Russia Accelerates Asia Pivot

[amoy]

Russia Accelerates Asia Pivot | The Diplomat
Putin has created a special economic zone in the Far East as part of a broader effort to boost ties to Asia.

By Zachary Keck
April 18, 2014

Russian President Vladimir Putin has ordered that a special economic zone in the Far East be established as part of a broader effort to increase Moscow's economic integration in the Asia-Pacific.

According to Russian media, the Kremlin published Putin's order on its website on Tuesday. "Taking into account the previous instructions of the President of the Russian Federation," the document said that "a special economic zone of industrial type is to be created in Vladivostok and provide funding for construction of its industrial infrastructure." In the order, Putin says that the SEZ should be created by June of this year.

Vladivostok is a major city in Russia's Far East, close to Moscow's borders with China and North Korea. It is Russia's largest port in the Pacific Ocean, and also hosts Russia's Pacific Naval Fleet. It is also a major economic hub for Russia and helps facilitate Moscow's economic ties to the Asia-Pacific.

According to China's state media, Russia currently has 28 SEZs throughout the country. Six of the SEZs "are industrial and production zones, five are technology and innovation zones, 14 are for tourist and recreational purposes and three are port zones."

The same article explains that: "Residents of the special economic zones enjoy tax preferences, modern transport, social, customs and other infrastructure, a free trade regime, reduced administrative barriers, access to qualified personnel, simplified migration regimes and other preferences."

The creation of the SEZ in Vladivostok is part of a concerted effort on Russia's part to bolster its economic relations with the Asia-Pacific as its ties with the West falter over the crisis in the Ukraine. Earlier this year, Russia expanded the ministry in charge of Russia's Far East. After years of talks being deadlocked over India's civil liability law, Russia and India inked an important nuclear agreement last week. This week, India's Foreign Secretary Sujatha Singh is also in Russia exploring stronger bilateral ties. India has largely backed Russia over the Crimea crisis.

Russia's ties with China have also strengthened significantly in the wake of the Ukraine crisis. As previously reported, Putin has agreed in theory to sell China Russia's most advanced air and missile defense system. The system will significantly enhance China's leverage in territorial disputes with countries like Taiwan and Japan.

Equally important, after roughly a decade of negotiations there are growing signs that Russia and China are getting close on agreeing to a huge natural gas deal. The two sides have been at odds over the pricing of the deal, but it appears that Russia may cave to China on the price issue in order to be able to sign the 30-year natural gas deal when Putin visits China sometime next month. The deal will require Russia to build a new pipeline but should help reduce Moscow's reliance on Europe for its energy exports. As The Diplomat previously reported, Russia's Foreign Minister Sergey Lavrov was in China briefly earlier this week.

Similarly, last Friday, Japan's Foreign Minister Fumio Kishida and Defense Minister Itsunori Onodera held a "2+2"³ meeting with their Russian counterparts, Foreign Minister Lavrov and Defense Minister Sergei Shoigu. It was the first such meeting between the two sides, which remain divided over the three disputed isles of Kunashiri, Shikotan and Habomai. The 2+2 meeting follows a bilateral investment forum between Russia and Japan last month.

Last month, Russia's Far East Development Minister Alexander Galushka also visited North Korea. Pyongyang and Moscow are reportedly discussing the possibility of Russian businesses opening up factories in the joint-Korean Kaesong Industrial Complex.

Russia has also been seeking to build its economic ties with Malaysia. Malaysia's defense ministry is expected to announce soon that Russia will tender the delivery of upgraded Su-30MKM fighters. Malaysia has also expressed interest in purchasing air defense systems from Moscow.

Russian Foreign Minister Lavrov was also in Vietnam this week, where he met with President Truong Tan Sang. The two sides reaffirmed their comprehensive strategic partnership, and agreed to focus particular attention on energy trade. Moscow has also said that it expects Vietnam to soon join Russia's Customs Union of Belarus, Kazakhstan and Russia.

Although Russia's Pacific pivot is being accelerated to reduce Russia's vulnerability to Western coercion, the move is likely to improve U.S.-Russian ties over the long term. In contrast to Europe, where Washington and Moscow are often at odds, their interests nearly perfectly converge in the Asia-Pacific. For example, both countries worry greatly about China's rise and are seeking to build up countries like India and Vietnam to help balance against it.

 

[amoy]

Chinese, Russian Vice PMs Meet in Vladivostok

Chinese Vice Premier Wang Yang met with his Russian counterpart, Dmitry Rogozin, Friday within the framework of the chairmen meeting of the joint commission for the regular meetings of Chinese and Russian prime ministers.

