While the USA seems set on continuing the policy that dominated the State Department’s approach to foreign affairs throughout the presidencies of George W Bush and Barack Obama by trying at every opportunity to provoke the other great military powers, Russia and China are playing a very different geopolitical game.
As our Currency Wars omnibus page has reported many time, the Russo – Chinese campaign, supported by Iran and several of the emerging economies is to undermine the US$ and replace it as the de facto global reserve currency. If successful this would effectively cripple the US economy.
This week, in the latest move to establish an alternative international trading system to the Pertodollar, The Russian Direct Investment Fund and the China Development Bank (CDB) agreed to create a Russian-Chinese investment fund worth 68 billion yuan ($10 billion).
The agreement was formalised by Russian President Vladimir Putin and Chinese President Xi Jinping during an official visit to Russia by the Chinese leader.
The new fund, named the Russia-China RMB Cooperation Fund, was created to make settlements in ruble and yuan. Both Moscow and Beijing have repeatedly talked about the importance of payments in local currencies for bilateral trade. In the past few years Russia and China, with support from Iran, have signed up many partners to their system of setting cross – border trades in the vendor’s national currency.
The money will be used on infrastructure projects in Russia and China. Particularly to projects linked to One Belt One Road (the 21st-century Maritime Silk Road) scheme and the Eurasian Economic Union.
“The Russian-Chinese investment cooperation fund in yuan will be a major stage in China-Russia investment partnership, supported by the governments of both countries, which will stimulate the growth of direct investment between the countries and promote a significant increase in the number of Russian-Chinese projects,” said CDB Chairman Hu Huaibang.
“We are pleased to announce a partnership with the China Development Bank and provide an opportunity for Chinese investors to invest in their national currency. It will give a powerful impetus to increase the volume of cross-border direct investment and significantly increase the number of jointly implemented projects,” said Russian Direct Investment Fund chief Kirill Dmitriev.
This blog’s elder sdibling, The Daily Stirrer, reported back in 2015:
If recent events are anything to go by, 2015 is set to be another year of ‘interesting times’ as China, Russia and Iran square up against the American bid for global hegemony and continue their efforts to see the US dollar dumped as the global reserve currency and the oil trading system known as The Petrodollar replaced by bilateral trades being settled in the currency of the vendor nation.
We don’t know how this will turn out yet of course, but given the fragility of the US economy which is dependent on borrowing and already overburdened with debt (as we reported previously) the USA is not in such a commanding position as its leaders like to imagine. And given that Washington has pent the past twenty years progressively pissing off its natural allies, when push comes to shove that position may not actually be commanding at all.
As the BRICS, Russia, Brazil, India, China and South Africa form closer economic bonds and given that Iran is a long time ally of both Moscow and Beijing, there will undoubtedly be further moves towards the economic integration of Eurasia
Moves against the dollar started before that of course, even before Bush mark 2 entered The White House there was widespread dissastisfaction with the way the US used dollar dominance to force deals on weaker nations that seriously disadvantaged them in dealings with US based global corporations. Most recent examples of this were TTIP and TPP, the trade deals that would have given corporate lawyers the power to overturn laws made by the democratically elected governments of sovereign nations.
Immminent collapse Of The Petrodollar
Turkey, India join alliance against the petrodollar
De – dollarization Moves Ahead – Once Again We Told You So,
De – dollarization: dismantling America’s financial dominance
The Imperatives Behind The New cold War
War, Famine, Plague and all that
Moved To Mumbai