Deputy Prime Minister Yuri Borisov said that India will pay for the delivery of S-400 Triumph anti-missile systems in rubles. China is not lagging behind: according to the head of VEB Igor Shuvalov, an agreement on mutual settlements in national currencies can be signed by the end of this year. What benefit Russia will get from the de-dollarization of foreign trade and who else is ready to join settlements in national currencies - in the material of RIA Novosti.
Red light to green
The contract for the supply of S-400 systems to India was signed on October 5 this year during Vladimir Putin's visit to Delhi. Experts estimate it at $ 5 billion. At the rate of the Bank of Russia, this is 331 billion rubles.
The biggest and most obvious benefit to both countries when trading in local currencies is that there are no major fluctuations in recalculation.
So, on January 1 of this year, 0.89 Indian rupees were given for the ruble, and after 10 months - 0.88 rupees. The maximum exchange rate for this year is 0.98 rupees per ruble, the minimum is 0.85 rupees. It means that the volatility corridor amounted to 0.13 rubles for the whole year.
For comparison: on January 1, the dollar was worth 57.04 rubles, and on November 1 - already 65.6 rubles. The maximum value this year is 69.9 rubles, the minimum is 55.6 rubles. Volatility corridor - 14.3 rubles. The difference in this indicator between the ruble / dollar and ruble / rupee pairs turns out to be fabulous - 11,000%.
Another equally important problem in settlements through the American dollar is the high probability of sanctions, which Washington is distributing this year to the right and to the left.
In April, Indian media reported that Delhi's financial institutions froze about $ 2 billion allocated to pay for critical projects, including the repair of the Russian-rented nuclear submarine Chakra (Project 971 Schuka-B).
The reason is that the White House included Rosoboronexport on the sanctions list. For credit and financial organizations, this actually means a ban on any settlements in US currency.
But, as practice shows, the world is no longer taking Donald Trump's threats seriously. India has chosen to maintain relations with the most reliable partner in the field of military-technical cooperation and the supply of weapons - Russia.
According to the Stockholm Peace Research Institute (SIPRI), From 2007 to 2017, Russia supplied $ 24.5 billion worth of weapons to India. USA - only 3.1 billion.
And Russia's trade with India is not only about arms supplies, the volume of which in 2017 amounted to about $ 1.9 billion (against the background of a total trade turnover of $ 9.1 billion). According to Borisov, it is possible to pay for civilian products in national currencies.
“Today, the share of settlements in rubles for exports is 20%, for imports - about 21%,” said the Russian Deputy Prime Minister. - This is a good indicator, but, nevertheless, we will increase settlements in national currencies as a means to solve the problem with non-payments... This also applies to contracts for military-technical cooperation. "
It unites not only Cupid
Another excellent news for Moscow on the same topic came in early October from the head of Vnesheconombank (VEB) Igor Shuvalov. The top manager said that Russia and China have their own channels for interaction, adding that in the current situation, Beijing is also interested in using them.
“We understand how this scheme should work, it should be described in the agreement. The Chinese side is no less, and perhaps even more interested, since it was announced yesterday by the PRC President, that such an agreement be signed as soon as possible, ”Shuvalov informed reporters about the results of intergovernmental negotiations.
The banker specified that in the coming weeks, bilateral consultations will take place, during which it is necessary to finally decide how the interaction between the financial institutions of both countries will take place and who will take on the role of the authorized operator in Moscow and Beijing.
It should be noted that the dynamics of the ruble and yuan rates this year was more similar to the ratio of the ruble to the Indian rupee than the ruble to the dollar. On January 1 of this year, the yuan at the Central Bank rate was 8.74 rubles, and on November 1 - 9.4 rubles. The highest rate of the Chinese currency was recorded at around 10.1 rubles, and the lowest at 8.72 rubles.
Thus, the volatility corridor between the ruble and the yuan was only 1.38 rubles against 14.3 between the ruble and the dollar. As in the case of India, for business this means a reduction in the risk of exchange rate losses.
The volume of mutual trade is also pushing to cancel the settlement in dollars between Moscow and Beijing. Last year, the turnover between Russia and the United States amounted to $ 23.6 billion, and between Russia and China - $ 84.9 billion (a difference of almost 360%).