Wang said his meeting with Rogozin was to implement the important consensus reached by the heads of state of the two countries in Sochi and to make preparations for Russian President Vladimir Putin's visit to China in May and a summit meeting in Shanghai.

China and Russia have good political mutual trust, their economies are highly complementary, and they have similar regional development strategies, Wang said.

So the two countries have best conditions for the deepening of pragmatic cooperation, Wang said.

The two sides should expand cooperation in an innovative manner and carry forward big projects in aviation, space, nuclear energy, agriculture, cross-border infrastructure, he said.

China is ready to actively engage in Russia's Far East development strategy, Wang said.

Rogozin said Russia-China relations are at their best in history.

Russia is willing to actively promote pragmatic cooperation, reinforce cooperation in big projects, and create favorable conditions for Chinese enterprises that would invest in Russia or would take part in the development of the Far East.

During the meeting, the two sides spoke highly of the progress made in key projects such as the development of wide-body aircraft and reached consensus on the direction and mechanism of cooperation for Far East development.

The two sides agreed to quicken the establishment of a special supervision group for cooperation projects of strategic significance and a agricultural subcommittee under the joint commission for the regular meetings of Chinese and Russian prime ministers. They also agreed to set in motion the drafting of regulations for China-Russia cooperation in agricultural investment.

Russia Eyes Closer Economic Ties with China: Deputy PM

Russia eyes closer economic ties with China, with bilateral trade turnover expected to reach 100 billion U.S. dollars next year, said Deputy Prime Minister Dmitry Rogozin.

Rogozin, who met with visiting Chinese Vice Premier Wang Yang in the Far East city of Vladivostok on Friday, was quoted by Russian media as saying that trade growth between the two countries had accelerated in the first two months of this year to 4 percent.

According to him, China became Russia's largest trading partner last year and Russia became China's ninth largest.

In particular, Rogozin mentioned Russia-China joint projects in the high-tech field, including the Glonass and Beidou satellite navigation systems, as well as the development of advanced chipsets.

 

[Zero_Wing]

Well this non of our business what Neo Nazi china and Russia does but we defend ourselves from china that's it

 

[pmaitra]

This is a good opportunity for India to invest in Russian oil blocks as it seems Russia might be interested in giving some discounts.

What is more important is, India needs to buy some technology for building advanced turbines, for missiles, rockets, jets, etc..

I think this is going to be largely a win-win situation for both Russia and India. Here are the possible after-effects of Russia reorienting its focus on Asia.

1. Russia will be able to offset losses from possible US and EU sanctions, now that it has alternative customers.
2. Russia can also make its trade with EU dispensable, and will be able to leave it upto EU to continue or discontinue trade. If EU does discontinue trade, they will be at a disadvantage, as they will have to invest a lot of money in importing energy from the US, and US energy will also be more expensive as US gas is mainly extracted from capital intensive fracking methods. Russia, then, will also have the option of flooding the market with its cheap conventionally extracted gas, thus forcing a net loss on US fracking companies.
3. By increasing trade with PRC and India, all these transactions can be done using local currencies, thus bypassing the US Dollar. This will be a major hit to the US economy, and take the bite out of US sanctions.
4. This will also give impetus to the plans of setting up a SWIFT system for the BRICS countries, which will bypass London and New York for international money transfers; and this is already in the process of being implemented.
5. India should be able to sell arms to PRC's rivals, thus boosting its arms exports.
6. PRC will also be able to sell arms to Pakistan, thus boosting its own arms exports.
7. Russia will be selling technology and arms to both India and PRC, thus boosting its own arms exports.

All in all, Asia will greatly benefit. Now, we need a visionary that can do something in this direction.

 

[Peter]

This is a good opportunity for India to invest in Russian oil blocks as it seems Russia might be interested in giving some discounts.

What is more important is, India needs to buy some technology for building advanced turbines, for missiles, rockets, jets, etc..

I think this is going to be a win-win situation for both Russia and India.

1. Russia will be able to offset losses from possible US and EU sanctions, now that it has alternative customers.
2. Russia can also make its trade with EU dispensable, and will be able to leave it upto EU to continue or discontinue trade. If EU does discontinue trade, they will be at a disadvantage, as they will have to invest a lot of money in importing energy from the US, and US energy will also be more expensive as US gas is mainly extracted from capital intensive fracking methods. Russia, then, will also have the option of flooding the market with its cheap conventionally extracted gas, thus forcing a net loss on US fracking companies.
3. By increasing trade with PRC and India, all these transactions can be done using local currencies, thus bypassing the US Dollar. This will be a major hit to the US economy, and take the bite out of US sanctions.
4. This will also give impetus to the plans of setting up a SWIFT system for the BRICS countries, which will bypass London and New York for international money transfers; and this is already in the process of being implemented.
   [*]India should be able to sell arms to PRC's rivals, thus boosting its arms exports.
   [*]PRC will also be able to sell arms to Pakistan, thus boosting its own arms exports.
   [*]Russia will be selling technology and arms to both India and PRC, thus boosting its own arms exports.

