{"id":1551,"date":"2021-06-08T14:11:23","date_gmt":"2021-06-08T14:11:23","guid":{"rendered":"https:\/\/depthtrade.com\/?p=1551"},"modified":"2021-10-11T17:55:26","modified_gmt":"2021-10-11T17:55:26","slug":"bad-omen-biden-putin-summit-meeting-abuse-of-u-s-dollar-status","status":"publish","type":"post","link":"http:\/\/localhost\/depth\/bad-omen-biden-putin-summit-meeting-abuse-of-u-s-dollar-status\/","title":{"rendered":"Bad Omen: Biden – Putin Summit Meeting \/ Abuse of U.S. Dollar Status"},"content":{"rendered":"\n

Current developments in bilateral relations between the U.S. and Russia do not paint a good picture for the upcoming meeting between Joe Biden and Vladimir Putin in Geneva next week. On the contrary, something is happening here that could indeed affect the financial markets, but has so far attracted little attentio<\/em>n.<\/p>\n\n\n\n

Last week, the St. Petersburg Economic Forum held a number of surprises for many observers. In sight of the escalating foreign policy situation between the United States and the Russian Federation, it came as little surprise that, according to official statements, Russia’s National Asset Management Fund will now completely abandon the U.S. dollar.<\/p>\n\n\n\n

Putin: Don’t need the U.S<\/strong>.
The Moscow Kremlin, which is now apparently blamed by the Washington administration for all sorts of things that go wrong in the world and in its own country, finds itself not only in the crossfire of accusations of being (partly) responsible for the recent cyber attacks in the United States, but also guilty of an increasing expansionist policy towards Ukraine, in addition to interfering in the elections in the United States.<\/p>\n\n\n\n

The recent episode of the forced landing of a Ryanair plane by the leadership in Minsk, Belarus, has only intensified these discussions in the West. Last Friday, Russian President Vladimir Putin responded to these developments in his own unique way, pointing at the Washington administration that it does not need the United States.<\/p>\n\n\n\n

Rather, it is becoming increasingly clear, Putin said, that the Washington administration is misusing the U.S. dollar’s status as the world’s reserve currency as a tool for waging political and economic wars against rival nations.<\/p>\n\n\n\n

Russia’s national asset management fund divests all USD assets<\/strong>
On Thursday, the day before, the Russian Federation’s National Asset Management Fund, which is worth the equivalent of about $185 billion, announced its intention to dispose of all its remaining U.S. dollars and U.S. dollar assets in order to redeploy the freed-up capital into euros, Chinese yuan\/renminbi and physical gold.<\/p>\n\n\n\n

On the following day, Putin warned<\/a> that the Russian Federation might soon consider selling its oil and gas on the basis of other fiat currencies, especially the euro.<\/p>\n\n\n\n

The Russian Federation, along with Saudi Arabia, the United Arab Emirates, Kuwait and Qatar, is proving to be one of the largest and therefore most influential oil and gas producing countries in the world.<\/p>\n\n\n\n

Petrodollar targeted<\/strong>
This threat has certainly not gone unheeded in Washington, as the entire construct of the so-called petrodollar – and with it the hegemonic claim of the United States over the rest of the world – is proving dependent on precisely this global acceptance of the petrodollar.<\/p>\n\n\n\n

Referring to Putin, he said it would prove to be a serious setback from the U.S. dollar’s point of view if Russian oil and gas production companies decided to stop conducting their international business on the basis of the U.S. dollar. Putin added that Moscow’s leadership, however, is not actively pushing companies at home to adopt such a strategy.<\/p>\n\n\n\n

Systems ready: Putin calls for energy settlement on euro basis<\/strong>
In this context, however, Putin did not miss the opportunity to once again call on the countries of Europe to settle Russian gas deliveries on the basis of the euro. For some years now, Russia’s leadership has made no secret of its strategy of diversifying its currency reserves and assets.<\/p>\n\n\n\n

In the course of this, the process of de-dollarization in the Russian Federation is progressing at seven-league pace. The main reason for this is an anticipation of intensifying sanctions by the United States against its own country. Putin reiterated in his speech that payments for gas supplies on a euro basis are absolutely acceptable from the perspective of the Russian Federation.<\/p>\n\n\n\n

Already at this point in time, he said, the systems needed for this were ready, so that in the long run it would not only be possible to settle Russian energy bills on a euro basis, but that it should rather come to that.<\/p>\n\n\n\n

Abuse of U.S. Dollar Status & Bilateral Relations at Extreme Low Point<\/strong>
In this context, Putin went on to say that the role of the U.S. dollar as a global reserve currency would be persistently weakened if Washington leaders did not refrain from abusing the U.S. dollar as an instrument to eliminate economic competition and in the sense of a political all-purpose weapon.<\/p>\n\n\n\n

According to Putin, defusing these conflicts would require relaxing of the bilateral tensions between the two nations. At this point, bilateral relations between the United States and the Russian Federation are at an “extreme low-point,” Putin said.<\/p>\n\n\n\n

No breakthroughs Expected at Summit Meeting<\/strong>
It remains to be seen whether the talks between the presidents of the two nations to be held in Geneva on June 16 will change this. In his speech, Putin made the additional accusation that the United States was trying to sabotage the development of its own country.<\/p>\n\n\n\n

In Russia, he said, no one has any problems with the United States. Rather, it is the United States of America that has a problem with Russia, Putin said. The U.S. political leadership is even openly talking about wanting to put a spoke in the wheel of Russia’s development.<\/p>\n\n\n\n

In view of the current situation, which is extremely tense, and the rhetoric between the two leaders, which has intensified once again in the past week, observers and experts do not yet expect that the talks at the highest level on June 16 will actually result in any major successes, including an improvement in relations between the two nations.<\/p>\n\n\n\n

Nor are there likely to be any “breakthroughs” in the talks. Yesterday, at the beginning of the week, the stream of news from the Russian Federation continued. Obviously, the political leadership in the Moscow Kremlin would like to follow up their words with deeds soon.<\/p>\n\n\n\n

Russian Finance Ministry Working on Incentives for Currency Shifting<\/strong>
As the Russian Finance Ministry announced yesterday, incentive plans are being worked out to shift more of the country’s currency reserves into euros and euro investments. At the same time, state-owned enterprises are to be encouraged to carry out payment settlements and other transactions based on the euro.<\/p>\n\n\n\n

According to the Russian news agency RIA Novosti, Moscow is preparing adequately for Western calls and demands to intensify sanctions against its own country. This also included preparations for a potential disconnection of Russian banks from the international SWIFT system.<\/p>\n\n\n\n

The Russian Finance Ministry then clarified once again that it would encourage its own companies to make greater use of the euro against the U.S. dollar, but that it would not introduce any formal restrictions on the use of the American currency.<\/p>\n\n\n\n

Referring to Bloomberg, both RIA Novosti and Tass had backtracked a bit on their own previous reporting, having previously said, with reference to Russian Finance Ministry officials, that the Russian Ministry of Finance was working on drafting directives to force domestic state-owned companies to use the euro against the U.S. dollar.<\/p>\n\n\n\n

However, in view of the previous reporting, this could also have been a kind of test balloon that the Moscow Kremlin had allowed to rise for a short time in order to assure itself of the reactions in the United States and the rest of the West, as was said in some quarters.<\/p>\n\n\n\n

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Russia's divestment from the Dollar is moving at an astonishing pace. https:\/\/t.co\/3WYC47o2oT<\/a><\/p>— Tom Fowdy (@Tom_Fowdy) June 7, 2021<\/a><\/blockquote>