Amidst the pulsating global economy, Russia’s Finance Minister Anton Siluanov shares insights into the steps taken to weather the perceived onslaught from the U.S. dollar.
He gives an account of Russia’s strategy in maneuvering through the economic barriers set up due to the sanctions imposed by the U.S. government in response to the Russia-Ukraine conflict. Siluanov further lays emphasis on the critical role of national currencies for bolstering trade activities.
The U.S. dollar conundrum
The finance minister traces the roots of the current economic turbulence to a significant shift in the dynamics of the Russia-U.S. financial relationship.
Rather than Russia being the provocateur, he contends that it was the U.S. dollar that set the wheel of contention rolling. As a result, the countryfound itself in a precarious situation, having to navigate the economic terrain with limited access to dollar-based exchange.
This, in turn, spurred the country to explore alternatives, seeking practical and reliable mechanisms for settling accounts between its importers and exporters. The aim has been to ensure a smooth flow of foreign economic activity despite the impediments posed by the sanctions.
In its quest for alternatives, Russia looked inwards, focusing on the utilization of national currencies for bilateral settlements. This is a move that has seen positive outcomes, particularly in its dealings with countries like China and Iran.
Russian Prime Minister Mikhail Mishustin affirms that as of May, a substantial 70% of Russia-China settlements were successfully carried out using their national currencies.
In a similar vein, Iran has seen an impressive 60% of bilateral trade settled using the Russian ruble and the Iranian rial, according to Hadi Tizhoush Taban, head of the Iran-Russia Joint Chamber of Commerce.
Russia on America’s debt dilemma
Siluanov also delves into the U.S. economic landscape, specifically concerning the nation’s towering debt situation. He attributes the debt issue largely to what he considers substandard economic policies.
Despite the recent bipartisan deal signed by President Joe Biden to suspend the country’s debt ceiling, Siluanov views the situation as far from settled.
Given the U.S.’s ability to print money as needed, a default is seen as unlikely. However, the crux of the matter lies in political regulation and the implications of letting the deficit and debt exceed certain limits.
As it stands, the U.S.’s national debt hovers around a staggering $31.4 trillion, with Japan and China owning a significant share.
As Siluanov sees it, the U.S.’s unstable internal economic situation serves as a catalyst for supporting settlements in national currencies and advocating for de-dollarization of trade markets.
The uncertainty surrounding how countries like the U.S. will manage their economic future is a point of concern for Russia.
Questions regarding the inflation rates, the amount of money that will be printed, and whether debt-ceiling agreements will be reached create a case for the necessity of de-dollarization.
As the country navigates through these economic challenges, the country seeks to establish a robust and independent economic system.
By fostering relationships with like-minded nations and employing national currencies for trade, Russia is determined to withstand the repercussions of the sanctions and the ensuing U.S. dollar onslaught.
