Comment by Riaz Haq on March 31, 2022 at 8:24pm

Putin and Xi Exposed the Great Illusion of Capitalism
Unless the U.S. and its allies mobilize to save it, the second great age of globalization is coming to a catastrophic close.


https://www.bloomberg.com/opinion/articles/2022-03-24/ukraine-war-h...

The supply of basic commodities, from wheat to nickel to titanium to oil, has been disrupted. The West is doing everything it can to “cancel” Russia from the global economic system — sanctioning oligarchs, expelling Russian banks from the global financial plumbing, and preventing Russia’s central bank from accessing its reserves. There’s talk of throwing Russia out of the World Trade Organization.

Even when they haven’t been forced to do so by law, Western companies are boycotting Russia and closing down their Russian operations. Russian consumers can no longer use Visa, MasterCard and American Express. The McDonald’s in Pushkin Square is closed — along with 850 other branches. Photos have appeared on social media of Russians standing in interminable queues for sugar and other basic foods or else fighting over remaining scraps, just as they did in the Soviet days. For its part, the Kremlin has hit back by blocking access to Facebook and threatening to imprison or fine anyone suspected of spreading “fake” news, thereby essentially closing down Western news organizations inside the country.

We Didn’t Mean It
The Western policymakers meeting this week will say they have no intention of closing down the global order. All this economic savagery is to punish Putin’s aggression precisely in order to restore the rules-based system that he is bent on destroying — and with it, the free flow of commerce and finance. In an ideal world, Putin would be toppled — the victim of his own delusions and paranoia — and the Russian people would sweep away the kleptocracy in the Kremlin.

In this optimistic scenario, Putin’s humiliation would do more than bring Russia back to its senses. It would bring the West back as well. The U.S. would abandon its Trumpian isolationism while Europe would start taking its own defense seriously. The culture warriors on both sides of the Atlantic would simmer down, and the woke and unwoke alike would celebrate their collective belief in freedom and democracy. McDonald’s would be open again in Pushkin Square — and Keynes’s various serpents would slither out of the garden.


There’s a chance this could happen. Putin wouldn’t be the first czar to fall because of a misjudged and mishandled war. Many of Russia’s most powerful people are seeing their mansions, yachts and private planes confiscated, all for an invasion they weren’t consulted about. Younger Russians, particularly in the big cities, are more liberal than their parents. Russian shoppers don’t want to return to the Soviet era.

Meanwhile in the West, Ukraine has already prompted a great rethink. As German Chancellor Olaf Scholz has proclaimed, we are at a Zeitenwende — a turning point. Under his leadership, pacifist Germany has already proposed a defense budget that’s larger than Russia’s. Meanwhile, Ukrainian immigrants are being welcomed by nations that only a few months ago were shunning foreigners, and, after a decade of slumber in Brussels, the momentum for integration is increasing.

But this turning point can still lead in several directions. The chances of a regime change in the Kremlin remain slim, given Putin’s popularity and terror machine. Western Europe has heard pious words about integration and immigration before. And look at the West’s leaders! Joe Biden hardly conveys an image of world-changing dynamism; after his initial heroics, Olaf Scholz greeted Volodymyr Zelenskiy’s speech to the German parliament with pudding-like inertia; Emmanuel Macron is bent on winning an election while trying to look like Zelenskiy, in hoodie and stubble; while Boris Johnson has dared to compare the Ukrainian resistance to Brexit.

Comment by Riaz Haq on March 31, 2022 at 8:58pm

#India more than doubles price of locally produced #gas.The price of gas from regulated fields of state-owned ONGC and Oil India Ltd will rise to a record $6.10 per million British thermal unit from the current $2.90. #Energy #Economy #BJP #Modi https://www.livemint.com/industry/energy/india-more-than-doubles-do...

The Central Government on Thursday more than doubled the price of domestically produced natural gas for the six months beginning tomorrow (1 April), reflecting a surge in global prices.

The Petroleum Planning and Analysis Cell of the federal oil ministry announced the new prices today.

This will raise the prices of gas sold to households, the power sector, industries and fertiliser firms, adding to overall inflation.

