Russia And India Ditch Dollar In Military Deals

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Originally appeared at Zero Hedge

With the US increasingly willing to use the dollar, and SWIFT, as a strategic weapon against the country’s sovereign enemies (as Iran learned every 5 or so years), Russia and India are preparing to bypass US sanctions on Moscow by using the rupee and the ruble in bilateral trade involving military deals, the Economic Times reported.

Some $2 billion in weapons deals between India and Russia have been hit as a result of the recent US sanctions, as payments get stuck. The countries are seeking to bypass such monetary bottlenecks this by switching to settlements in domestic currencies and ditching the greenback.

Senior officials told ET that after several rounds of consultations, it has become clear that a rupee-rouble transfer, pegged to the exchange rate of an international currency, is the solution. A top official said that a foreign currency, such as the Singapore dollar, could be used as the benchmark and cont .

Until now, India signed defense contracts with Russia for which payments are made in US dollars. However, as US sanctions making this virtually impossible, contractual payments have been frozen since April.

The involuntary loss of India as a Russian customer has had significant effects on the Russian economy: the Asian country is one of the largest buyers of military equipment from Russia, having signed military contracts worth $65BN since the 1960s.

* * *

With current trade deals between the two countries estimated at around $12 billion, it is imperative for Russia to way to find a loophole to US sanctions. Furthermore, just like Turkey, India is ready to purchase Russia’s state of the art S400 air-defense system in a $5-billion deal. And just like in the case of Turkey – which overnight saw the US Senate block the sale of over over 100 F-35 juts to Erdogan precisely because of Ankara’s overtures to Moscow – the sale is being heavily opposed by the United States.

The two nations have been struggling to find banks that would risk US sanctions for transferring the money between the two nations. Sources said that on the Indian side, the banks being talked to include Vijaya Bank and Indian Bank, while on the Russian side, its largest banking entity in India, Sberbank, has been involved in discussions.

Other options that were looked at included payments to non-sanctioned entities in Russia after its flagship arms trading company Rosoboronexport came under sanctions by the US Office of Foreign Assets Control (OFAC).

“This option was decided against as it would have opened up a lot of legal and audit issues, especially as defence deals are looked at very closely. No one wanted to take a chance,” a top official involved in talks to resolve the issue told ET.

As part of the recent US sanctions, the US Treasury has banned business ties with entities designated as Specially Designated Nationals (SDN). After fresh notifications in April named Rosoboronexport, Indian banks were pressured into freezing all lines of credit (LoCs) to Russian arms companies, resulting in all deals coming to a halt ET reports.

Meanwhile, payments worth over $100 million were blocked in less than a month, while total payments of over $2 billion currently face uncertainty.

It was not clear if the two nations had considered “neutral” alternatives such as bitcoin, although in retrospect probably not in light of India’s belligerent attitude toward the cryptocurrency, one which emerged was more prejudice than informed opinion following a report last week that India’s central bank admitted it did no research before strangling cryptocurrency payments. In light of the US crackdown on dollar use against anyone who opposes the US military-industrial complex, perhaps the RBI should have at least considered it.

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  • Attrition47

    Good

    • VeeNarian (Yerevan)

      Excellent!

  • Wise Gandalf

    Unimportant for dollar position.

    Good for India, wrong for Russia.

    • VeeNarian (Yerevan)

      Incorrect, deluded one! This move is great for both Russia and India. Time to ditch the currency of the Evil Empire.

      • Wise Gandalf

        No, because russia still need dollars.

        • VeeNarian (Yerevan)

          Russia and the BRICS need US$ like loo paper. The moment they agree to trade with each other in local currencies and price commodities in IMF special drawing rights or gold, the US$ is toast.
          Some US$ will be needed to buy shoddy and substandard US goods.
          Boy, do I try to avoid US apples, which have a horrible pasty taste.

        • Sinbad2

          Why, to buy burgers and pizza?
          What has America got that anybody wants to buy?

          • SEAN THOMAS

            Japan, Germany, and Saudi Arabia still accept US$.

    • Sinbad2

      What if Russia used the rupees to buy gold in India, and shipped the gold back to Russia?

      • goingbrokes

        To that India will say no! Buy basmati rice instead! ;)

  • Tudor Miron

    Russia vs Egypt = 3:1!

    • Wise Gandalf

      Bravo!

      (but russians shot only the same amount of goals as egyptians :D )

      • Siegfried

        LOL! ;)

    • Wise Gandalf

      BTW., on the playstyle of arab countries you can see the same problem as in their fighting capabilities. No creativity, no fantasy, only schem 1, meybe scheme 2. Nothing else.

  • Merijn

    If it is Easy for the U.S. to Create Money Out of Thin Air… Then why would it be Difficult for Other Countries to Create their OWN money out of Thin Air? Perhaps a Stupid Question…..but nevertheless…

    • FlorianGeyer

      Many do :)

    • Jesus

      If you are not tied to the central bank and have sovereignty you can print your own money. The FED and the European Central Bank create money out of thin air to stimulate their economies and financial markets. Russia is still tied up to the Central Bank ( Rothchild) because of the constitutional guidelines drawn during Yeltsin’s tenure.
      Putin would have to change the Constitution to make a clean break from the Central Bank, then they can print rubbles backed by their ample natural resources, immune from any predatory financial attacks and sanctions.

      • Merijn

        It would be a very wise decision to break Free from this Central Bank…for every Nation… because they are a Parasitic Criminal Organisation… they have proven that…just Boycot that System, step out of it and it will Collapse in a matter of time…That is why they are always threatening with War or Create a War if countries want to leave… Qaddafi wanted an African gold backed coin to pay for Oil… he Died…Saddam wanted the Euro for Oil he Died…the Petro-dollar is Rubbish….