All in all, Asia will greatly benefit. Now, we need a visionary that can do something in this direction.

Sir no offense to you but do explain points 6 and 7.
More specifically how would point 6 help us Indians?I mean it would definitely be a worrying issue for us.

 

[Kaalapani]

Sir no offense to you but do explain points 6 and 7.
More specifically how would point 6 help us Indians?I mean it would definitely be a worrying issue for us.

Are we buying weapons only from Russia?.

Russia has problem with US,Israeli and we are buying weapons from them.

Business is business and National .

Can you tell me one country which can veto on behalf of India?

Only Russian Itz in Asias And worlds Interest that we have a multi polar world not US(alCIAda) dominated world.

 

[amoy]

Russia writes off 90 percent of North Korea's debt | Reuters

(Reuters) - Russia said on Tuesday it agreed to write off 90 percent of North Korea's $11 billion debt and would reinvest the balance in the reclusive Asian state, in a sign of closer engagement with Pyongyang under new leader Kim Jong-un.

By writing off most of the sum owed by North Korea, one of the world's poorest countries, Russia granted a level of forgiveness in line with debt reduction deals it has given to its most impoverished debtors.

Moscow said the remaining $1 billion or so of the debt racked up by Pyongyang when it was a client state of the Soviet Union would go towards energy and education deals as well as development aid.

"It will be decided later by the parties for what purposes the funds received for the repayment of this debt will be used," Konstantin Vyshkovsky, head of the debt department at the Russian Finance Ministry, told Reuters.

Parts of the international community have been seeking to re-engage with North Korea since the death of Kim Jong-il, amid hopes that his son and successor would seek ways to end years of isolation and poverty.

RAIL AND POWER LINES

Analysts believe infrastructure deals will likely be a big part of the investments, including in railway and power lines.

Russia is also considering building a gas pipeline to energy-hungry South Korea - which Alexander Vorontsov, head of the Korean and Mongolian Studies department at a Russian Academy of Sciences institute, said Pyongyang would be bound to welcome.

"Yes, they're in conflict (with the South), but undoubtedly, North Korea is very interested in the pipeline," he said.

The two Koreas remain technically at war and are separated by one of the world's most militarized frontiers.

Analysts say those tensions and other sources of gas that South Korea benefits from mean the pipeline project is unlikely to get off the ground, at least for the time being.

"Nothing will happen immediately," Vorontsov said. "But the (debt) agreement is a success - first, it will improve economic cooperation with North Korea itself and this could gradually lead to the expansion of Russia's influence in Eastern Asia."

North Korea traditionally played off China, its main economic and political backer, against the former Soviet Union until the latter's collapse in 1991. Negotiations on restructuring the debt to Russia stalled for most of the past two decades, with fresh talks starting only a year ago.

Russia, which hosted an Asia-Pacific summit earlier this month near the North Korean and Chinese borders which Pyongyang did not attend, is keen to increase its influence in Asia's fast growing economies.

Moscow ships half of its exports to Europe but, prompted by the region's debt crisis, the government wants to double the share of exports that go to the Asia-Pacific region, which now make up a quarter of the total.

At the summit in Vladivostok, gas export monopoly Gazprom signed a draft deal with Japan on a liquefied natural gas export terminal on Russia's Pacific seaboard that dealt a blow to the trans-Korea pipeline's prospects.

The outstanding debt owed by North Korea will be managed by Russia's state development bank, Vnesheconombank.

 

[pmaitra]

Sir no offense to you but do explain points 6 and 7.
More specifically how would point 6 help us Indians?I mean it would definitely be a worrying issue for us.

You are right.

Point 6 will not be beneficial to India. I should have clarified that. The header is about Win-Win situation, but that point is of detriment to India.

Point 7 (Russia selling arms to India) is certainly beneficial to India.

Let me modify my original post.

 

[Ray]

Given the sanction and the manner in which the Ukraine crisis is panning out, Russia has no option but to look East.

One of the reason why the US is acting 'soft' towards Iran is possibly to neutralise Iran so much so that Russia does not have a free access to the Indian Ocean to open up routes and trade to rest of Asia bordering the Indian Ocean and Africa wherein the Russian goods sold there are cost effective.