As per a notification issued by the oil ministry's PPAC, the price of gas from regulated fields of state-owned Oil and Natural Gas Corp Ltd and Oil India Ltd will rise to a record $6.10 per million British thermal unit from the current $2.90.

The rate paid for difficult fields like deepwater will rise to $9.92 for April-September from $6.13 per mmBtu, the notification stated.

India links prices of locally produced gas from old fields to a formula tied to global benchmarks, including Henry Hub, Alberta gas, NBP and Russian gas.

High natural gas prices will boost earnings of producer ONGC, Oil India Ltd and Reliance Industries.

India's annual retail inflation exceeded 6% for the second consecutive month in February.

Comment by Riaz Haq on April 1, 2022 at 7:49am

Arif Rafiq
@ArifCRafiq
The chairman of an Indian think tank affiliated with the RSS — the parent group of India’s ruling BJP — floats the possibility of an India-Russia-China axis:

https://twitter.com/ArifCRafiq/status/1509880440932478982?s=20&...
------------

Ukraine crisis: The war that is changing relations, rules
S Gurumurthy, Chairman, VIF



https://www.vifindia.org/article/2022/march/28/ukraine-crisis-the-w...

The Ukraine war seems to have dented the US global leadership in more than one sense. First, it has delivered the most telling message that the US can’t protect its own protégé. Next, that it had to solicit a virtual meeting between Biden and Xi Jinping (XJP) to get China to the US side or to end the war itself, exposed its weakness. Donald Trump would perhaps have handled Russia and Ukraine differently, not allowed China to be the proverbial monkey between two tigers, the US and Russia.

Anyway the two-hour talk Biden had with XJP did not go well for him. XJP reportedly snubbed Biden saying “those who tied the bell to the tiger must untie it,” clearly blaming NATO for the war. XJP used the talk to advance China’s claim to be equal to the US, saying they should jointly shoulder “international responsibilities” for world peace and tranquility. According to a Chinese report, XJP seems to have said that one hand cannot clap, suggesting that NATO should have a dialogue with Putin and address his security concerns, implying NATO expansion as the issue. XJP, of course, has also spoken in support of the principles of sovereignty and territorial integrity of all states. He seems to have insisted on bringing the China-US ties under turmoil over a host of issues, including Taiwan, Hong Kong, Xinjiang and Tibet, on “right track” — something completely beyond the agenda of Biden on that day.

The US media had reported that Biden threatened XJP. On the contrary, he seems to have got snubbed. Biden’s effort to wean China away from Russia has failed at the minimum. If this is what the US got from China, The Wall Street Journal reported that Saudi Arabia and the UAE declined calls from Biden to ease oil prices unless the US supported them in Yemen and elsewhere. Arab allies of the US have refused to toe its line. Israel did criticise the Russian attack but its stand was so nuanced as not to take the side of the West. Turkey’s position is identical to Israel’s.

Al-Jazeera even sees a strong alliance between Russia and UAE. Another collateral setback to the US is Syrian president Assad’s visit (after 11 years) to UAE about which the US could only lament that it was “disappointed and troubled”. Syria and Russia are close. On top of it all, Saudi Arabia, whose oil has been priced in US dollars for five decades, is considering pricing it in Yuan for sales to China. One more important development. The Chinese foreign minister was invited for the first time to the meeting of the Organisation of Islamic Cooperation. These are not ordinary developments. The Ukraine war has undoubtedly eroded US influence over even its allies.

---------

China and India have had border clashes for the last two years. Surprisingly, its foreign minister Wang Yi is visiting Delhi on March 25 — a significant development. India’s independent position on Ukraine is itself a message to China that India would withstand US pressure. If it can lead to some trust and understanding between China and India on the borders, that can pave the way for an informal Russia-China-India axis for future. Naftali Bennett, the Prime Minister of Israel, a US ally, is making a four-day long visit to India in April first week at the invitation of “his friend” Indian Prime Minister Modi. India is boldly going ahead with the purchase of Russian oil amid US sanctions on Russia.

Comment by Riaz Haq on April 1, 2022 at 7:50am

Ukraine crisis: The war that is changing relations, rules
S Gurumurthy, Chairman, VIF



https://www.vifindia.org/article/2022/march/28/ukraine-crisis-the-w...

