The role of ruble in Russian geopolitical visions
Povilas Žielys2009 03 09
The global financial crisis affected Russia, including the flight of capital from the country after the war in Georgia, and possible budget deficit because of lowered oil prices. But some Russians were rejoicing over the crisis. In order to understand that it is necessary to recall certain past events.
The year 2001. The closed conference „Globalization and Probable Crisis of Global Reserve Currencies“ is held in Moscow under the auspices of President‘s Administration. Geopolitician A.Dugin delivers his presentation. He tries to convince that positions of the USD as a global reserve currency are based on the geopolitical hegemony of the United States. In 1973 the world was divided into three geoeconomic zones: the United States, Europe and Pacific Ocean Region. At the same time another two financial centers – Europe and Japan – were legalized, and the emergence of complementary reserve currencies - Euro and Yen – was anticipated. According to A.Dugin, only the collapse of the American hegemony (and, consequently USD) would give Russia the chance of rebirth.
In 2007, the mortgage crisis in the United States turned out into the global financial crisis in less than one year period. It could seem that rapidly going down share prices would certainly break the hegemony of the US and dollar. What should Russia do in this situation? How could it possibly take its chance for rebirth?
A famous Russian economist M.Chazin, the author of the concept of the multi-currency world, is convinced that hegemony of the USD would soon come to an end and the world would probably be divided into five currency zones: USD, Euro (EU), Yuan (China), Golden Dinar (Arab countries) and Ruble (Russia). According to the economist, today the Russian Government has to take all its efforts in order to consolidate domination of ruble in the region. „Otherwise Russia might face catastrophic consequences: western Russia would enter Euro zone, southern Russia - the Muslim, and Eastern Russia - the Chinese“, said M.Chazin.
It seems that A.Dugin and M.Chazin‘s ideas were taken into consideration by the Kremlin. During the St.Petersburg Economic Forum in June 2008, president D.Medvedev set the following goal: to make Moscow a powerful financial center, and ruble one of the key reserve currencies in the region.
On 5 November 2008, in his statement to the Parliament, D.Medvedev specified this goal by indicating that positions of ruble should be strengthened by settling accounts for the Russian natural gas and oil. In 17 November this proposal was discussed during the meeting of ministers of finance and heads of central banks of CIS countries.
In December 2008, the Russian media released information on the negotiations of the central bank Vnešekonombank with China and India on settlement of accounts in rubles for acquired Russian weapons. The main Russia‘s argument is a huge risk in settling the accounts in USD: USD is unstable and the US banks might freeze dollar-driven operations.
There are no doubts that ambitions of the Russian Government to make ruble a regional reserve currency are serious. This idea is related to Russia’s rebirth as a global power.
However, Russia might face major difficulties in realizing these ambitions, even in the CIS space. So far none of the CIS countries, except Belarus, supported the above Russia‘s initiative. Even the Russian experts acknowledge that CIS countries would hardly keep part of their foreign currency reserve in rubles which is gradually devalued. Moscow might make the countries dependent on its gas and oil settle accounts in rubles, but how to convince Central Asian countries to accept rubles for energy resources sold to Russia?
Thus, everything depends on Russia‘s role and standing in the region. After unsuccessful attempts to consolidate the region via CIS, today Moscow is not the player which could attract former USSR republics as volunteers. Years would be needed for ruble to dominate in the CIS space.
But is Russia ready to wait so long? Maybe the Kremlin wants the immediate results? Then the attempts could be made to make ruble the regional reserve currency by applying political and economic pressure against CIS countries, i.e. to develop an ordinary example of the Russian „integration“.
The global financial crisis affected Russia, including the flight of capital from the country after the war in Georgia, and possible budget deficit because of lowered oil prices. But some Russians were rejoicing over the crisis. In order to understand that it is necessary to recall certain past events.
The year 2001. The closed conference „Globalization and Probable Crisis of Global Reserve Currencies“ is held in Moscow under the auspices of President‘s Administration. Geopolitician A.Dugin delivers his presentation. He tries to convince that positions of the USD as a global reserve currency are based on the geopolitical hegemony of the United States. In 1973 the world was divided into three geoeconomic zones: the United States, Europe and Pacific Ocean Region. At the same time another two financial centers – Europe and Japan – were legalized, and the emergence of complementary reserve currencies - Euro and Yen – was anticipated. According to A.Dugin, only the collapse of the American hegemony (and, consequently USD) would give Russia the chance of rebirth.
In 2007, the mortgage crisis in the United States turned out into the global financial crisis in less than one year period. It could seem that rapidly going down share prices would certainly break the hegemony of the US and dollar. What should Russia do in this situation? How could it possibly take its chance for rebirth?
A famous Russian economist M.Chazin, the author of the concept of the multi-currency world, is convinced that hegemony of the USD would soon come to an end and the world would probably be divided into five currency zones: USD, Euro (EU), Yuan (China), Golden Dinar (Arab countries) and Ruble (Russia). According to the economist, today the Russian Government has to take all its efforts in order to consolidate domination of ruble in the region. „Otherwise Russia might face catastrophic consequences: western Russia would enter Euro zone, southern Russia - the Muslim, and Eastern Russia - the Chinese“, said M.Chazin.
It seems that A.Dugin and M.Chazin‘s ideas were taken into consideration by the Kremlin. During the St.Petersburg Economic Forum in June 2008, president D.Medvedev set the following goal: to make Moscow a powerful financial center, and ruble one of the key reserve currencies in the region.
On 5 November 2008, in his statement to the Parliament, D.Medvedev specified this goal by indicating that positions of ruble should be strengthened by settling accounts for the Russian natural gas and oil. In 17 November this proposal was discussed during the meeting of ministers of finance and heads of central banks of CIS countries.
In December 2008, the Russian media released information on the negotiations of the central bank Vnešekonombank with China and India on settlement of accounts in rubles for acquired Russian weapons. The main Russia‘s argument is a huge risk in settling the accounts in USD: USD is unstable and the US banks might freeze dollar-driven operations.
There are no doubts that ambitions of the Russian Government to make ruble a regional reserve currency are serious. This idea is related to Russia’s rebirth as a global power.
However, Russia might face major difficulties in realizing these ambitions, even in the CIS space. So far none of the CIS countries, except Belarus, supported the above Russia‘s initiative. Even the Russian experts acknowledge that CIS countries would hardly keep part of their foreign currency reserve in rubles which is gradually devalued. Moscow might make the countries dependent on its gas and oil settle accounts in rubles, but how to convince Central Asian countries to accept rubles for energy resources sold to Russia?
Thus, everything depends on Russia‘s role and standing in the region. After unsuccessful attempts to consolidate the region via CIS, today Moscow is not the player which could attract former USSR republics as volunteers. Years would be needed for ruble to dominate in the CIS space.
But is Russia ready to wait so long? Maybe the Kremlin wants the immediate results? Then the attempts could be made to make ruble the regional reserve currency by applying political and economic pressure against CIS countries, i.e. to develop an ordinary example of the Russian „integration“.
posted by EMREISERI @ 5:31 AM
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