Moscow, Beijing and Delhi by their example show the world how to get rid of dollar dependence... It is noteworthy that all three countries are the largest emerging economies, while the US has a developed economy. This means that mutual settlements in national currencies open up prospects for other developing economies and can finally rid world trade of dollar hegemony.
Joseph Janning, Head of ECFR Berlin
The plans of the European Commission to strengthen the role of the euro in international trade are due to the recognition of the structural dependence of European trade on the US economy, on the dollar as a global currency, and on dollar transactions for key commodities. US extraterritorial law and sanctions policies only add to Europe's dependence. Be that as it may, this approach in no way implies "abandoning the dollar" or completely replacing the American currency with the euro.
The eurozone countries are reluctant and currently unable to address the political implications of such a replacement strategy and are wary of facing financial implications for the euro as a global reserve currency.
In the best case, the strengthening of the euro may lead to the replacement of the US dollar with a basket of leading world currencies - yuan, yen, euro. The EU should ensure the conclusion of large energy contracts based on the euro, respectively, using a basket of currencies. Likewise, all key commodity contracts, from soybeans to aircraft, must be paid in euros. Such measures will reduce the commitment to the dollar and the foreign exchange impact of the US sanctions, although it will not diminish the interest of European companies in the US market.
Obviously, even with the inclusion of the Chinese market, exports to the US or manufacturing to the US are more important for many large European companies than for any other export market outside the EU. After all, the US and the EU are each other's most important export and investment destinations - and European politicians are unlikely to want to undermine their own interests.
For Russia, “de-dollarization” should strengthen its energy relations with European countries - Germany in particular - but it does not provide a significant strategic advantage beyond that.
With a GDP equal to that of Spain, the Russian market is too small and too static to balance transatlantic business ties. Russian geopolitics continues to fuel controversies on both sides of the Atlantic (as if they weren't enough anyway), irritating European politicians, undermining EU integration and intimidating neighbors. Thus, the potential for partnership with Europe that Russia can use will remain very limited.
China, the only competitor of the American economy and geopolitics in the eyes of decision-makers in Washington, can really change the situation. Since the turn of the century, China has been at the center of US strategy, and the shift has only come about in the wake of the post-9/11 counterterrorism and warfare in the Middle East. The Trump administration has brought China back into the spotlight.
As the rivalry intensifies, America's international relations are increasingly viewed through the lens of their usefulness in US containment of China. Beijing seems to be gradually adopting America's experience. This could quickly raise trade wars to a higher level, with a direct impact on both Europe and Russia, not to mention other regions. Both sides will expect their partners to support them.
The political and economic consequences of such a scenario have a much more destructive potential than the US withdrawal from the agreement with Iran. And the strengthening of the euro as a trading currency is unlikely to change the situation.
An important anniversary was celebrated in Beijing yesterday on a grand scale: 40 years have passed since the start of Chinese economic reforms and the policy of "opening up to the world." It was this openness, the willingness to learn from the West without copying it, the willingness to undertake unpopular but necessary reforms, as well as the most serious injections of American capital aimed at turning China into an effective counterbalance to the late Soviet Union, that became the key to the Chinese economic miracle.
Part of the American elite looks at today's China through the prism of a rather offensive thesis for the Chinese: "I gave birth to you, I will kill you," in the sense that, since the Chinese economic miracle became possible due to the export of Chinese goods to the West, due to the transfer to China of American technologies and due to the high level of direct American investments, it means that if all of the above is blocked, China will collapse like a house of cards. The optics and logic of American sinophobes are based on the fact that the current strong China is a historical aberration that can and must be corrected.
It is not for nothing that the Trump administration's chief trade negotiator, Robert Lighthizer, is pushing for China to abandon the import substitution program and the development of Chinese high-tech manufacturing - "Made in China 2025".
The US wants to return the country to a "cheap assembly shop" position for US companies. Judging by the rhetoric of official Beijing, the view of the most influential (one might say, healthy nationalist) part of the Chinese political elite on their own country comes from completely different premises: according to their version, the humiliation and weakness of their state, which was most clearly manifested in the era of the opium wars, and also widespread poverty before the beginning of the era of reforms are historical aberrations, and the natural state of China is the most powerful power and the world pole of power.
