*MOSCOW – Moscow is intensifying efforts to wean its economy off thedollar as Washington considers tough new sanctions that could deny Russiaaccess to foreign debt markets and cut its banks from the greenback.*
President Vladimir Putin has repeatedly slammed the US unit’s dominance onthe world’s stage but the country’s previous efforts to de-dollarize itseconomy have so far had little success.
But with Russian business circles fearing a new round of US measures overMoscow’s alleged international aggression and Washington’s trade policiesbecoming ever more unpredictable, authorities have now made concrete stepstowards their long-standing goal.
Russia’s finance ministry and the central bank are soon expected to presentmeasures to increase the use of other currencies in international trade toPrime Minister Dmitry Medvedev.
“We will certainly be moving in this direction,” Putin said last month.
“Not because we want to undermine the dollar but because we want to ensureour security, because they are constantly slapping sanctions against us andare simply denying us an opportunity to use the dollar.”
Observers warned that the task Russia faces is hugely ambitious but that anunpredictable US policy, new US sanctions against Iran and Washington’strade war with China could in fact help Moscow.
“Large-scale de-dollarization will take time –- estimates range between 1.5and five years,” Euler Hermes, a France-based credit insurance company,said in a recent report.
Russia’s de-dollarization efforts “may be easier now in a world of risingUS protectionism”, it added.
Euler Hermes said Russia’s transactions with the EU and China — which makeup nearly 60 percent of Russia’s foreign trade — could be shifted intoEuros and the Yuan, while transactions with former Soviet nations could bedone in rubles.
Putin and Chinese counterpart Xi Jinping have repeatedly said they want toincrease the use of the ruble and Yuan for cross-border trade.
In October, Russian authorities said they were preparing an agreement onthe use of national currencies with China.
According to the ING Bank, Sino-Russian trade in the ruble and yuan hasalready quadrupled over the past four years, although it still onlyamounted to around 18 percent.
Deputy Prime Minister Yuri Borisov has said India will pay for Russia’sS-400 surface-to-air missile batteries in rubles.
Russian Central Bank governor Elvira Nabiullina has also said she wanted toencourage banks to shift to the ruble.
Russia, which has been chafing under US sanctions since 2014, has alreadydeveloped its own system for financial transactions to help protect itselffrom a potential ban from using international bank messaging system SWIFT.*‘Organic reduction’*
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Dmitry Polevoy, chief economist at sovereign wealth fund Russian DirectInvestment Fund, said more active trade and transactions between countrieswould strengthen the de-dollarization trend.
“There has already been an organic and natural reduction of dollar paymentsover the years,” Polevoy told AFP.
Russia’s sovereign wealth fund has been a “pioneer” by setting up two fundswith China to settle deals in national currencies, Polevoy added.
“The first transactions are due in 2019. Similar investment vehicles couldbe created in other countries,” he said.
According to the central bank’s data, the share of dollar payments inexports of goods and services declined to 68 percent from 80 percentbetween 2013 and 2017.
At the same time, the share of transactions in Euros increased to 16percent from nine percent and those in rubles rose to 14 percent from 10percent.
The trend is less visible in imports, where the share of payments indollars declined 36 percent from 41 percent.
Russia will not be able to fully jettison the dollar any time soon becauseits economy still relies heavily on oil — priced in dollars.
But the country has already reduced its holdings of US government debt byaround $80 billion this year.
Euler Hermes said that “other measures could be the delisting of majorRussian companies from foreign stock exchanges and increasing gold and euroreserves”.
Oleg Kuzmin, an economist at Renaissance Capital, said there were still alot of obstacles to using national currencies.
“No one needs — for instance — the Russian ruble in Croatia and theCroatian currency in Russia,” he said.
“But if there’s an easy and efficient mechanism to change directly onecurrency into another, then this can start working properly,” he said. -APP/AFP
