After a recent videoconference meeting, the Eurasian
Economic Union (EAEU) and China agreed to design the mechanism for an independent
international monetary and financial system.
The EAEU consists of Russia, Kazakhstan, Kyrgyzstan, Belarus
and Armenia, is establishing free trade deals with other Eurasian nations, and
is progressively interconnecting with the Chinese Belt and Road Initiative
(BRI).
For all practical purposes, the idea comes from Sergei
Glazyev, Russia’s foremost independent economist, a former adviser to President
Vladimir Putin and the Minister for Integration and Macroeconomics of the Eurasia
Economic Commission, the regulatory body of the EAEU.
In this article, Glazyev’s key role in devising the new
Russian and Eurasian economic/financial strategy has been examined. He saw the
western financial squeeze on Moscow coming light-years before others.
Quite diplomatically, Glazyev attributed the fruition of the
idea to the common challenges and risks associated with the global economic
slowdown and restrictive measures against the EAEU states and China.
Since China is as much a Eurasian power as Russia, both the
countries need to coordinate their strategies to bypass the US unipolar system.
The Eurasian system will be based on a new international
currency, most probably with the yuan as reference, calculated as an index of
the national currencies of the participating countries, as well as commodity
prices. The first draft will be discussed by the end of March this year.
The Eurasian system is bound to become a serious alternative
to the US dollar, as the EAEU may attract not only nations that have joined BRI
(Kazakhstan, for instance, is a member of both) but also the leading players in
the Shanghai Cooperation Organization (SCO)as well as ASEAN. West Asian
actors – Iran, Iraq, Syria and Lebanon – will be inevitably interested.
In the medium to long term, the spread of the new system
will translate into the weakening of the Bretton Woods system, which even
serious US market players/strategists admit is rotten from the inside. The US
dollar and imperial hegemony are facing stormy seas.
Meanwhile, Russia has a serious problem to tackle. This past
weekend, Finance Minister Anton Siluanov confirmed that half of Russia’s gold
and foreign reserves have been frozen by unilateral sanctions. It boggles the
mind that Russian financial experts have placed a great deal of the nation’s
wealth where it can be easily accessed – and even confiscated.
At first it was not exactly clear what Siluanov had meant.
How could the Central Bank’s Elvira Nabiulina and her team let half of foreign
reserves and even gold be stored in Western banks and/or vaults? Or is this
some sneaky diversionist tactic by Siluanov?
No one is better equipped to answer these questions than the
inestimable Michael Hudson, author of the recent revised edition of Super
Imperialism: The Economic Strategy of the American Empire.
Hudson was quite frank, he said “When I first heard the word
‘frozen,’ I thought that this meant that Russia was not going to expend its
precious gold reserves on supporting the ruble, trying to fight against a
Soros-style raid from the west. But now the word ‘frozen’ seems to have meant
that Russia had sent it abroad, outside of its control.”
“It looks like at least as of last June, all Russian gold
was kept in Russia itself. At the same time it would have been natural to have
kept securities and bank deposits in the United States and Britain, because
that is where most intervention in world foreign exchange markets occurs,”
Hudson added,
Essentially, it is all still up in the air, “My first
reading assumed that Russia must be doing something smart. If it was smart to
move gold abroad, perhaps it was doing what other central banks do, lend it to
speculators, for an interest payment or fee. Until Russia tells the world where
its gold was put, and why, we can’t fathom it. Was it in the Bank of England –
even after England confiscated Venezuela’s gold? Was it in the New York Fed –
even after the Fed confiscated Afghanistan’s reserves?”
So far, there has been no extra clarification either from
Siluanov or Nabiulina. Scenarios swirl about a string of deportations to
northern Siberia for national treason. Hudson adds important elements to the
puzzle.
“If the reserves are frozen, why is Russia paying interest
on its foreign debt falling due? It can direct the freezer to pay, to shift the
blame for default. It can talk about Chase Manhattan’s freezing of Iran’s bank
account from which Iran sought to pay interest on its dollar-denominated debt.
It can insist that any payments by NATO countries be settled
in advance by physical gold. Or it can land paratroopers on the Bank of
England, and recover gold – sort of like Goldfinger at Fort Knox. What is
important is for Russia to explain what happened and how it was attacked, as a
warning to other countries.”
As a clincher, Hudson could not but wink at Glazyev: “Maybe
Russia should appoint a non-pro-westerner at the central bank.”
It’s tempting to read into Russian Foreign Minister Sergey
Lavrov’s words at the diplomatic summit in Antalya last Thursday a veiled
admission that Moscow may not have been totally prepared for the heavy
financial artillery deployed by the Americans.
“We will solve the problem – and the solution will be to no
longer depend on our western partners, be it governments or companies that are
acting as tools of western political aggression against Russia instead of
pursuing the interests of their businesses. We will make sure that we never
again find ourselves in a similar situation and that neither some Uncle Sam nor
anybody else can make decisions aimed at destroying our economy. We will find a
way to eliminate this dependence. We should have done it long ago.”
One of its planks will be the Eurasian financial system.
Meanwhile, the market (as in, the American speculative casino) has judged
(according to its self-made oracles) that Russian gold reserves – the ones that
stayed in Russia – cannot support the ruble.
That’s not the issue – on several levels. The self-made
oracles, brainwashed for decades, believe that the Hegemon dictates what the
market does. That’s mere propaganda. The crucial fact is that in the new,
emerging paradigm, NATO nations amount to at best 15 percent of the world’s
population. Russia won’t be forced to practice autarky because it does not need
to most of the world – as we’ve seen represented in the hefty non-sanctioning nation
list – is ready to do business with Moscow.
Iran has shown how to do it. Persian Gulf traders confirmed that
Iran is selling no less than 3 million barrels of oil a day even now, with no
signed JCPOA (Joint Comprehensive Plan of Action agreement, currently under
negotiation in Vienna). Oil is relabeled, smuggled, and transferred from
tankers in the dead of night.
Another example, Indian Oil Corporation (IOC), a huge
refiner, just bought 3 million barrels of Russian Urals from trader Vitol for
delivery in May. There are no sanctions on Russian oil – at least not yet.
Washington’s reductionist, Mackinderesque plan is to
manipulate Ukraine as a disposable pawn to go scorched-earth on Russia, and
then hit China. Essentially, divide-and-rule to smash not only one but two peer
competitors in Eurasia who are advancing in lockstep as comprehensive strategic
partners.
As Hudson sees as, “China is in the cross-hairs, and what
happened to Russia is a dress rehearsal for what can happen to China. Best to
break sooner than later under these conditions. Because the leverage is highest
now.”
All the blather about crashing Russian markets, ending
foreign investment, destroying the ruble, a full trade embargo, expelling
Russia from the community of nations, and so forth –that’s for the zombified
galleries. Iran has been dealing with the same thing for four decades, and
survived.
Historical poetic justice, as Lavrov intimated, now happens
to rule that Russia and Iran are about to sign a very important agreement,
which may likely be an equivalent of the Iran-China strategic partnership. The
three main nodes of Eurasia integration are perfecting their interaction on the
go, and sooner rather than later, may be utilizing a new, independent monetary
and financial system.
But there’s more poetic justice on the way, revolving around
the ultimate game-changer. And it came much sooner than we all thought.
Saudi Arabia is considering accepting Chinese yuan
– and not US dollars – for selling oil to China. Beijing told Riyadh this is
the new groove. The end of the petrodollar is at hand – and that is the
certified nail in the coffin of the indispensable Hegemon.