Chairman Xi's speech, dedicated to the anniversary of the beginning of reforms, was perceived by many Western observers as a kind of litmus test, as a kind of indicator of which path the country intends to take in the near future. Amid negotiations with Donald Trump, after which some media exploded with enthusiastic headlines with a general meaning
"China surrendered in a trade war," some expected that the Chinese leader's keynote speech would be used to covertly explain to fellow citizens the need to end the trade war (that is, de facto surrender) and increase the openness of the Chinese economy. Or at least the Chinese rhetoric was supposed to move into a more conciliatory register. No conciliatory tone was recorded. President Xi offered his fellow citizens and the world a completely different basic message: "No one is in a position to dictate to the Chinese people what can and cannot be done," he stressed in his speech.
Qatari al-Jazeera writes that “the reason everyone followed Xi's speech so closely was because they were looking for hints of the concessions he was willing to make in order to ease the trade conflict with the United States. ,
Chairman Xi’s speech cannot be called shabby-handed - it contains a sober indication that “all kinds of risks and challenges are ahead.” During the speech, Asian stock markets were falling - investors realized that China had not caved in under Trump's pressure, which means that tariffs, trade restrictions, arrests of Chinese businessmen wherever the American special services can reach them, and other events that do not contribute to optimism of financial tycoons.
At the same time, it should be noted that the hopes of those who pointed out the likelihood of China returning to the most radical economic and political practices of the Mao era as a mobilization response to external challenges and an instrument of maintaining power by the Chinese Communist Party did not come true. On the contrary, as the business publication Caixin rightly points out, in his speech, Chairman Xi stressed that the market will play a key role in the allocation of resources in the country's economy. This can be interpreted as an indication that China is not going to abandon the positive experience of using market mechanisms just because relations between Beijing and Washington have deteriorated greatly.
Apparently, in order to emphasize this "pro-market" position of the CCP, one of the honorary awards presented on the occasion of the "anniversary of reforms" went to billionaire Jack Ma, around whom a serious scandal recently erupted over his membership in the Communist Party of China: on the one hand Western investors in Jack Ma's Chinese companies did not know how to "digest" the news that the most famous Chinese entrepreneur was the holder of a red party card, and on the other hand, there were also critics for the party that accepted the billionaire into its ranks.
In a way, the case of the "billionaire communist" Ma is the embodiment in one person of the entire contradictory history of Chinese reforms: the combination of what it would seem impossible to combine gives an interesting and unexpected result.
"Socialism with Chinese characteristics" is an enigmatic phenomenon for many foreign analysts, which is the essence of China's economic success. And this is the main reason why, despite external pressure (and even a certain discontent that is recorded by foreign observers among the governing elite), the Chinese leadership is not going to change its economic and political course.
In his speech, President Xi tried to "reach out" to Washington and explain that Beijing is not trying to become a "world hegemon." Like Russia, China requires the United States to be left alone and not interfered with its development. Unfortunately, judging by the logic of the current Washington leaders, the very idea that someone just wants to develop and successfully compete with the United States in the global economy is already perceived as a threat to American national interests and American national security. This means that China will be "pressed" by economic, diplomatic and, possibly, even military methods.
The reason is his success, but there will always be a reason.
Russia is preparing a plan to reduce the economy's dependence on the dollar. In accordance with the strategy, domestic businesses will stop trading in US currency with foreign partners within five years. Why Moscow has taken a course towards de-dollarization and how this will affect the country's foreign trade potential, "360" figured out.
The Russian government is preparing a draft strategy for ditching the dollar. Prime Minister Dmitry Medvedev may approve it in one or two weeks, writes The Bell, citing three sources familiar with the discussions. It is noted that the Central Bank, VTB and other significant banks, as well as major exporters took part in the discussion.
According to the newspaper, the document does not contain strict requirements for abandoning the dollar. The government plans to focus on creating the ability to settle in local currencies, sources say The Bell. The plan also provides for the facilitation of foreign exchange controls and the liberalization of foreign exchange legislation.
The document will be based on the proposals of the head of VTB, Andrey Kostin. The official presented a plan to move away from the dollar in early September this year. It included the transition to settlement in other units for export-import operations, the transfer of holdings to Russian jurisdiction, the creation of a Russian depository for the placement of Eurobonds and licensing of all participants in the stock market according to uniform operating rules. Kostin also proposed transferring all trade with the EU to the euro, and with China to the yuan.
