In a major development, India has officially joined the recent announcements of Russia and China; all three parties will entirely eliminate the USD from inter-national transactions.
India has announced it will pay for the supply of Russian S-400 anti-missile systems in rubles, while China plans to make bilateral agreements in national currencies by the end of that year, Russian policymakers said.
The contract for delivery of Russian systems S-400 to New Delhi was closed on October 5 and estimated at $5 billion.
The greatest benefit of transactions in national currencies is the absence of currency fluctuations. An equally important problem in trade involving US dollars is the high probability of sanctions, which Washington “distributes” this year in all directions.
In April, Indian media reported that Delhi’s financial institutions froze about two billion dollars allocated to pay for major projects, including the reconstruction of the Russian nuclear submarine INS Chakra. The reason for this was that Washington included Russia’s state-controlled arms export company Rosoboronexport on the sanctions list, which for banking institutions practically means prohibiting any transactions in the US currency.
Even with US restrictions, India has opted to maintain relations with the most reliable partner in the field of military-technical cooperation and arms supply, ie Russia.
According to the World Peace Research Institute in Stockholm (SIPRI), from 2007 to 2017, Moscow provided arms to New Delhi worth $24.5 billion, while Washington – only $3.1 billion.
The Russian-Indian negotiations involve not only the supply of weapons, but also civilian products.
“The share of export rubles payments is 20%, while in imports it is about 21%,” said Russian Deputy Prime Minister Yuri Borisov, adding that Moscow will increase “payments in national currencies as a means of resolving the problem of default.”
Russia’s Vnesheconombank (VEB) director Igor Shuvalov has stated that Russia and China have their own channels of interaction and that Beijing is keen to use them.
The banker pointed out that bilateral consultations will take place in the coming weeks, during which the interaction between the financial institutions of both countries will be decided.
Russia and China are increasingly canceling contracts in dollars, given the large growth in their trade. Last year alone, trade between Moscow and Washington was $23.6 billion, while between Russia and China was $84.9 billion, a difference of almost 360%.
The three largest developing nations, namely Russia, China and India, have shown the world how to get rid of dependence on the dollar. Bilateral trade in these countries’ national currencies opens up prospects for other growing economies to be able to get rid of the hegemony of the dollar.