-----


Having pushed Ukraine into war, the US does not know how to save it. Having started it, Russia does not know where to end it. Having been pushed into the war, Ukraine does not know how to come out of it. It accuses its adversary Russia saying it is an invader and charges that its friends are betrayers. The UN Security Council keeps on meeting without any result. The global TV network for which the war is a reality show, a boon, keeps demonising Russia and valourising Ukraine. What the desperate Ukraine needs is a ceasefire. It is running from pillar to post — from India to Turkey to France, to Israel, to Japan — pleading with them to talk to Putin for a ceasefire. Everyone is talking to everyone else.


--------

Though India has not voted for Russia, it has taken a firm position on the discovery of a bio-weapon facility in Ukraine funded by America. And America, despite loosely calling India shaky on the Ukraine war, has not applied the CAATSA law to stop the sale of Russia’s missile system to India. Undoubtedly, the Ukraine war diplomacy has shown India’s rising stature. The greatest tribute to India’s policies came from the most unlikely of quarters, Pakistan. Praising India’s foreign policy as free and independent, Prime Minister Imran Khan said, “India is allied with America and is part of the Quad alliance and yet it is neutral on Ukraine, imports oil from Russia despite US sanctions, because its policy is oriented to the betterment of its own people.”

Shift away from the dollar?
The war’s collateral impact may be on the US dollar and the global financial order itself. With the dollar-based globalisation already under stress, the role of the greenback in the global financial system may decline. The dollar power enabled dominance of the financial economy over the real economy, particularly the commodity economy. The US sanctions which are bound to affect the Russian oil sale, may also affect the US dollar.

The strength of the US dollar depended, said two Harvard economists in 2006, not on the laws of economics but on the laws of physics, which said a dark matter sustains the universe. The dark matter which sustains the dollar value, they said, is the insurance that the US system and geopolitical power provides to the dollar. That insurance is what is under stress since 2008. With the rise of Asia and China, the US dollar cannot be said to continue to have the same insurance value. The share of USD in the global forex reserves has touched a 25-year low of about 59 percent.

If important nations shift to their own fiat currency based trade like the Rupee-Ruble arrangement between India and Russia and if an alternative to SWIFT can be found, the move away from dollar can accelerate. For instance, if India and China begin paying for their trade in their fiat currencies rated to the US dollar and at the year-end pay the net in terms of the dollar, the overall demand for the dollar will contract rapidly. It is the demand for the dollar that sustains its value. These kinds of developments post the Ukraine war can have a far reaching impact.

To end, in just weeks the needless Ukraine eruption has disrupted the world as if forever. Thanks to it, the post-cold war world already stands on its head — disrupting old relations, making new ones, undermining existing power centres, creating new, multiple influence centres. Its impact will keep unfolding for a long time.

Comment by Riaz Haq on May 16, 2022 at 11:18am

Opinion Biden’s sanctions against Russia are a double-edged sword
Image without a caption
By Fareed Zakaria

https://www.washingtonpost.com/opinions/2022/05/12/biden-sanctions-...

...the unprecedented nature of these measures (US sanctions against Russia) is producing concerns around the world that the United States has “weaponized” its financial power and could lead, over time, to the decline of the dollar’s dominance, which is what gives America its financial superpowers in the first place.

I’ve been hearing about this firsthand from three sources I trust. The first, in New Delhi, recently told me about a conversation that took place at the highest levels of India’s government. The topic: how to make sure that the United States could never do to India what it has just done to Russia. The second, from Brussels, where staff at the European Commission has been tasked — even while working with Washington on the sanctions — with finding ways to reduce the role of the dollar in its energy imports. The third, an Asian observer of China, speculated that the overly severe lockdowns in Shanghai — which involved the rationing of food and basic supplies — might be part of an effort by Beijing to experiment with a scenario in which it faced economic sanctions from Washington (perhaps after an invasion of Taiwan).

A debate is raging around the world about whether the dollar’s total dominance of the international financial system is waning. Even Goldman Sachs and the IMF have warned that that might well happen. I tend toward the opposite view: Namely, that you can only beat the dollar if you have an effective alternative, which so far does not exist.