At the same time, there is no talk of a complete rejection of the dollar, Kostin said then. “This plan is absolutely long-term and is aimed rather at changing the global trend than at some momentary one-time solution,” the banker emphasized. According to the calculations of the head of VTB, it will take about five years to de-dollarize the Russian economy.
However, ordinary Russians will not be affected by restrictions, so you should not run to the exchange office, said Yuri Yudenkov, professor at the All-Russian Academy of Foreign Trade of the Ministry of Economic Development. “Russia has accumulated a large amount of cash in dollars, so those who want to withdraw money in dollars will be able to do so. There shouldn't be any panic in the market for individuals, ”the source told 360.
Rejection of the economic hegemon
Photo source: RIA Novosti Russian business was prompted to gradually abandon the dollar when trading with foreign partners by the increased sanctions pressure from the United States in recent years, analysts interviewed by "360" are sure. Last August, US President Donald Trump signed into law the Sanctions Act (CAATSA), which would impose trade restrictions on "America's adversaries."
“The US Congress is threatening to block the correspondent accounts of the largest Russian banks in America. Since Russia trades in oil raw materials in dollars, the blockage puts our economy in a difficult situation, "Yuri Yudenkov emphasized.
In order not to find itself in trade isolation due to possible sanctions from the American establishment, Russia is actively working to switch to settlements in the national currency with its trading partners. Over the past few years, the country has already managed to accumulate the necessary experience in this area, said the head of the Ministry of Industry and Trade of the Russian Federation Denis Manturov in an interview with RIA Novosti the day before. According to him, in the near future the business plans to start trading in national currencies with the countries of the Middle East, Southeast Asia, Latin America and Africa.
A concrete example of a currency transition can be the supply of automotive components from Turkey. According to Denis Manturov, a number of Russian companies are ready to start settlements in Turkish lira. At the same time, the producers of the republic itself, according to the minister, also begin to carry out operations in the national currency with great pleasure.
A departure from the dollar in settlements with trading partners is necessary, says Alexander Belchuk, professor of the Department of World and National Economy of the All-Russian Academy of Foreign Trade of the Ministry of Economic Development. “The dominant position of the dollar in world markets gives the US tremendous advantages and the ability to directly exploit other countries. As a result, the economies of developing countries become dependent on the American hegemon, which at any time can impose sanctions on the alleged “opponents”, ”the source said to“ 360 ”.
According to the expert, first of all, Russia can switch to national currencies when trading with the countries of the Shanghai Cooperation Organization (SCO). So, against the background of huge reserves and a large foreign trade turnover of the PRC, the Chinese yuan can play a leading role in this issue. Moscow may also switch to settlements in national currencies with the states of Latin America. The main contenders may be the three largest countries in the region: Brazil, Mexico and Argentina.
Also, all former USSR countries will probably join the de-dollarization project, Yuri Yudenkov is sure. “With the EU, Russia can also start trading in euros, but there it will have to negotiate with each bank separately, since the European banking system is decentralized,” the source said to “360”.
Chinese protest
Photo source: RIA Novosti Russia is not the only country that has decided to reduce its dollar portfolio in its economy. The PRC has been trying for several years to limit the turnover of dollars among the population. According to the law, clients of an average bank of China can buy no more than five thousand dollars per day, and by prior order the amount cannot exceed 10 thousand dollars. The Chinese can buy no more than 50 thousand dollars a year.
Also, China is gradually abandoning the dollar in settlements with foreign partners. Beijing is especially active in national currencies with Moscow: in 2017, 9% of payments for deliveries from Russia to China were made in rubles. At the same time, Russian companies paid for 15% of Chinese imports in yuan.
However, for China, the transition to international settlements in yuan is a national economic strategy, experts say. For example, in March of this year, Beijing launched trading in yuan-denominated oil futures on the Shanghai International Energy Exchange.
“Many world powers are looking for an alternative to the dollar. The first possible candidate to replace the dollar hegemony is the euro. It is followed by the IMF's reserve currency, the yuan. But to say that in the coming years the countries will abandon the American national currency is premature, since now 70% of world trade is conducted in dollars, ”summed up Alexander Belchuk.
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If we wanted to identify the factors fueling American imperialism and the drive for global hegemony, the US dollar would figure prominently on this list. But its position is now noticeably shaken because of the new scheme - gas-yuan-gold, proposed by Russia and China. Oil yuan and gold have become the main "tools" of the fight.
