23 votes

Welcome to the Currency War, Part 14: Russia, China, India Bypass the Petrodollar

As it tries to punish Russia for the latter’s dismemberment of Ukraine, the West is discovering that the balance of power isn’t what it used to be. Russia is a huge supplier of oil and gas — traded in US dollars — which gives it both leverage over near-term energy flows and, far more ominous for the US, the ability to threaten the dollar’s reign as the world’s reserve currency. And it’s taking some big, active steps towards that goal. As Zero Hedge noted on Tuesday:

Russia Prepares Mega-Deal With India After Locking Up China With “Holy Grail” Gas Deal

Last week we reported that while the West was busy alienating Russia in every diplomatic way possible, without of course exposing its crushing overreliance on Russian energy exports to keep European industries alive, Russia was just as busy cementing its ties with China, in this case courtesy of Europe’s most important company, Gazprom, which is preparing to announce the completion of a “holy grail” natural gas supply deal to Beijing. We also noted the following: “And as if pushing Russia into the warm embrace of the world’s most populous nation was not enough, there is also the second most populated country in the world, India.” Today we learn just how prescient this particular comment also was, when Reuters reported that Rosneft, the world’s top listed oil producer by output, may join forces with Indian state-run Oil and Natural Gas Corp to supply oil to India over the long term, the Russian state-controlled company said on Tuesday.
Rosneft CEO Igor Sechin, an ally of President Vladimir Putin, travelled to India on Sunday, part of a wider Asian trip to shore up ties with eastern allies at a time when Moscow is being shunned by the West over its annexation of Crimea. Rosneft said it had also agreed with ONGC they may join forces in Rosneft’s yet-to-be built liquefied natural gas plant in the far east of Russia to the benefit of Indian consumers.
We just have one question: will payment for crude and LNG be made in Rubles or Rupees? Or in gold. Because it certainly won’t be in dollars.
Rosneft, which is increasing oil flows to Asia to diversify away from Europe, did not provide any additional details but said it had discussed potential cooperation with Reliance Industries and Indian Oil.
It did not have to: it is quite clear what is going on. While the US is bumbling every possible foreign policy move in Ukraine (and how could it not with John Kerry at the helm), and certainly in the middle east, where it is alienating Israel and Saudi just to get closer to Iran, Russia is aggressively cementing the next, biggest (certainly in terms of population and natural resources), and most important New Normal geopolitical Eurasian axis: China – Russia – India.
There is only one country missing – Germany. Because while diplomatically Germany is ideologically as close to the US as can be, its economy is far more reliant on China and Russia, something the two nations realize all too well. The second the German industrialists make it clear they are shifting their allegiance to the Eurasian Axis and away from the Group of 6 (ex Germany) most insolvent countries in the world, that will be the moment the days of the current reserve petrocurrency will be numbered.

Continue reading here:


Trending on the Web

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

So much for global hegemony...

The West wants to get it's claws into Mongolian natural resources. The entire focus on the M.E./eastern Europe/central Asia is to cut Russia (and China) off from Africa and establish inroads, via Iran, Afghanistan, etc., to the East. Russian deals with China, Iran, and India is bad news for Euro/Anglo/American interests. The wicked witches of the West need to stir up some anti-Chinese "Nazi" movements in India and central Asia to destabilize them a bit.


time to start looking for a Russian wife...

This isn't happening overnight

I feel as if there would need to be many more events that occurred before Germany did such a thing. That would rock the western world, leave Germany a bit geographically isolated from it's eastern allies, and leave it surrounded by those they just economically separated from.

If more countries in Europe join BRIC, that could be stepping stones for Germany.

Don't forget, Hitlers rise to power didn't happen overnight, and Rome wasn't built in a day. But we are seeing the chess pieces moving. I do wonder if many of these events will occur during the next generation.

That is, of course, unless another "new Pearl Harbor" occurred to speed things up, on either side of the fence.

meh, problem is that China still sells most of its crap here

They can take the dollars they make off their junk they sell and dump them, but at great expense and it's still floods the planet with dollars. The whole idea of globalism and world manufacturing (mainly China) is to make it impossible to create a new default currency. We are not #1 at much any more, but we are still far and above the supreme currency manipulators.

The German dimension.