But it’s clear that many countries — from hostile powers such as China and Russia to friendly nations such as India and Brazil — are working hard on ways to reduce their vulnerability to Washington’s whims. None of these efforts has so far gained much traction, though it is worth noting that the share of global foreign exchange reserves held in dollars has declined from 72 percent to 59 percent over the past two decades.

Partly this is because the United States appears less stable and predictable in the use of its extraordinary privilege. In the two decades preceding Russia’s invasion, Washington massively ramped up sanctions for all kinds of reasons — by more than 900 percent. Many of these measures were overreactions and should be rolled back. After 9/11, Washington put in place highly intrusive measures aimed at tracking money going to terrorists. It has inflicted harsh punishments on banks that did not adhere to all U.S. sanctions. It has imposed sanctions on Iran, Venezuela, North Korea, Cuba and other countries often simply to satisfy domestic critics who wanted to “do something” without paying much of a price. This type of economic warfare has failed to change the regimes in these countries but has caused widespread misery for ordinary people in them. Sanctions against Russia are aimed at policy change, not regime change, and therefore could be more effective.

----------
The dollar maintains its crucial role in the international system because the United States has the world’s largest economy. It also has the most liquid debt markets, its currency floats freely, and, crucially, it is regarded as a country based on the rule of law and not one prone to arbitrary and unilateral actions. That last criterion is not one that Washington has lived up to in recent years. Biden should make sure that, in fighting this battle against Russia, he does not erode America’s unique financial superpower.

Comment by Riaz Haq on May 31, 2022 at 4:59pm

Why #India is the big winner as #EU's #Russia #oil ban redraws energy trade map.India’s new role comes as it loads up on discounted #Russian #crude, which it has been refining at a torrid pace and then exporting refined products. #UkraineRussiaWar #energy https://www.marketwatch.com/story/why-india-is-set-to-win-big-as-eu...

https://twitter.com/haqsmusings/status/1531786077320515585?s=20&...

‘We have a growing suspicion that India is becoming the de facto refining hub for Europe’: RBC’s Tran

In an unexpected twist, the European Union’s plan to ban imports of Russian crude in response to Moscow’s invasion of Ukraine appears to be transforming India’s role in the global oil trade.

“As the EU weans from Russian refined product, we have a growing suspicion that India is becoming the de facto refining hub for Europe,” said Michael Tran, global energy strategist at RBC Capital Markets, in a Tuesday note.

It’s all part of the seismic displacements taking place across the physical market for crude and products in the aftermath of Russia’s late-February invasion and the resulting rounds of sanctions placed on Moscow.

EU leaders agreed Monday to embargo most Russian oil imports into the bloc by year-end as part of new sanctions agreed at a summit. While the agreement marks a hard-fought policy victory for the West, the reshuffling of global trade flows are set to prove economically inflationary for all nations involved as long as the war drags on, Tran said.

That will make sourcing barrels more expensive and keep upward pressure on oil pricing, the analyst said. The U.S. oil benchmark CL.1, 0.44% CLN22, 0.44% ended the day lower on Tuesday after earlier trading near a three-month high just shy of $120, but ended may with a strong gain. Brent crude BRN00, +0.58%, the global benchmark, ended higher and was also up for the month.

Meanwhile, India’s new role comes as it loads up on discounted Russian crude, which it has been refining at a torrid pace and then exporting refined products (see chart below).

Here’s how the puzzle pieces fit together, according to Tran:

India is buying record amounts of severely discounted Russian crude, running its refiners above nameplate capacity, and capturing the economic rent of sky-high crack spreads and exporting gasoline and diesel to Europe. In short, the EU policy of tightening the screws on Russia is a policy win, but the unintended consequence is that Europe is effectively importing inflation to its own citizens. This is not only an economic boon for India, but it also serves as an accelerator for India’s place in the new geopolitically rewritten oil trade map. What we mean is that the EU policy effectively makes India an increasingly vital energy source for Europe. This was historically never the case, and it is why Indian product exports have been clocking in at all-time-high levels over recent months.
So does India’s example mean that Russian crude no longer bound for Europe will just end up elsewhere? That’s unlikely, according to Tran.