    • Sinbad2

      Money like any other commodity is subject to the laws of supply and demand.
      Print too much and you exceed demand, the value drops, and inflation runs amok.

      The whole world uses the US dollar so when the US prints, it exports the inflation to every country on earth. That is why the value of real estate and shares are rising all over the world.
      Only one commodity has not risen with the American printing presses, GOLD.

      Buy gold and you are shorting the US dollar, in fact you are shorting every western fiat currency.
      Ever seen the movie “The Big Short” well the fiat currency market is like CDO’s, only a million times bigger. If you haven’t got any gold or silver, get some, a cheap bet against the US dollar will make you very rich.

  • John

    The most dangerous enemy that the US has ever faced and to whom it always loses, are the US politicians. IMHO the US is picking too many fights right now. In doing so, it cannot afford to lose any of them, fore this would shatter the image of invincibility. A series of major strategic errors is unfolding and the way it is going, this will only reduce US influence.

    The problem which has created this, is a mindset that looks to create longterm momentum and advantage, while having all of the finesse of repairing a dike using fingers and toes. Anybody think I am just foaming at the mouth, just another mindless blogger? Well check this out. Where did AQ come from? It was a result of US policies in Afghanistan ( Dumb Asses ). Where did IS come from? Destabilization of Iraq created by US actions ( Dumb Asses II ). Where did the refugee problem for the EU originate? It came from US policies, along with enthusiastic help from EU leaders, in Syria and Libya ( Dumb Asses III, with Dumb Asses IV though X coming to a theater near you soon ) The crap goes on and on.

    Now, the brain trust is messing with the international trade and banking systems, which were created largely to US benefit. It doesn’t take a post doctorate study in economics and/or finance to clearly see this. So, ………….., to the guys in the suits and uniforms doing all this destructive stuff, ……… whatever. People you do care about are going to be swept into oblivion at some point as a result. And that ladies and gentlemen, will be all because of you guys. I hope they stop it at some point and I wish well to all.

  • RichardD
    • VeeNarian (Yerevan)

      I would add dripping blood from the countries these NATO gangster countries have bombed and organised coups (Ukraine, Turkey).

      • Promitheas Apollonious

        an armenian, with an english flag as avatar……………………

        • VeeNarian (Yerevan)

          British Indian, actually, with an Armenian sounding name. My avatar (Hindi/Sanskrit) exposes all those name-calling shallow and ignorant hacks of the US/EU/NATO gang.

    • Merijn
  • RichardD

    The problem is that 95% of the planet’s Jews live in NATO countries and Israel. 85% in the US and Israel alone. The US and NATO would be far different and better without Jews. NATO might not even exist.

    https://uploads.disquscdn.com/images/f26587a318358d63084f355a4063c9c0ad63c7bb39636e113bd40838fc81f366.png

  • RichardD

    The SCO needs to be brought to a higher level of development to help get our planet’s Jew infestation problem corrected. China has outlawed Judaism and Russia has gotten rid of 95% of it’s Jews. The rest of the world, NATO countries in particular, should follow suit. Jews and Judaism are humanity’s and our planet’s number one problem.

  • Joe Dirt

    Yawn this has very little impact…and should be demded irrelevant..but Southtards will find any excuse to post Anti-US propaganda.

    • VeeNarian (Yerevan)

      India and Russia would be very wise not to use the currency of the Evil Empire, that loves to bomb around the clock.
      Time to dump the US$.

      • Joe Dirt

        Subjective opionion is not an argument… Yawn go back to the academy and learn how to debate

        • Promitheas Apollonious

          maybe, you should follow your own advice and while they at it ask them to upgrade you to at least 32k so you are not so monotonous and moronic, in your comments.

          • John Mason

            You shouldn’t bother with that scum bag, he is only baiting you and what comes from him is pure faeces.

          • Promitheas Apollonious

            Bother ? I dont bother, but from time to time, I do humor him.

        • VeeNarian (Yerevan)

          Debate as much as you like, but I will enjoy the US dollar empire return to the swamp of greed. About time!

    • Sinbad2

      Every straw increases the load, eventually the dollar will break.

      • Joe Dirt

        Not even close but nice try

    • Bob

      Securing payment for current military contracts is a strategic issue for both Russia and India, and as it has apparently escaped your limited attention span, this is in fact a Russian orientated strategic news site, ergo it is significant news content.

  • Sinbad2

    Gold is the answer, but India won’t hand over any of its gold?

  • Nigel Maund

    It’s long past time the US control of the global monetary system was fatally torpedoed and sunk for good! No nation should ever be able to exert such overarching control over the world’s financial system. It’s wide open to extreme abuse and always has been since it was instigated by the Rothschild’s controlled globalist Cabal.

    • John Mason

      Agree and those that are bribed need to be executed and that will stop it completely.

    • goingbrokes

      It’s not actually USA. It is the International bankers, who own the Federal Reserve, that use IMF, the BIS and other bodies, to control worldwide credit situation. They are the ones that are using the greenback as a global reserve currency. America, the USA that is, has very little say in the matter. They do not complain because since Bretton Woods USA has greatly benefited from the arrangement. But it is a fact that there is over 50 million people in the US below poverty line, so I guess the system has run its course.

      • Nigel Maund

        Good commentary and agree!

  • georgeking

    Go with Gold and physical transfers.

  • Siegfried

    “Russia And India Ditch Dollar In Military Deals”
    The FED gets another kick in the a##