India will have look sharp and not lose the initiative since Russia may rope in Pakistan in her axis of influence to open up the route to Gwadar for trade beyond in Asia and Africa once the West quits Afghanistan.

 

[amoy]

Petrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With China | Zero Hedge

If it was the intent of the West to bring Russia and China together - one a natural resource (if "somewhat" corrupt) superpower and the other a fixed capital / labor output (if "somewhat" capital misallocating and credit bubbleicious) powerhouse - in the process marginalizing the dollar and encouraging Ruble and Renminbi bilateral trade, then things are surely "going according to plan."

For now there have been no major developments as a result of the shift in the geopolitical axis that has seen global US influence, away from the Group of 7 (most insolvent nations) of course, decline precipitously in the aftermath of the bungled Syrian intervention attempt and the bloodless Russian annexation of Crimea, but that will soon change. Because while the west is focused on day to day developments in Ukraine, and how to halt Russian expansion through appeasement (hardly a winning tactic as events in the 1930s demonstrated), Russia is once again thinking 3 steps ahead... and quite a few steps east.

While Europe is furiously scrambling to find alternative sources of energy should Gazprom pull the plug on natgas exports to Germany and Europe (the imminent surge in Ukraine gas prices by 40% is probably the best indication of what the outcome would be), Russia is preparing the announcement of the "Holy Grail" energy deal with none other than China, a move which would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis. One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may refrain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source.

Here is what will likely happen next, as explained by Reuters:

Igor Sechin gathered media in Tokyo the next day to warn Western governments that more sanctions over Moscow's seizure of the Black Sea peninsula from Ukraine would be counter-productive.

The underlying message from the head of Russia's biggest oil company, Rosneft, was clear: If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts and political alliances.

The Holy Grail for Moscow is a natural gas supply deal with China that is apparently now close after years of negotiations. If it can be signed when Putin visits China in May, he will be able to hold it up to show that global power has shifted eastwards and he does not need the West.

More details on the revelation of said "Holy Grail":

State-owned Russian gas firm Gazprom hopes to pump 38 billion cubic meters (bcm) of natural gas per year to China from 2018 via the first pipeline between the world's largest producer of conventional gas to the largest consumer.

"May is in our plans," a Gazprom spokesman said, when asked about the timing of an agreement. A company source said: "It would be logical to expect the deal during Putin's visit to China."

Summarizing what should be and is painfully obvious to all, but apparently to the White House, which keeps prodding at Russia, is the following:

"The worse Russia's relations are with the West, the closer Russia will want to be to China. If China supports you, no one can say you're isolated," said Vasily Kashin, a China expert at the Analysis of Strategies and Technologies (CAST) think thank.

Bingo. And now add bilateral trade denominated in either Rubles or Renminbi (or gold), add Iran, Iraq, India, and soon the Saudis (China's largest foreign source of crude, whose crown prince also happened to meet president Xi Jinping last week to expand trade further) and wave goodbye to the petrodollar.

As reported previoisly, China has already implicitly backed Putin without risking it relations with the West. "Last Saturday China abstained in a U.N. Security Council vote on a draft resolution declaring invalid the referendum in which Crimea went on to back union with Russia. Although China is nervous about referendums in restive regions of other countries which might serve as a precedent for Tibet and Taiwan, it has refused to criticize Moscow. The support of Beijing is vital for Putin. Not only is China a fellow permanent member of the U.N. Security Council with whom Russia thinks alike, it is also the world's second biggest economy and it opposes the spread of Western-style democracy."

This culminated yesterday, when as we reported last night, Putin thanked China for its "understanding over Ukraine." China hasn't exactly kept its feelings about closer relations with Russia under wraps either:

Chinese President Xi Jinping showed how much he values ties with Moscow, and Putin in particular, by making Russia his first foreign visit as China's leader last year and attending the opening of the Winter Olympics in Sochi last month.

Many Western leaders did not go to the Games after criticism of Russia's record on human rights. By contrast, when Putin and Xi discussed Ukraine by telephone on March 4, the Kremlin said their positions were "close".

The punchline: "A strong alliance would suit both countries as a counterbalance to the United States." An alliance that would merely be an extension of current trends in close bilateral relations, including not only infrastructure investment but also military supplies:

However, China overtook Germany as Russia's biggest buyer of crude oil this year thanks to Rosneft securing deals to boost eastward oil supplies via the East Siberia-Pacific Ocean pipeline and another crossing Kazakhstan.

