Thursday, July 31, 2014

Russia and India Align Central Banks, Circumvent the Dollar

Tick-tock. Yesterday, the Central Bank of Russia announced a new partnership with the Reserve Bank of India.

At the 20th meeting of IRIGC-TEC (The Indo-Russian Inter-Governmental Commission on Trade, Economic, Scientific, Technical and Cultural Cooperation) the Chairman for Russia's Central Bank, KV Yudaeva and the Executive Director of the Reserve Bank of India, G. Padmanabhan, announced a new partnership where trade deals would now be conducted in their national currencies instead of the U.S. dollar.

A press release published by Russia's Central Bank states that "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."

This comes only weeks after the recent formation of the New Development Bank by the BRICS group of nations (Brazil, Russia, India, China, and South Africa), a move seen by many as a concerted effort by those countries to eliminate the dollar as the world's reserve currency.

Additionally alarming is the news that earlier this year, India and Russia announced a new space partnership, where India's scientists would provide expertise to the United Space and Rocket Corporation (Russia's version of NASA). With Russia and India collaborating on rocket technology, aligning their banks, and creating their own version of the IMF, it would seem that the two countries have bigger plans ahead.

Ukraine has been set up as a geopolitical domino, and Russia is now facing increasing sanctions from the U.S. and Europe. For the past several years, the country has been coordinating with the largest non-Western economic powers, but even more worrisome, enemy nations of the U.S.

On July 18th, North Korea announced a new Russia-Korea terminal in their Rason Economic Zone that will facilitate trade between the two countries. And in January of this year, Russia announced a barter deal with Iran for 20 billion dollars. Russia has been providing Iran with nuclear fuel for their power plants for the past 25 years.

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