He expects the EU ban to back out around 1.2 million to 1.5 million barrels a day (mbd) of Russian exports. They will have to find a home elsewhere, particularly Asia.

So far, China has yet to increase imports, let alone Russian barrels, but scope for India, which has “already been backing up the truck and buying discounted Russian barrels in size,” to further boost purchases appears limited. Over time, Russian storage will fill and production will begin to falter, Tran said.

He noted that Russian floating crude storage now stand near 2 million barrels, down from 3.5 million a month ago, while refined products remain unchanged near 4 million barrels.

“This implies that barrels have continued to move in a relatively fluid state and storage levels have yet to be stressed, for now, but given the ban, the directional arrows of process would suggest that the wheels are in motion,” he said.

Comment by Riaz Haq on June 1, 2022 at 4:09pm

Arif Rafiq
@ArifCRafiq
Bangladesh says it seeks to learn from India how it’s managed to import discounted Russia oil without being penalized by the US.

Smaller developing countries envy the exception given to India by the US. They see India as having its cake & eating it too.

https://twitter.com/ArifCRafiq/status/1532083876163624965?s=20&...

----------

Momen seeks advice from New Delhi on purchase of Russian oil
India’s oil purchases from Russia have more than doubled from last year, reports BBC

Foreign Minister AK Abdul Momen on Monday said he sought suggestions from India on how they are managing their oil purchases from Russia, noting that the energy issue has become a real problem for Bangladesh too.

“We are dependent on energy (import). Russia offered us energy and wheat. It has become a real problem. We are afraid of the energy crisis. We sought India’s suggestions on how they are doing it. This is more of a friendly discussion,” he told reporters, apparently keeping the fear of sanctions in mind.

Momen attended the two-day NADI Conclave in Guwahati on May 28-29, together with his Indian counterpart S Jaishankar.

According to BBC, the Indian government has defended the move to buy Russian oil, saying what it buys from Russia in a month is less than what Europe buys from Russia in an afternoon.

As calls continue for India to keep its distance from Moscow over the Ukraine issue, its oil purchases from Russia have more than doubled from last year.

India has taken advantage of discounted prices to ramp up oil imports from Russia at a time when global energy prices have been rising.

Without naming any country, Momen said: “You are seeing that they keep bossing us and you (journalists) also encourage them. Every day, they come up with new issues. We used to call them development partners. They do not pay for the development but keep giving advice.”

Momen also claimed that to impede the development, they put forward many things and added various conditions to create instability.

“These are not acceptable,” he added.

Responding to a question, the foreign minister said Bangladesh, being a peace-loving country, always welcomes stability in the world.

“We are very inter-dependent,” he said, adding that Bangladesh will get affected if there is instability in the USA and Europe – two big markets for Bangladesh’s export.

At the same time, if there is instability in the Middle East, Bangladesh’s remittance earnings will get hurt, he said.

“We do not want to get into any problem. We want peace in the world,” Momen said, adding that the rich countries will also be affected and it is good for all to end the war as soon as possible.

Comment by Riaz Haq on June 15, 2022 at 5:24pm

US says China’s support for Russia over Ukraine puts it on ‘wrong side of history’
‘China claims to be neutral, but its behavior makes clear that it is still investing in close ties to Russia,’ state department says

https://www.theguardian.com/us-news/2022/jun/15/us-china-russia-ukr...

Xi Jinping has assured Vladimir Putin of China’s support on Russian “sovereignty and security” prompting Washington to warn Beijing it risked ending up “on the wrong side of history”.

China has refused to condemn Moscow’s invasion of Ukraine and has been accused of providing diplomatic cover for Russia by blasting western sanctions and arms sales to Kyiv.

China is “willing to continue to offer mutual support [to Russia] on issues concerning core interests and major concerns such as sovereignty and security,” state broadcaster CCTV reported Xi as saying during a call with Putin.


It was the second reported call between the two leaders since Putin launched his invasion of Ukraine on 24 February.

According to CCTV, Xi praised the “good momentum of development” in bilateral relations since the start of the year “in the face of global turmoil and changes”.

Beijing was willing to “intensify strategic coordination between the two countries”, Xi reportedly said.

