May 9, 2018 (EIRNS)—In a speech yesterday before the Federal Assembly after his inauguration, Russian President Vladimir Putin addressed the burden that the “dollar monopoly” represents for Russia, and said that, in order to achieve greater economic sovereignty, it will be necessary to free the economy from it, according to reports by TASS and Sputnik. “Certainly, we are thinking about what we need to do in order to get free of this burden,” Putin said.
Diversification of reserves is one way, he said, and “we will continue to do it.”
The Russian President pointed out, reported Sputnik, that “we used to behave naively, but now we see that the World Trade Organization rules are broken all too often, and restrictions [sanctions] are imposed for political reasons, plus more and more of them are imposed to secure favored competitive advantages.”
He warned that the dollar monopoly is dangerous, “not just for us but for many,” and that for underlying security-related reasons, particularly as this relates to the pricing of oil in global commodity markets, it’s time to look for alternatives.
Sputnik observes that Putin’s statement comes less than two months after China launched yuan-denominated oil futures on the Shanghai International Energy Exchange, thus challenging the dominance of the Brent and West Texas Intermediate benchmarks. Citing a source close to the top management of the St. Petersburg Stock Exchange, columnist Igor Naumov says Russia is ready to support the Chinese contracts.
“Currently the U.S. dollar is used as the contract currency in the global hydrocarbon trading system, as well as for other commodities. This is what largely provides the dollar with its status as the world’s leading reserve currency. However, the yuan is seeking to dislodge the American [petrodollar] from one of the fastest growing markets in the world,” Naumov explained.
Russia is now China’s largest crude supplier, displacing Saudi Arabia and Angola. In January a second pipeline for importing Russia’s East Siberia-Pacific Ocean Crude began to pump oil, doubling China’s import capacity to 30 million metric tons annually. In December 2017, Russia’s Finance Ministry announced plans to place an issue of yuan-denominated bonds worth $1 billion on the Russian domestic market this year.