If Russia is isolated by a new round of Western sanctions - those so far affect only a few officials' assets abroad and have not been aimed at companies - Russia and China could also step up cooperation in areas apart from energy. CAST's Kashin said the prospects of Russia delivering Sukhoi SU-35 fighter jets to China, which has been under discussion since 2010, would grow.

China is very interested in investing in infrastructure, energy and commodities in Russia, and a decline in business with the West could force Moscow to drop some of its reservations about Chinese investment in strategic industries. "With Western sanctions, the atmosphere could change quickly in favor of China," said Brian Zimbler Managing Partner of Morgan Lewis international law firm's Moscow office.

Russia-China trade turnover grew by 8.2 percent in 2013 to $8.1 billion but Russia was still only China's seventh largest export partner in 2013, and was not in the top 10 countries for imported goods. The EU is Russia's biggest trade partner, accounting for almost half of all its trade turnover.

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.

Putin did take time, however, to thank one other country apart from China for its understanding over Ukraine and Crimea - saying India had shown "restraint and objectivity".

He also called Indian Prime Minister Manmohan Singh to discuss the crisis on Tuesday, suggesting there is room for Russia's ties with traditionally non-aligned India to flourish.

Although India has become the largest export market for U.S. arms, Russia remains a key defense supplier and relations are friendly, even if lacking a strong business and trade dimension, due to a strategic partnership dating to the Soviet era.

Putin's moves to assert Russian control over Crimea were seen very favorably in the Indian establishment, N. Ram, publisher of The Hindu newspaper, told Reuters. "Russia has legitimate interests," he added.

To summarize: while the biggest geopolitical tectonic shift since the cold war accelerates with the inevitable firming of the "Asian axis", the west monetizes its debt, revels in the paper wealth created from an all time high manipulated stock market while at the same time trying to explain why 6.5% unemployment is really indicative of a weak economy, blames the weather for every disappointing economic data point, and every single person is transfixed with finding a missing airplane.

 

[amoy]

China, Russia to hold joint naval drill in politically sensitive East China Sea | South China Morning Post

Crew on the Chinese destroyer Shenyang

China and Russia will stage a naval drill in the sensitive East China Sea at the end of this month, a move analysts say could be aimed at showing their displeasure over Washington's policies regarding the Diaoyu Islands and Ukraine.

The Ministry of National Defence yesterday confirmed the Chinese-Russia naval manoeuvres, named Joint Sea-2014, would be staged in waters and air space near Shanghai and in the East China Sea.

"The naval drill, which is a regular exercise between the Chinese and Russian navies, aims to deepen pragmatic co-operation between the two militaries as well as to improve their capability to deal with maritime security threats," the ministry said in a statement.

The East China Sea has become more sensitive after Beijing announced the creation of an air defence identification zone in November. The zone includes the disputed Diaoyu Islands, known as the Senkakus in Japan, over which both China and Japan claimed sovereignty, but which are now controlled by Tokyo.

Chinese and Russian soldiers participate in the China-Russia joint military drill in Chelyabinsk, Russia. Photo: Xinhua

The drill will start at almost the same time as a scheduled visit to Shanghai later this month by Russian President Vladimir Putin.

"Russia might want to use the joint drill to remind the United States and the European Union that Moscow and Beijing are going to strengthen their 'full-fledged strategic partnership', a consensus reached by President Xi Jinping and President Putin," Shanghai-based military expert Ni Lexiong said.

Since last week, the US and EU have imposed new sanctions targeting a string of Russian individuals and companies that Washington says are linked to Putin's "inner circle" as a retaliation against Moscow's actions in Ukraine.

Beijing-based naval expert Li Jie said Beijing was also unhappy at US President Barack Obama's remarks in Tokyo that the US-Japan security treaty covered the Diaoyus, and Washington's decision to sign a new 10-year military pact with Manila, which has territorial disputes with China in the South China Sea.

"Choosing the East China Sea as the drill's location is obviously a political gesture to protest against US sanctions toward Russia, as well as Washington's intervention in China's territorial disputes with Japan and the Philippines in the East and South China seas," Li said.

Masafumi Iida, a China military analyst at the National Institute of Defence Studies in Tokyo, said the joint exercises could be seen "as a message aimed at the Japan-US alliance or to Tokyo or Washington individually".

"But I do not believe it will be so beneficial to Russia to ally itself with China over the issue of the Senkakus," he said.

Additional reporting by Julian Ryall in Tokyo

 

[W.G.Ewald]

You are right.

Point 6 will not be beneficial to India. I should have clarified that. The header is about Win-Win situation, but that point is of detriment to India.