The Kremlin said the two leaders had agreed to ramp up economic cooperation in the face of “unlawful” western sanctions.

“It was agreed to expand cooperation in the energy, financial, industrial, transport and other areas, taking into account the situation in the global economy that has become more complicated due to the unlawful sanctions policy of the west,” the Kremlin said following the phone call.

But the United States swiftly weighed in with a frosty retort to Beijing’s expressed alignment with Moscow.

“China claims to be neutral, but its behavior makes clear that it is still investing in close ties to Russia,” a US state department spokesperson said.

Washington was “monitoring China’s activity closely”, including how, nearly four months into Russia’s war in Ukraine, the Asian giant was “still echoing Russian propaganda around the world” and suggesting Moscow’s atrocities in Ukraine were “staged,” the official said.

“Nations that side with Vladimir Putin will inevitably find themselves on the wrong side of history.”

The west has adopted unprecedented sanctions against Russia in retaliation for its invasion of Ukraine, and Moscow considers that Europe and the United States have thus caused a global economic slowdown.

Moscow is also looking for new markets and suppliers to replace the major foreign firms that left Russia following the invasion.

The European Union and the US have warned that any backing from Beijing for Russia’s war, or help for Moscow to dodge western sanctions, would damage ties.

Once bitter cold war enemies, Beijing and Moscow have stepped up cooperation in recent years as a counterbalance to what they see as US global dominance.

The pair have drawn closer in the political, trade and military spheres as part of what they call a “no limits” relationship.

Last week they unveiled the first road bridge linking the two countries, connecting the far eastern Russian city of Blagoveshchensk with the northern Chinese city of Heihe.

The leaders’ call on Wednesday fell on Xi’s 69th birthday and was their first reported communication since the day after Russia launched its Ukraine invasion.

Beijing is Moscow’s largest trading partner, with trade volumes last year hitting $147bn, according to Chinese customs data.

Comment by Riaz Haq on June 25, 2022 at 4:09pm

India's Russian coal purchases spike despite sanctions

https://www.reuters.com/markets/commodities/exclusive-indias-russia...


India's Russian coal buying May 27-June 15 up 6-fold-govt data
India's Russian oil buying May 27-June 15 up 31-fold-govt data
June Russia coal imports seen at multi-year high - Refinitiv
Bulk shipments of Russian thermal coal began third week of May


India's purchases of Russian coal have spiked in recent weeks despite global sanctions on Moscow, as traders offer discounts of up to 30%, according to two trade sources and data reviewed by Reuters.

Russia, facing severe Western sanctions over its invasion of Ukraine, warned the European Union in April against sweeping sanctions on coal, saying they would backfire as the fuel would be redirected to other markets.

India has refrained from condemning Russia, with which it has longstanding political and security ties, while calling for an end to violence in Ukraine. New Delhi defends its purchases of Russian goods as part of an effort to diversify supplies and argues a sudden halt would jack up world prices and hurt its consumers.

U.S. officials have told India there is no ban on energy imports from Russia but they do not want to see a "rapid acceleration".

Yet as European importers shun trade with Moscow, Indian buyers are lapping up huge quantities of Russian coal despite high freight costs.

Its purchases of coal and related products jumped more than six-fold in the 20 days through Wednesday from the same period a year earlier to $331.17 million, according to unpublished Indian government data reviewed by Reuters.

Indian refiners similarly have snapped up cheap Russian oil shunned by Western countries. The value of India's oil trade with Russia in the 20 days through Wednesday jumped more than 31-fold to $2.22 billion, the data showed.

India's trade ministry did not immediately respond to a request for comment on Saturday.

"The Russian traders have been liberal with payment routes and are accepting payments in Indian rupee and United Arab Emirates dirham," one source said. "The discounts are attractive, and this trend of higher Russian coal purchases will continue."

COAL BUYING TO CONTINUE
Offshore units of such Russian coal traders as Suek AG, KTK and Cyprus-based Carbo One in places including Dubai and Singapore offered discounts of 25% to 30%, triggering bulk purchases of Russian thermal coal by traders supplying to utilities and cement makers, the sources said.

