/ world today news/ It has been expected for a long time, but some key features of the new foundations of the multipolar world are finally being revealed.
On Friday, after a video conference meeting, the Eurasian Economic Union (EEU) and China agreed to develop the mechanism for an independent international monetary and financial system.
The EIC, which consists of Russia, Kazakhstan, Kyrgyzstan, Belarus and Armenia, has entered into free trade agreements with other Eurasian countries and is gradually linking up with China’s Belt and Road Initiative (BRI).
In any sense, the idea comes from Sergey Glaziev, Russia’s top independent economist, a former adviser to President Vladimir Putin and the integration and macroeconomics minister of the Eurasian Economic Commission, the EIC’s regulatory body.
Glaziev’s central role in the development of the new Russian and Eurasian economic/financial strategy is examined here. He saw Western financial pressure on Moscow coming light years ahead of others.
Quite diplomatically, Glaziev attributes the realization of the idea to “common challenges and risks related to the slowdown of the world economy and the restrictive measures against the EIS countries and China.”
Translation: because China is as much a Eurasian power as Russia, and they need to coordinate their strategies to circumvent the US unipolar system.
The Eurasian system will be based on a “new international currency”, most likely with the yuan as the referent, calculated as an index of the national currencies of the participating countries as well as commodity prices. The first draft will already be discussed by the end of the month.
The Eurasian system will certainly become a serious alternative to the US dollar, since the EIS can attract not only countries that have joined the “One Road, One Belt” (Kazakhstan, for example, 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, Lebanon – will inevitably show interest.
In the medium and long term, the spread of the new system will weaken the Bretton Woods system, which even serious US market players/strategists admit is rotten from within. The US dollar and imperial hegemony face rough seas.
Show me the frozen gold
Meanwhile, Russia has a serious problem to deal with. Last weekend, Finance Minister Anton Siluanov confirmed that half of Russia’s gold and foreign reserves had been frozen through unilateral sanctions.
It boggles the mind that Russian financial experts have placed much of the nation’s wealth where it can be easily accessed – and even confiscated – by the “Empire of Lies” (copyright Putin).
At first it was not clear what exactly Siluanov meant. How can Elvira Nabiulina of the Central Bank and her team release half of the foreign reserves and even the gold stored in Western banks and/or vaults? Or is this some sneaky diversionary tactic by Siluanov?
No one is better equipped to answer these questions than the invaluable Michael Hudson, author of the recent revised edition of Super Imperialism: The Economic Strategy of American Empire.
Hudson was quite frank:
“When I first heard the word ‘frozen,’ I thought it meant that Russia would not use up its precious gold reserves to prop up the ruble, trying to fight off a Soros-style attack from the West.”
“But now the word ‘frozen’ seemed to mean that Russia had sent them abroad, outside of its control,” he continued.
“It appears that at least as of last June, all Russian gold was stored in Russia itself. At the same time, it would be natural to keep securities and bank deposits in the United States and Great Britain, because that is where most of the interventions in the world currency markets take place,” adds Hudson.
Essentially, everything is still up in the air:
“On first reading, I assumed that Russia must be doing something smart. If it was wise to move gold abroad, perhaps it would do what other central banks do: ‘give’ it to speculators for interest or a fee.”
“Until Russia tells the world where its gold is placed and why, we cannot find out. Was it in the Bank of England – even after England confiscated Venezuela’s gold? Was it in the New York Federal Reserve – even after like the Fed confiscating Afghanistan’s reserves,” he wonders.
So far, there have been no further clarifications from either Siluanov or Nabiulina. The scenarios revolve around a series of deportations to Northern Siberia for national treason. Hudson adds important pieces to the puzzle:
“If [резервите] are frozen, why is Russia paying interest on its foreign debt that is due? It can direct the ‘freezer’ to pay, shift the blame for default,” Hudson argued.
“She can talk about Chase Manhattan’s freezing of Iran’s bank account from which Iran was trying to pay interest on its dollar-denominated debt. She can insist that all payments from NATO countries be settled in advance with physical gold.” , he continues.
“Or he can send paratroopers to the Bank of England and restore the gold – something like Goldfinger in Fort Knox. The important thing is for Russia to explain what happened and how it was attacked, as a warning to other countries,” the expert is emphatic.
As the clincher, Hudson couldn’t help but wink at Glaziev:
“Maybe Russia should appoint a non-Western person to the Central Bank”.
The variable that will change the petrodollar game
It is tempting to read Russian Foreign Minister Sergey Lavrov’s words at a diplomatic summit in Antalya last Thursday as a veiled admission that Moscow may not have been fully prepared for the financial heavy artillery used 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 act as instruments of Western political aggression against Russia, instead of pursuing the interests of their businesses.”
“We’re going to make sure that we’re never in that situation again, and that no Uncle Sam or anyone else can make decisions to destroy our economy. We’re going to find a way to end this dependency. We should have done it a long time ago Lavrov was categorical.
And so the “long time ago” begins now. And one of its foundations will be the Eurasian financial system. Meanwhile, the “market” (as in the American speculative casino) “assessed” (according to its own oracles) that Russian gold reserves – those that remained in Russia – could not support the ruble.
That’s not the point – on several levels. Self-made oracles brainwashed for decades believe that the Hegemon dictates what the “market” does. This is just plain propaganda.
The crucial fact is that in the new, emerging paradigm, NATO countries amount to at most 15 percent of the world’s population. Russia will not be forced to practice autarky because it does not need to: most of the world – as we have seen, represented in the extensive list of non-sanctioned nations – is ready to do business with Moscow.
Iran showed how it’s done. Gulf traders confirmed to The Cradle that Iran is selling no less than 3 million barrels of oil per day even now, without a signed Joint Comprehensive Plan of Action (the Iran nuclear deal currently being negotiated in Vienna). Oil is labeled, smuggled and transferred by tankers in the middle of the 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. No sanctions against Russian oil – at least not yet.
Washington’s reductionist, Mackinderian plan is to manipulate Ukraine as a disposable pawn to use scorched earth tactics against Russia and then strike China. Essentially, divide and conquer to take down not just one, but two competitive rivals in Eurasia who are stepping up as comprehensive strategic partners.
As Hudson sees it:
“China is in the crosshairs, and what happened to Russia is a dress rehearsal for what could happen to China. It is best to separate sooner rather than later under these conditions. Because now the leverage is highest.”
All the chatter about “the collapse of Russian markets”, the end of foreign investment, the destruction of the ruble, the “total trade embargo”, the expulsion of Russia from the “community of nations” and so on – this is for the zombified. Iran has been dealing with the same thing for four decades and survived.
Historical poetic justice, as Lavrov hinted, is now happening to decree that Russia and Iran are about to sign a very important agreement, possibly the equivalent of the Iran-China strategic partnership.
The three main nodes of Eurasian integration are improving their interaction in motion and may sooner or later use a new, independent monetary and financial system.
But there’s more poetic justice along the way that revolves around the ultimate game changer. And it came much sooner than we all thought.
Saudi Arabia is considering accepting Chinese yuan – rather than US dollars – to sell oil to China. Translation: Beijing told Riyadh that this is the new channel. The end of the petrodollar is nigh – and it is the certified nail in the coffin of the irreplaceable Hegemon.
Meanwhile, there is one mystery to be solved: where is this frozen Russian gold?
Translation: SM
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