Point 7 (Russia selling arms to India) is certainly beneficial to India.

Let me modify my original post.

I assume that last is a privilege that the ordinary DFI member does not have?

Now post #4 is time-stamped 3 hours after post #8!

Moderation on DFI has become truly Orwellian, and I don't care if I am breaking a rule to say it.

Based on your track record, I expect another infraction and deletion of this post.

 

[pmaitra]

Russia can switch to payments with India, China in national currencies crushing dollar amid sanctions - experts

Also, chances are that Russia, as one of the largest suppliers of oil and gas, will soon switch to mutual payments with India and China in the national currencies – roubles, yuans and rupees. In this case the dollar and the euro will gradually retire into the background.

Read more: Russia can switch to payments with India, China in national currencies crushing dollar amid sanctions - experts - News - Economy - The Voice of Russia: News, Breaking news, Politics, Economics, Business, Russia, International current events, Expert o

 

[Ray]

I assume that last is a privilege that the ordinary DFI member does not have?

Now post #4 is time-stamped 3 hours after post #8!

Moderation on DFI has become truly Orwellian, and I don't care if I am breaking a rule to say it.

Based on your track record, I expect another infraction and deletion of this post.

It is true the Members cannot modify their post after a certain period of time.

However, they can always modify/ amplify/correct their original post by using the 'Reply' button on the original post and then doing the needful.

I don't think the comment 'Moderation on DFI has become truly Orwellian' is a fair one.

One has to understand that there are a whole lot of views that are being aired here. Many of them are not palatable and yet there is no deletion or infraction.

I also understand that one does get riled if one's views are not given the due weightage since we all feel that we are right. If we did not feel that are view was justified, then would be post? And can we grudge someone if that poster holds a contrary view?

I would only request tolerance to views and ambiguity.

If one feels one is slighted/ insulted/ being unfairly treated, then one can always use the 'Report' button, and if one is very inflamed, then one could also send a PM to Yusuf or Singh or any other Moderator for arbitration.

 

[Twinblade]

Russia can switch to payments with India, China in national currencies crushing dollar amid sanctions - experts



Read more: Russia can switch to payments with India, China in national currencies crushing dollar amid sanctions - experts - News - Economy - The Voice of Russia: News, Breaking news, Politics, Economics, Business, Russia, International current events, Expert o

One of the big talking point of BRICS bank is the presence of SDR (statutory drawing rights) similar to SDR by IMF but exchangeable in BRICS' respective currencies and linked to international commodities price indexes unlike IMF's SDRs which are based on the weighted value of Dollar, Yen, Pound and Euro. A commodity price linked SDR (based on weighted values of highest traded commodities) would be much more stable and would be more or less immune to crash of any currency.

 

[pmaitra]

One of the big talking point of BRICS bank is the presence of SDR (statutory drawing rights) similar to SDR by IMF but exchangeable in BRICS' respective currencies and linked to international commodities price indexes unlike IMF's SDRs which are based on the weighted value of Dollar, Yen, Pound and Euro. A commodity price linked SDR (based on weighted values of highest traded commodities) would be much more stable and would be more or less immune to crash of any currency.

Thank you.

India, along with other emerging economies have been asking for reform in the voting rights in IMF and WB, but the western powers have been resisting change, as they do not want to relinquish their influence over these institutions. IMF and WB are basically like a toll-booth installed (by Dollar, Yen, Pound and Euro countries) between trade between two countries that do not use Dollar, Yen, Pound and Euro as their currency.

Can you please explain a bit more about SDR and what kind of commodities the index is linked to?

 

[Twinblade]

Can you please explain a bit more about SDR and what kind of commodities the index is linked to?

SDR is a sort of monetary reserve currency, it's an artificial form of money that cannot be used directly but has to be exchanged into one of the four currencies before use. SDR are used as collateral by countries to meet the shortfall of any particular currency. However IMF has discouraged the use of its SDRs as a supra currency and restricted its liquidity. China wants its currency linked to the IMF SDR but IMF will not budge. Currently BRICS hold around 50% of the world's foreign exchange reserve and any policy changes in US, UK, EU and Japan causes flutters in their reserves and their national currencies. One of the ideas being floated around (in a news report that I saw on RT) is commodity linked SDRs under BRICS bank. Most currencies in the beginning were coupled to a standard, most commonly, gold standard, which was abandoned as gold does not have sufficient liquidity. By linking the SDR to some of a weighted index of some of the highest traded commodities (like the stock market index is linked to the valuation of the largest companies listed on the exchange), the SDRs would have sufficient liquidity and stability, two of the most important criteria for a good currency.

