Additional Dedollarization & Energy News

Director of the Department of Economic Cooperation Dmitry Birichevsky's interview with Rossiya Segodnya, August 11, 2023

The interview covers a bit more, mainly the EU’s attempts to coerce Russia’s Central Asian allies into obeying the illegal sanctions on Russia, which they refuse to do since they’re illegal. Birichevsky provides information verifying my claims that the main issue in building a new international financial system is the implementation of its infrastructure, which consists of a great many connections between nations, banks, and businesses. The issue of hydrocarbons is also touched upon. And now, the Q & A:

Question: Is Moscow considering options for possible actions in the event of a halt in the pumping of oil through the Druzhba pipeline to Hungary, given that the oil pipeline was already shut down last year at Kiev's initiative?

A: Russia has traditionally been a reliable supplier of hydrocarbons to countries that need these raw materials. We have always advocated mutually beneficial pragmatic cooperation in the field of energy. The destructive actions of individual countries in this area are devoid of economic logic and are due to dubious purely political motives. I would like to emphasise that the policy taken by some countries to abandon Russian energy resources is their own (or, we do not exclude, imposed from outside) choice. In any case, as we say, you won't be forced to be nice. Let them look for energy resources where they like best.

As for the practical aspects of the operation of the Druzhba oil pipeline, we would advise you to address this issue to the business entities operating this pipeline.

Question: Over the past year, the EAEU countries have actually switched to settlements in national currencies. Is the possibility of creating a single currency of the bloc being worked out? It was reported that the EAEU offers partners from the SCO and BRICS to create a common payment card. How will it work? Has there been a reaction to this proposal from BRICS and the SCO?

A: Indeed, over the past year and a half, there has been an accelerated transition of international payments to national currencies. The countries of the world majority are gradually abandoning the use of "toxic" currencies (primarily the US dollar and the euro), in an effort to ensure the stability of their trade, economic and investment ties. The reasons for this phenomenon are obvious - the sanctions "voluntarism" and the irresponsible macroeconomic policies of many Western countries, which undermined confidence in the US-centric financial system.

We welcome these processes. We believe that it is possible to ensure the sustainable development of the world economy and finance only in a multi-currency and truly multipolar world, in which there is no place for dictatorship and various manifestations of neocolonialism on the part of a number of countries claiming to be exclusive.

The EAEU is among the leaders in terms of the rate of transfer of mutual settlements to national currencies. According to some estimates, their share is already about 90%. With Belarus, for example, almost all payments have been converted into national currencies - mainly into the Russian ruble. Here, of course, unprecedented measures of pressure on our countries from the unfriendly states of the West, contributing to the withdrawal of the dollar and the euro from our foreign trade and financial turnover, are affecting.

At the same time, we are not talking about the creation of a single currency in the Union. The main work at this stage is related to the formation of a common financial market of the EAEU, the debugging of existing payment and settlement mechanisms, and the organization of exchange trading. The agenda includes a wide range of tasks for harmonization and convergence of the regulatory framework of national financial systems.

At the same time, we are developing cooperation with friendly countries in the field of payment systems. I would like to emphasise that at this stage we are cooperating with our partners in the national financial regulators. We consider it uncontested to create a financial architecture independent of the West, part of which will be new payment card systems. Only in this way will we be able to ensure the continuity of global economic relations and additional opportunities for settlements of individuals. This work is being carried out systematically, many technical issues need to be addressed.

In addition, we are working on establishing direct correspondent relations between Russian and foreign credit institutions, as well as the formation of the necessary amount of cash liquidity in the corresponding currency pairs. Since last year, the national currencies of all EAEU member states have been traded on the Moscow Exchange, and the volume of their purchase and sale is steadily growing.

Question: In addition to the already known ones, which countries have expressed their interest in creating a free trade zone with the EAEU – perhaps the states of Latin America or the Middle East?

A: Many constructive-minded states, as well as associations from Latin America, Africa, the Middle East and Asia, are indeed interested in establishing a preferential trade regime with the EAEU. The EAEU member states, together with the Eurasian Economic Commission, are studying such applications from the point of view of economic feasibility. Relevant initiatives have not yet been finalized.

Currently, official negotiations on trade liberalization are underway with Egypt, the United Arab Emirates and Indonesia.

Question: Is it true that the project to create a gas hub in Turkey, which was previously proposed by Russia, no longer involves the construction of a new gas infrastructure there, but only the creation of an electronic trading platform? The work of such a hub was planned to begin during this year, how ready is the project for launch? Or will the start dates be adjusted?

A: I would like to remind you that Russia's initiative on a gas distribution centre in Turkey was dictated by the need to create a fundamentally new gas trading mechanism independent of importing countries. In recent years, the European gas market has undergone dramatic changes. Consumer countries reduced the share of long-term contracts in the structure of imports, while requiring suppliers to increase the spot component in the pricing formula, pursued a policy of diversification of supplies, including through a reorientation to LNG. The result of such innovations was a sharp increase in the volatility of gas prices in Europe, to which gas producers had to adapt.

The choice of Turkey for the organization of a gas distribution center is not accidental. Its role as a transit country for Europe has recently grown significantly with the commissioning of the Turkish Stream gas pipeline. At the same time, cooperation between Moscow and Ankara in the gas sector is strategic in nature and is not subject to political expediency.

As for the implementation of this initiative, its parameters are still being discussed, including at the highest level.

Question: Is it possible to expand the idea of a "gas union" between Russia, Uzbekistan and Kazakhstan to other countries? Have there already been specific parameters for this project? Can this be integrated into the EAEU system?

A: We do not rule out the possibility of expanding trilateral cooperation in the gas sector. We know that other states are also showing interest in it. We are open to such cooperation on the understanding that it should be mutually beneficial and constructive, taking into account the positions of all participants.

The implementation of specific project parameters is carried out through PJSC Gazprom. In particular, in January of this year, bilateral roadmaps for cooperation in the gas industry were signed with the Government of Kazakhstan and the Ministry of Energy of Uzbekistan.

Russia stands for stable and long-term supplies of "blue fuel" to ensure energy security and sustainable development of the entire Central Asian region.

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