The reason the dollar plays such an important role in the global economy is due to the following three main factors: the petrodollar; the dollar as the world's reserve currency; and Nixon's decision in 1971 to reverse the conversion of the dollar into gold. It is easy to guess that the petrodollar strongly influenced the set of currencies in the SDR (international means of payment intended for use for strictly defined purposes by the member countries of the International Monetary Fund), becoming the world reserve currency and paving the way for serious consequences in the world economy. Globalresearch.ca writes about it.
For example, the US Federal Reserve was able to start printing dollars with virtually no restrictions, thus supporting huge sectors of private and state enterprises (for example, in the oil industry). This laid the foundation for a global economic system in the form of financial instruments and securities instead of real tangible goods such as gold. In doing so for its own benefit, the United States has created the conditions for a new financial bubble that could destroy the entire global economy when it bursts.
A destabilizing factor for the world economy has also become Washington's ability to accumulate huge volumes of public debt without caring about the consequences or even the possible distrust of international markets in the dollar. Countries just needed dollars to trade and bought US government securities to diversify their financial assets.
The decisive factor that changed the perception of the situation for countries like China and Russia was the financial crisis of 2008, as well as the growing US aggression after the events in Yugoslavia in 1999. The war and America's continued presence in Afghanistan underscored Washington's intentions to encircle China, Russia and Iran to thwart any Eurasian integration. Naturally, the more the dollar was used around the world, the more Washington could spend on its army and military campaigns. Color revolutions, hybrid warfare, economic terrorism, and attempts to destabilize various countries have had a devastating effect on Washington's military credibility. Now, many countries see the United States as a big one that cannot get what it wants, cannot achieve agreed common goals, and does not even have the ability to control countries like Iraq and Afghanistan despite its military superiority.
In recent years, it has become clear to many of Washington's adversaries that the only way to contain the fallout of the American empire is to phase out the dollar. This will limit the amount of Washington's military spending and create the necessary alternative financial and economic instruments that will help eliminate Washington's dominance. Ditching the dollar is an important part of the Russian-Chinese-Iranian strategy for uniting Eurasia.
The US hurt itself by excluding Iran from the SWIFT system (giving way to the Chinese alternative to CIPS) and imposing sanctions on Russia, Iran and Venezuela. These actions only accelerated the process of Eurasian integration, as well as the process of mining and acquisition of physical gold by China and Russia, given that, according to rumors, the US Federal Reserve has no more gold left. It's no secret that Beijing and Moscow are keen to establish a gold-backed currency in case the dollar collapses. This is pushing some countries to start operating in a non-dollar environment and through alternative financial systems.
How this happens can be seen in the example of Saudi Arabia, which is a key element of the petrodollar system. Beijing has begun to exert strong pressure on Riyadh to accept yuan instead of dollars in oil sales, as other countries such as Russia do.
However, Riyadh is obliged to obey the United States, an ally that does not care about the country's positions in the region (Iran is now becoming more influential in Iraq, Syria and Lebanon) and which, moreover, is a competitor in the oil market. At the same time, China remains Riyadh's largest customer, and given the agreements with Nigeria and Russia, Beijing can safely stop buying oil from Saudi Arabia if Riyadh continues to insist on sales in dollars.
For China, Iran and Russia, as well as for some other countries, de-dollarization is a pressing issue. The number of countries that are beginning to see the benefits of a decentralized system is gradually increasing. Iran and India, as well as Iran and Russia, are already trading hydrocarbons with each other in exchange for commodities, thereby bypassing US sanctions. Likewise, China's economic strength has enabled the country to open a € 10 billion line of credit to Iran, bypassing recent sanctions. Even the DPRK seems to be using cryptocurrency to buy oil from China and bypass US sanctions. Venezuela (which has the largest oil reserves in the world) has just taken a historic step away from dollar-denominated oil trading and announced that it will start receiving money in a basket of currencies without the US dollar. Beijing will buy gas and oil from Russia and pay for them in yuan, and Moscow will be able to instantly convert yuan into gold thanks to the Shanghai International Energy Exchange. The new gas-yuan-gold scheme speaks of revolutionary economic changes due to the gradual abandonment of dollar trade.