 

[tarunraju]

Good. The next step should be kicking out USD and trading in native currencies.

 

[amoy]

Can America Stop Russia's Energy "Pivot" To Asia? | The National Interest

"Transnational pipelines are the contour lines of geopolitics in the twenty-first century. Russia's design is now apparent to all. America needs to show it has one as well."
Gal Luft
May 13, 2014

For centuries, European royal families forged marital alliances with friends and adversaries in order to ensure security and influence. Prominent among them was Russia. In the 300 years prior to Czar Nicholas II's 1894 marriage with Queen Victoria's granddaughter Alexandra, almost at any point Russia was tied by marriage to its European neighbors. Today, it is no longer royal blood that solidifies Russia's foreign relations but the energy pipelines that run the lifeblood of national economies.

Vladimir Putin's coercion of Europe through his control over its energy supply is widely known. But post-Crimea, his energy leverage over Europe may have reached its apex. By the end of this decade, North American liquefied natural gas (LNG) will land in Europe from the West. From the east, the Trans-Anatolian and Trans Adriatic Pipelines will open a new energy corridor from the Caspian to Europe, crowding out Russia's gas even further. To sustain Russia's economy and to maintain its position as an energy power, Putin must extend Russia's energy tentacles into Asia, where the thirst for oil and gas is insatiable.

Recently, the Russian parliament wrote off 90 percent of North Korea's debt, a gesture estimated at $10 billion, in exchange for Pyongyang's agreement to build a pipeline that would run from Sakhalin through North Korea to South Korea, the world's second largest gas importer, with the goal of supplying South Korea with 10 billion cubic meters of gas annually. In doing so, Russia will not only assign North Korea the same role it assigned Ukraine—a vulnerable energy-transit country which holds the key to an economy much larger than itself—but it could also exert influence over the third largest economy in the Asia Pacific, potentially raising South Korea's dependence on Russian gas from 6 to 30 percent.

Important as the South Korean market may be for Russia, China is an even bigger prize. Putin's ability to secure permanent access to the Chinese gas market is as crucial for his own 'Pivot to Asia' strategy as Russia's gas is crucial to China's recently declared war on smog. Putin's visit to Beijing this week provides the two neighbors an opportunity to seal a massive gas deal through a yet-to-be-built pipeline from Western Siberia to Northwestern China. This project, which has suffered endless delays over the past fifteen years, mainly due to disagreements over price, may finally become a reality as both countries need each other now more than ever before.

Relations with China are critical to another piece of Putin's pipeline strategy—his plan to penetrate the Indian energy market. Russia and India are negotiating the construction of a $30 billion pipeline—the most expensive ever—to connect Russia's Altai mountain region to the Xinjiang province in northwest China and then to northern India. Unlike the gas pipelines to Korea and China, the pipe to India will transport oil. It is a little known fact that Russia is much more of an oil exporter than a gas exporter. It exports 70 percent of its crude production while exporting only 30 percent of its gas production. From a financial standpoint, its oil revenues are almost seven times larger than gas revenues. There is no better market for Russia's oil than India, which has just displaced Japan to become the world's third biggest economy in terms of purchasing power parity.

The above three pipelines to China, India and the Koreas (should they be built) would make one third of humanity beholden to Russia's energy resources and provide Russia inordinate power on the world stage, which could make its shenanigans in Europe a fond memory. However, the United States has failed to articulate an alternative vision for Asia's energy security. In fact, energy security played almost no role in President Obama's recent visit to Asia.

To thwart Russia's energy export scheme, Washington must present its own strategy for Asian energy security and convince its allies in Asia of its advantages. This will not be easy due to Russia's geographical proximity to Asia, but there are options to consider.

First, as guarantor of South Korean security, Washington should publically take a strong position against the Russia-Korea pipeline. It should clearly express its concern to Seoul that this pipeline will not only embolden and enrich Kim Jong-un, but it will also inject Russia into the already challenging security landscape of the Korean Peninsula. Here Washington would find a common interest with Beijing, which would also prefer not to see Russia become part of the dynamics in the Peninsula.

Second, Washington should convince its Asian allies that it is committed to becoming a leading energy-exporting country and a major player in the global energy-trade system. This means expediting the permission process for export terminals for coal and LNG and the removal of the anachronistic four-decade ban on crude oil exports.

Third, the United States should enhance cooperation with Asia on unconventional gas. China owns the world's largest shale reserve. Japan is a global leader in the development of methane hydrates. According to estimates, there is more energy in the world's methane hydrates than in all the world's oil, coal and gas put together. Unlocking the secret to their safe and environmentally responsible extraction could be a game-changer in the global energy landscape.

