De-dollarization of the Russian Economy: Myth or Uunavoidable Reality?

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Earlier this month, the Russian Ministry of Finance announced the program of de-dollarization of the national economy, triggering widespread discussion in intellectual and journalistic circles.

According to Ivan Danilov, author of the Crimson Alter blog, the more frequent the discussions about de-dollarization in the Kremlin, the Russian government, the Central Bank and the State Duma, the more active the “media campaign” becomes which aims to ordinary Russians that giving up the dollar is impossible and would be extremely damaging to their savings.

“The propaganda for the use of US money and increasing the vulnerability of the Russian economy to Washington’s restrictive measures involves media outlets, economists, public opinion leaders and famous bloggers,” he said. It is made to intimidate Russian citizens with a “medieval” future without the presence of the dollar in their lives, he continued to explain.

In this context, he believes, “just look” for the opinions of the Western experts and not the Russian “Americanophiles” about the existing international dollar-based economy. Thus, former UK Trade Minister, legendary asset manager of Goldman Sachs, as well as president of the famous British think tank Chatham House and financier, Jim O’Neill, told the US television channel CNBC that the dollar plays a role disproportionately large in the global financial system and called it “a problem”.

As an example of his idea, the economist pointed to the fact that the share of the US economy in the world GDP has dropped to less than 20%, which does not correspond to the dominant role the dollar maintains in international trade.

Another famous figure, European Commission President Jean-Claude Juncker, called it “absurd” for Europe to pay for 80% of its fuel exports in US Dollars, as only 2% of deliveries are from the United States.

The official’s statement has to be considered with special attention, not least because he has an in-depth knowledge of economics, having been Luxembourg’s finance minister for more than 10 years, Danilov recalls.

“He knows what he is talking about, and when he says that the European currency must necessarily become ‘the face and tool of the new sovereign Europe’ these words are linked to really serious intentions,” writes the author.

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The main argument in the narrative of those who speak out against the dollar’s withdrawal, says Danilov, is the idea that the US is the “hegemonic force” in the world and that would logically mean that the world must use their currency.

However, the author points to two “fundamental” problems in this paradigm.

“First, US hegemony to a great extent (of course not at all) depends precisely on the status of the dollar. Second, the very certainty that it is well-suited to American hegemony is more akin to a very small Russiann Americanophiles,” he said.

Meanwhile, independent experts, including Westerners, all warn of the risks of the system set up. Thus, political scientist Ian Bremmer recently stated in the course of a financial forum:

“This geopolitical recession is actually quite simple, it’s the end of the US-led world order, and we still do not know what will replace that world order.”

This, said Denisov, proves that it is not the Kremlin that is spreading the idea about the end of the unipolar world led by Washington, but this is stated by the leading Western experts.

“In the context of the rupture of the existing system, clinging to the currency of a hegemonic force that is ceasing to exist is not only foolish but an almost criminal mistake against the future of our country [Russia], which has played (and will still play) one of the key roles in dismantling the ‘American world’,” stressed the author.

According to him, the dominance of the dollar will certainly “not be settled tomorrow”, but this process will better protect Russia from the persistent policy of US sanctions.

“A cautious and calculating firmness is the best path to success, and this principle fits very well with the question of the de-dollarization of the Russian and international financial system,” concluded Danilov.

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