happen. Could be very interesting to see how 
>>this all pans out. We may be about to live in some very interesting times...

>Russia Announces Decoupling Trade From Dollar
>China will re-open the old Silk Road as a new 
>trading route linking Germany, Russia and China
>By Peter Koenig
>April 08, 2014 "ICH" - Russia has just dropped 
>another bombshell, announcing not only the 
>de-coupling of its trade from the dollar, but 
>also that its hydrocarbon trade will in the 
>future be carried out in rubles and local 
>currencies of its trading partners – no longer 
>in dollars – see Voice of Russia
>Russia’s trade in hydrocarbons amounts to about 
>a trillion dollars per year. Other countries, 
>especially the BRICS and BRCIS-associates 
>(BRICSA) may soon follow suit and join forces 
>with Russia, abandoning the ‘petro-dollar’ as 
>trading unit for oil and gas. This could amount 
>to tens of trillions in loss for demand of 
>petro-dollars per year (US GDP about 17 trillion 
>dollars – December 2013) – leaving an important 
>dent in the US economy would be an understatement.
>Added to this is the declaration today by 
>Russia’s Press TV – China will re-open the old 
>Silk Road as a new trading route linking 
>Germany, Russia and China, allowing to connect 
>and develop new markets along the road, 
>especially in Central Asia, where this new 
>project will bring economic and political 
>stability, and in Western China provinces,where 
>“New Areas” of development will be created. The 
>first one will be the Lanzhou New Area in 
>China’s Northwestern Gansu Province, one of China’s poorest regions.
>“During his visit to Duisburg, Chinese President 
>Xi Jinping made a master stroke of economic 
>diplomacy that runs directly counter to the 
>Washington neo-conservative faction’s effort to 
>bring a new confrontation between NATO and Russia.” (press TV, April 6, 2014)
>“Using the role of Duisburg as the world’s 
>largest inland harbor, an historic 
>transportation hub of Europe and of Germany’s 
>Ruhr steel industry center, he proposed that 
>Germany and China cooperate on building a new 
>“economic Silk Road” linking China and Europe. 
>The implications for economic growth across Eurasia are staggering.”
>Curiously, western media have so far been 
>oblivious to both events. It seems like a desire 
>to extending the falsehood of our western 
>illusion and arrogance – as long as the silence will bear.
>Germany, the economic driver of Europe – the 
>world’s fourth largest economy (US$ 3.6 trillion 
>GDP) – on the western end of the new trading 
>axis, will be like a giant magnet, attracting 
>other European trading partners of Germany’s to 
>the New Silk Road. What looks like a future gain 
>for Russia and China, also bringing about 
>security and stability, would be a lethal loss for Washington.
>In addition, the BRICS are preparing to launch a 
>new currency – composed by a basket of their 
>local currencies – to be used for international 
>trading, as well as for a new reserve currency, 
>replacing the rather worthless debt ridden 
>dollar – a welcome feat for the world.
>Along with the new BRICS(A) currency will come a 
>new international payment settlement system, 
>replacing the SWIFT and IBAN exchanges, thereby 
>breaking the hegemony of the infamous privately 
>owned currency and gold manipulator, the Bank 
>for International Settlement (BIS) in Basle, 
>Switzerland – also called the central bank of all central banks.
>To be sure – the BIS is a privately owned for 
>profit institution, was created in the early 
>1930’s, in the midst of the big economic 
>melt-down of the 20th Century. The BIS was 
>formed precisely for that purpose – to control 
>the world’s monetary system, along with the also 
>privately owned FED and the Wall Street 
>Banksters – the epitome of private unregulated ownership.
>The BIS is known to hold at least half a dozen 
>secret meetings per year, attended by the 
>world’s elite, deciding the fate of countries 
>and entire populations. Their demise would be another welcome new development.
>As the new trading road and monetary system will 
>take hold, other countries and nations, so far 
>in the claws of US dependence, will flock to the 
>‘new system’, gradually isolating Washington’s 
>military industrial economy (sic) and its NATO killing machine.

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Twitter: @TonyGosling
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