The EU is built upon the plan for the Greater German Reich. It is unlikely that Germany will relinquish its grip on Europe in order to join the Eurasian Economic Community that is being formed. One reason for this is that its membership in the Eurozone gives Germany a trading advantage in the exchange markets where the Euro is weighted down by the economies of the southern states like Greece, Italy and Portugal, not to mention France that is also in a parlous condition. If Germany were to revert to the Deutschmark then their trading competitiveness would have to be engineered by another reduction of the German standard of living via wage reduction. This is unlikely to happen.

However German heavy industry can benefit greatly by Ukraine joining the EU, preceded by a radical devaluation of the Hyryvnia through the actions of the IMF. This will enable these companies to buy up Ukrainian heavy industry for pennies on the pound and for Ukraine to benefit thereby from the expertise and technological excellence of German engineering. The owners of the bulk of heavy industry in Ukraine are the Yanukovych family which is no doubt why Yanukovych turned down the EU offer while protesting it was due to the (admittedly) excessive austerity demands of the IMF.

It would not surprise me if this division of Ukraine into German (aka U.S.) and Russian interests is entering into the calculations of those responsible for making decisions on that country's future. The Ukrainian oligarchs now running the show there will of course act in their own best interests and it will not necessarily be to the disadvantage of the people of Ukraine if they do so. Whatever the political architecture finally decided upon it is the economic realities that will dictate the future.

"Jesus answered them: 'Truly, truly, I say to you, everyone who commits sin is a slave to sin. The slave does not remain in the house forever; the son remains forever. So if the Son sets you free, you will be free indeed.'" (John 8:34-36)

You present a good analysis

You present a good analysis of the situation. However, believe that the subconscious adherence to the nation state concept to describe various factions in play is overstated. The trend to split into smaller, and independent communities, with local interests paramount, is slowly disintegrating nation states. The corporate, be it IMF, oligarchic, Russian or American business interests, have proven stronger than the cohesion of state identity... the coup in Ukraine being the latest manifestation of this.

The sentence I was responding to.

This was in the OP and it was the thought I was responding to:

"The second the German industrialists make it clear they are shifting their allegiance to the Eurasian Axis and away from the Group of 6 (ex Germany) most insolvent countries in the world, that will be the moment the days of the current reserve petrocurrency will be numbered."

Perhaps I should have included this in my post to make it clear.

"Jesus answered them: 'Truly, truly, I say to you, everyone who commits sin is a slave to sin. The slave does not remain in the house forever; the son remains forever. So if the Son sets you free, you will be free indeed.'" (John 8:34-36)

Thank you for the

Thank you for the explanation.

point of order ..

.. > "As it tries to punish Russia for the latter’s dismemberment of Ukraine"

It was the US Regime's meta-invasion (via their trained and organized Nazis) of Ukraine that led Crimea to flee to Russia. Ie. Ukraine dismembered itself due to the US meta-invasion.

The current US Corporate and Social Media propaganda is heavilly into "US and Ukraine are innocent victims of evil Russia. And, by the way, there are no Nazis in Ukraine", but we don't need to swallow or perpetuate the myth, do we?

ha ha

wow if we were actually that good, but we aren't.

Also please don't call it an annexation.

The technical term for Crimea's return to Russia is retrocession.

thanks for your important contribution and for inspiring my more trivial point

dynamite anthrax supreme court white house tea party jihad
to be continued

Interesting times we live in.....


The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. But no price is too high to pay for the privilege of owning yourself.
Friedrich Nietzsche

Central banks around the world began dumping the dollar

years ago around 2006. At that time it was something like 70% holdings in nearly every central bank. The fake dollar index is meaningless, Paulsons plunge team fixed that, in 08.

Travel outside the country and you'll see what those worthless FRN's will buy.

At this point there's 3 possibilities.

1) Its all just a scripted play to keep us guessing.
2) The Rockefellers and the Rothchilds are trying to out do each other for world domination.
3) Putin just went full autocrat.


"Take hold of the future or the future will take hold of you." -- Patrick Dixon

The wheels are turning

Its like living in nightmarishly slow trainwreck, every day.

Cyril's picture

La-La-Land... in Slo. Mo.

I concur.

This all feels like living in a La-La-Land... specifically designed for slow motion.

And, pardon my french, without vaseline.

"Cyril" pronounced "see real". I code stuff.


"To study and not think is a waste. To think and not study is dangerous." -- Confucius

the dollar may bounce a

the dollar may bounce a little here in the future. but by the end of the year into next year the dollar sitting at 70 USDX?

? ? ?

:) ? (AKA cover my A$$)