The second source said the Singapore-based unit of Suek was also accepting payments in dollars.

Suek and KTK did not immediately respond to requests for comment. Reuters could not immediately reach Carbo One.

The EU ban has barred new coal contracts and by mid-August will force members nations to terminate existing ones.

India bought an average $16.55 million of Russian coal a day in the three weeks through Wednesday, more than double the $7.71 million it bought in the three months after Russia's Feb. 24 invasion, according to Reuters calculations.

Oil purchases averaged $110.86 million a day in the 20-day period, more than triple the $31.16 million it spent in the three months ended May 26.

Indian bulk buying of Russian coal is set to continue, with June imports expected to be the most in at least seven and a half years, Refinitiv Eikon ship tracking data showed.

Bulk shipments of Russian thermal coal started reaching India in the third week of May, with orders mainly from cement and steel firms and traders, according to shipping data compiled by an Indian coal trader.

Comment by Riaz Haq on June 29, 2022 at 8:29am

#India's Top Cement Maker Paying for #Russian #Coal in #Chinese #Yuan. India tried setting up an #INR payment mechanism for #trade with Russia, but that has not materialized. Chinese businesses have used the yuan in trade settlements with Russia for years https://money.usnews.com/investing/news/articles/2022-06-29/exclusi...

India's biggest cement producer, UltraTech Cement, is importing a cargo of Russian coal and paying using Chinese yuan, according to an Indian customs document reviewed by Reuters, a rare payment method that traders say could become more common.

UltraTech is bringing in 157,000 tonnes of coal from Russian producer SUEK that loaded on the bulk carrier MV Mangas from the Russian Far East port of Vanino, the document showed. It cites an invoice dated June 5 that values the cargo at 172,652,900 yuan ($25.81 million).

Two trade sources familiar with the matter said the cargo's sale was arranged by SUEK's Dubai-based unit, adding that other companies have also placed orders for Russian coal using yuan payments.

The increasing use of the yuan to settle payments could help insulate Moscow from the effects of western sanctions imposed on Russia over its invasion of Ukraine and bolster Beijing's push to further internationalise the currency and chip away at the dominance of the U.S. dollar in global trade.

The sources declined to be identified as they are not authorized to speak to the media. UltraTech and SUEK did not respond to a request seeking comment.

"This move is significant. I have never heard any Indian entity paying in yuan for international trade in the last 25 years of my career. This is basically circumventing the USD (U.S. dollar)," a Singapore-based currency trader said.

The sale highlights how India has maintained trade ties with Russia for commodities such as oil and coal despite the western sanctions. India has longstanding political and security ties with Russia and has refrained from condemning the attack in Ukraine, which Russia says is a "special military operation".

It was not immediately clear which bank opened a letter of credit for UltraTech and how the transaction with SUEK was executed. SUEK did not respond to a request seeking comment.

India has explored setting up a rupee payment mechanism for trade with Russia, but that has not materialized. Chinese businesses have used the yuan in trade settlements with Russia for years.

For Indian trade settlements using the yuan, lenders would potentially have to send dollars to branches in China or Hong Kong, or Chinese banks they have tie-ups with, in exchange for yuan to settle the trade, two senior Indian bankers said.

"If the rupee-yuan-rouble route turns out to be favourable, the businesses have every reason and incentive to switch over. This is likely to happen more," said Subash Chandra Garg, a former economic affairs secretary at India's finance ministry.

India's bilateral trade with China, for which companies largely pay in dollars, has flourished even after a deadly military clash between the two in 2020, though New Delhi has increased scrutiny on Chinese investments and imports, and banned some mobile apps over security concerns.

An Indian government official familiar with the matter said the government was aware of payments in yuan.

"The use of the yuan to settle payments for imports from countries other than China was rare until now, and could increase due to sanctions on Russia," the official said.

---
Business units of Russian coal traders in Dubai have become active hubs for facilitating deals with India in the recent weeks, as Singapore has grown wary of provoking western nations that invoked sanctions against Russia, said multiple coal traders based in Russia, Singapore, India and Dubai.

Comment

• ‹ Previous
• 1
• 2
• 3
• 4
• 5
• 6
• Next ›
• Page