Fourth, the United States should support measures aimed at reducing LNG prices in the Asia-Pacific to make LNG more competitive with Russian pipeline gas. The price of natural gas in the Asia-Pacific is mostly indexed to oil or oil products. In order for consumers to enjoy a competitive gas market, pricing should be indexed to spot prices that are tied more closely with supply and demand fundamentals in the region (gas-to-gas competition). However, despite the fact that the Asia-Pacific is the second largest gas market in the world, it lacks a single natural gas trading hub to facilitate the transparent exchange of the commodity and provide more competitive prices. The amount of gas currently traded via pipelines is very limited, and the market relies increasingly on LNG, which is more conducive to gas-to-gas competition. If Russia succeeds in carrying out its pipeline strategy this will undermine the prospects of an Asian trading hub, as pipeline gas is more likely to be tied to oil. This will result in perpetuation of the oil indexation to the detriment of the region's economies. Unsurprisingly, both OPEC and the Gas Exporters Country Forum (of which Russia is a member) endorsed oil indexation as the preferred pricing scheme to trade natural gas. The United States should work with the governments of the Asia-Pacific—China, Japan and South Korea—to gradually shift the gas market toward gas-to-gas competition and toward the establishment of at least one regional trading hub. This will not happen overnight but the intention and vision should be articulated in order to steer investments in natural gas infrastructure and to facilitate the emergence of a competitive and transparent market.

Finally, Washington should strive to include China and India as members of the International Energy Agency (IEA), even though those two countries are not members of the OECD and therefore technically not eligible for IEA membership. Being part of a multinational energy-security mechanism would strengthen China and India's connection to the club of rich industrialized democracies instead of to Russia, whose application for OECD has been suspended in light of its recent behavior.

Transnational pipelines are the contour lines of geopolitics in the twenty-first century. Russia's design is now apparent to all. America needs to show it has one as well.

Gal Luft is co-director of the Institute for the Analysis of Global Security and a senior adviser to the United States Energy Security Council. He is also co-chairman of the Global Forum on Energy Security.


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Peter "¢ 9 hours ago

Gal

You seem to assume that China would prefer to deal with the US rather than Russia

Major false assumption IMHO

The US is applying the same containment/encircling policy to China as it is doing to Russia

Policy makers in Washington should have thought before antagonising Russia and China at the same time

Or have the sane policy maker iin the US just been ignored?

I also doubt if India trusts the US now according to recent analyses...

US aggression for the last 20 years has damaged the US more than you may realise

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IAF101 "¢ 8 hours ago

The Indian government and the Indian people have already been coerced and bullied by the US administration into abstaining from procuring cheap Iranian oil and gas due to unilateral American sanctions against Iran.

The Indian government has grudgingly obliged at great cost (since most of India's refineries are built to handle Iranian crude) and detriment to the Indian economy to satisfy Washington D.C's own geo-political interests since India's relationship with Israel, the Arab world and the USA was of greater long term strategic interest than supporting Iran's mercurial and arrogant regime. This overture however gained nothing in return for the Indian people except for being reduced to scramble every year to satisfy the US government' enough to earn sanction "exceptions". India is not going to put itself in such a situation ever again.

I can almost guarantee that should the US government try and stand in the way of India getting access to cheap Russian oil via pipeline, there will be nobody in New Delhi who would be willing to listen no matter what threats or inducements the US offers. India is a country that remembers history and in that regard the Russian people hold greater esteem than the US government for their solid commitment to India through the years. The chance to bridge India enormous energy deficit even a little would be too vital a benefit to let pass by for any compensation or threats by the US or the West.

 

[amoy]

UPDATE 1-Russia's Gazprom plans Singapore stock exchange listing-Interfax | Reuters

May 15 (Reuters) - Russia's Gazprom is planning to list on Singapore's stock exchange in July, Interfax agency quoted a company source as saying on Thursday.

Interfax reported that state-controlled Gazprom, the country's top natural gas producer, was talking to the exchange and preparing paperwork.

Gazprom, which is negotiating a deal to supply natural gas to China, declined to comment.

Russian President Vladimir Putin hopes the negotiations will be concluded before he visits China next week, showing Moscow has alternative markets to turn to at a time of tension with the West over the crisis in Ukraine.

Russia and China are still trying to iron out price differences over the potential deal.

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Singapore? Hmmmm why not get listed in Hong Kong like Rusal is first Russian company to list on Hong Kong exchange | Business | The Guardian