Russia And India Begin Negotations To Use National Currencies In Settlements, Bypassing Dollar


Russia And India Begin Negotations To Use National Currencies In Settlements, Bypassing Dollar (ZeroHedge, July 31, 2014):

Over the past 6 months, there has been much talk about the strategic proximity between Russia and China, made even more proximal following the “holy grail” gas deal announced in May which would not have happened on such an accelerated time frame had it not been for US escalation in Ukraine.

And yet little has been said about that other just as crucial for the “new BRIC-centric world order” relationship, that between Russia and India. That is about to change when yesterday the Russian central bank announced that having been increasingly shunned by the west, Russia discussed cooperation with Reserve Bank of India Executive Director Shrikant Padmanabhan. The punchline: India agreed to create a task group to work out a mechanism for using national currencies in settlements. And so another major bilateral arrangement is set up that completely bypasses the dollar.

From the Russian Central Bank:

First Deputy Chairman of the Central Bank of the Russian Federation KV Yudaeva and Executive Director of the Reserve Bank of India G. Padmanabhan at the twentieth meeting of the Subgroup on banking and financial issues of the Russian-Indian intergovernmental commission on trade-economic, scientific-technical and cultural cooperation discussed the current state and prospects of cooperation between banks.

The meeting was attended by representatives of central banks, ministries and agencies, credit organizations in Russia and India.

During the meeting dealt with the problems faced by the branches and subsidiaries of banks in the two countries and ways of addressing these problems.

As a priority area discussed the use of national currencies in mutual settlements. Given the urgency of the issue and the interest of commercial structures of the two countries, the meeting decided to establish a working group to develop a mechanism for the use of national currencies in mutual settlements. It will consist of representatives of banks and, if necessary, the ministries and departments of the two countries to coordinate its activities will be central banks of Russia and India.

What is curious is that now that China has sided firmly with Russia when it comes to geopolitical strategy (not least when it comes to recent development surrounding the downing of flight MH-17, recall “China Blasts “One-Sided Western Rush To Judge Russia” Over MH17“), and thus Russia behind China when it comes to claims by the world’s most populous nation in its territorial dispute with Japan, Japan too is scrambling to secure a major ally in Asia, and it too is trying desperately to get on India’s good side.

Bloomberg reports that “Japan’s Sasebo naval base this month saw unusual variety in vessel traffic that’s typically dominated by Japanese and U.S. warships. An Indian frigate and destroyer docked en route to joint exercises in the western Pacific.”

The INS Shivalik and INS Ranvijay’s appearance at the port near Nagasaki showed Japan’s interest in developing ties with the South Asian nation as Prime Minister Shinzo Abe’s government faces deepening tensions with China. Japan for the third time joined the U.S. and India in the annual “Malabar” drills that usually are held in the Bay of Bengal.

With Abe loosening limits on his nation’s military, the exercises that conclude today showcase Japan’s expanding naval profile as China pushes maritime claims in disputed areas of the East and South China Seas. For newly installed Indian Prime Minister Narendra Modi, Japan’s attention adds to that of China itself, in an opportunity to expand his own country’s sway.

Japan’s involvement in Malabar underscores its interest in helping secure its trade routes to Europe and the Middle East. The Indian Ocean is “arguably the world’s most important trading crossroads,” according to the Henry L. Stimson Center, a foreign policy research group in Washington. It carries about 80 percent of the world’s seaborne oil, mostly headed to China and Japan.

“The Japanese are facing huge political problems in China,” said Kondapalli in a phone interview. “So Japanese companies are now looking to shift to other countries. They’re looking at India.”

So on one hand Japan is rushing to extend a much needed olive branch by the “insolvent western alliance + Japan” to India; on the other Russia is preparing to transact bilterally with India in a way that bypasses the dollar.

Which means that just as Germany has become the fulcrum and most strategic veriable in Europe (more on this shortly) whose future allegiance to Russia or the US may determine the fate of Europe, so suddenly India is now the great Asian wildcard.

Perhaps a very important hint of which way India is headed came moments ago from Reuters, which said that India has raised the issue of U.S. surveillance activities in the South Asian nation with Secretary of State John Kerry, the foreign minister said on Thursday. “Yes, I raised this issue (U.S. snooping) with Secretary John Kerry … I have also conveyed to him that this act on the part of U.S. authorities is completely unacceptable to us,” Sushma Swaraj said at a joint news conference in New Delhi. In response, Kerry said: “We (the United States) fully respect and understand the feelings expressed by the minister.”

Thank you Snowden for helping move the geopolitical tectonic plates that much faster.

Now let the real courting begin.



5 thoughts on “Russia And India Begin Negotations To Use National Currencies In Settlements, Bypassing Dollar

  1. This news is over two years old. India and Japan dumped the dollar in 2012…….after another insane round of sanctions on Iran. Both nations buy a lot of their fuel , neither are willing to stop on a petulant, childish and outright nasty whim of the increasingly obnoxious USA.

    Russia is going public with all this old news to push back against the US………he has been building this financial coalition for the past four years. Both China and Russia have worked tirelessly to break the hold the US had on world economics…….and they have succeeded……

    Obama gave Japan a “pass” whatever that means…….the US’s day in the sun is setting rapidly. I am so glad I have a serious illness that will soon take my life………I am horrified at what I see. Everything is becoming cold, no connection with others………it is more like “1984” than “Brave New World” because the latter offers some hope.

  2. One other point, I turned on US media, Obama is on all channels…..he wants to “protect” those savages in Israel. Who the fuck does he think he is fooling?
    “I have met the enemy, and it is I.”
    Corporate stooge makes me sick!

  3. G7 freezing funds on Russia. This is so stupid, but combined with the other stories I have seen, that idiot in the White House and the greedy guts in the congress all war with Russia.
    They are still fighting the wrong war, the real war is economic, and Putin has won it hands down. Better than half the world won’t accept the dollar….according to my research, it was Hugo Chavez who started the war by introducing the first electronic currency, the Sucre, for his tiny organization, the South American Trade Alliance. It was around $500 million, and it flew under the radar.
    Russia and China saw their success, and did the same thing later in 2004. They have recruited much of the emerging world to their basket of currencies; making conversion to any world reserve currency obsolete and unnecessary.
    The US still insists they are the world reserve currency, regardless over half the world no longer accepts the dollar.
    They want to get Putin for masterminding and establishing this system…..far more efficient than converting all international trade to the dollar first.
    For the first time in centuries, nations can trade with each other using their own currencies, leaving any other currency out. Technology, and electronic currencies like the Sucre, have made it obsolete. This is the real reason, and even if the US won, Putin’s system will continue and grow.
    Putin is probably the most popular leader in the world, and if the US pushes this insanity without a coalition or allies, it will lose.
    The US could not pay Germany half their gold back, they are bankrupt. So will be the EU if they go with him……this is insanity. We are broken, we don’t have enough for food, education, medical care, ETC, yet Obama wants to start yet another world war we have no chance of winning.
    Boy, have we been totally screwed. Russia has the ability to hit us, unlike the little countries Obama likes to attack…..

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