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It’s impossible to understand the finer points of what’s happening on the ground in Russia and across Eurasia, business-wise, without following the annual St Petersburg International Economic Forum, happening now.
Arguably the most eye-catching panel of the forum has been the one on the post-Covid-19 “new normal” (or abnormal), and how economics will be reshaped. An important sub-section is how Russia can possibly capitalize on it, in terms of productive growth.
That was an opportunity to see IMF Managing Director Kristalina Georgieva, Russian Central Bank governor Elvira Nabiullina and Russian Minister of Finance Anton Siluanov debating at the same table.
It was Siluanov who in fact commanded all the forum-related headlines when he announced that Russia will totally ditch the US dollar in the structure of the National Wealth Fund – the de facto Russian sovereign wealth fund – as well as reduce the share of the British pound. The NWF will have more euros and yuan and more gold, while the yen’s share remains stable.
This ongoing de-dollarization process has been more than predictable. In May, for the first time, under 50% of Russian exports were denominated in US dollars.
Siluanov explained that the sales of roughly US$119 billion in liquid assets will go through the Russian Central Bank, and not through financial markets. In practice, that will be a simple technical transfer of euros to the NWF. The central bank, after all, has been steadily getting rid of the US dollars for years now.
Sooner or later, China will follow. In parallel, some nations across Eurasia, in an extremely discreet manner, are also bypassing what is de facto the currency of a debt-based economy – to the tune of tens of trillions of dollars, as Michael Hudson has been explaining in detail.
Not to mention that transacting US dollars exposes whole nations to an extra-territorial, extortionary judicial machine.
That’s not all
Let’s cut to the chase, and offer a few other choice examples of what is being discussed by top panels:
The Russian Far East: Here’s a discussion on the – largely successful – strategies for boosting productive investment in industry and infrastructure across the Russian Far East. Manufacturing in Russia grew by 12.2% between 2015 and 2020; in the Far East it was almost double the national figure, 23.1%. And from 2018 to 2020, per capita investment in fixed capital was 40% higher than the national average.
The next steps center on improving infrastructure; opening global markets to Russian companies; and, most of all, finding the necessary funds (from China? from South Korea?) for advanced tech.
The Shanghai Cooperation Organization: As I’ve seen for myself in previous editions of the forum, in terms of serious discussion the West has nothing similar to the SCO – which has evolved from its initial security focus toward a wide-ranging politico-economic role.
Russia presided over the SCO in 2019-20, when foreign policy got a fresh impetus and the socioeconomic consequences of Covid-19 were seriously addressed. Now the collective emphasis should be on how to make member nations – especially the Central Asian “stans” – attractive for global investors. Panelists include a former SCO secretary-general, Rashid Alimov, and the current one, Vladimir Norov.
Eurasian partnership: This discussion involves what should be one key node of the Eurasian Century: the International North-South Transportation Corridor. An important historical precedent applies: the 8th-and-9th centuries’ Volga trade route that connected Western Europe to Persia – and that could now be extended, in a variation of the Maritime Silk Road, all the way to ports in India.
That raises a number of questions, ranging from the development of trade and technology to the harmonious implementation of digital platforms. Here one finds panelists from Russia, India, Iran, Kazakhstan and Azerbaijan.
The Greater Eurasian partnership: Greater Eurasia is the overall Russian concept applied to the consolidation of the Eurasian Century. This discussion is largely focused on big tech, including digitalization, automated managing systems and Green growth. The question is how a radical tech transition could work for pan-Eurasia interests.
And that’s where the Russian-led Eurasia Economic Union comes in: addressing how the EAEU’s drive for a Greater Eurasian Partnership should work in practice. Panelists include the chairman of the board of the Eurasian Economic Commission, Mikhail Myasnikovich, and a relic from the Yeltsin past: Anatoliy Chubais, who is now Putin’s special representative for “relations with international organizations to achieve sustainable development goals.”
On the all-important Chinese-Russian front, permeating all the discussions at the forum, is the fact that a pool of Chinese technical knowhow and Russian energy should be more than able to solidify a massive pan-Eurasian market capable of dwarfing the West. After all, history tells us that in 1400 India and China were responsible for half of the world’s GDP.
As the West wallows in a self-induced Build Back Better collapse, the Eurasian caravan seems unstoppable. But then, there are those pesky US sanctions.
The Valdai Discussion Club Session dug deeper into the hysteria: Sanctions serving a political agenda are threatening vast swathes of the world economic and financial infrastructure. So we’re back once again to the inescapable syndrome of the weaponized US dollar – deployed against India buying Iranian oil and Russian military hardware, or against Chinese tech companies.
Panelists including Russian Deputy Finance Minister Vladimir Kolychev and Alena Douhan, the UN special rapporteur on the “negative impact of unilateral coercive measures on the enjoyment of human rights,” debated the inevitable new escalation of anti-Russian sanctions.
Another running theme underlying the forum debates is that, whatever happens on the sanctions front, Russia already has an alternative to SWIFT, and so does China. Both systems are compatible with SWIFT in software, so other nations may also be able to use it.
No less than 30% of SWIFT’s traffic involves Russia. If the financial “nuclear
“option” should ever be exercised, nations trading with Russia would almost certainly ditch SWIFT. On top of it, Russia, China and Iran – the “threat” trio facing the hegemon – have currency swap agreements, bilaterally and with other nations.
The forum in St Petersburg this year has taken place only a few days before the G7, NATO and US-EU summits – which, reduced to the status of a platform for US power projection, will graphically highlight European geopolitical irrelevance.
And taking place less than two weeks before the Putin-Biden summit in Geneva, the forum most of all performed a public service for those who care to notice, charting some of the most important practical contours of the Eurasian Century.