Weekend Economic Glance, Nov, 23-29

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Last week has seen Russia adding the Yuan into its reserve currency basket. Several media outlets have reported on Turkey role in supporting terrorist group IS financially, among them the New York Times. Russia has started to sanction Turkey in retaliation for the planned provocation that was the downing of the Russian fighter plane. Additionally, Damascus is offering Russia a deal to develop Syrian oil field in the mediterranean. 

Weekend Economic Glance, Nov, 23-29

Written by Frank Jakob exclusively for SouthFront

Russia to add Yuan to national currency reserve. Russia has decided to add the Chinese Yuan into its reserve currency basket. The move comes amid the Yuan’s accession into the currency basket of the International Monetary Fund (IMF) and thus its gaining of the status of world reserve currency. The reserve currency basket is for emergency situations when the national economy is falling out of balance. The country then uses its reserves to stabilize the domestic market by selling its reserves and backing the demand side of the market. So far, the Russian reserves are mainly consisting of dollar holdings (44%) closely followed by assets denominated in euro (42%). Russia and the BRICS states are pushing their agenda to replace the dollar from bilateral trade and replace it with BRICS currencies for quite some time now. Russia and China are also rumored to be working on a gold backed reserve currency to break the dollars dominance.

Media reports: Turkey pays IS $ 40 Million per month. Turkish and Syrian media outlets as well as the New York Times have reported about Turkeys oil deals with the terrorist group IS in Syria. According to the reports, Turkey is the main buyer of IS oil and funds the terrorist group with at least $ 10 Million a week. The estimate has been made by US state officials and were cited by the NYT. Meanwhile Turkish and Syrian media report that none other than Bilal Erdogan, son of the Turkish president, is the man overseeing the trade. The Russian Kremlin has repeatedly stated that it suspect Turkey to be the main buyer of IS oil. The Russian air force has bombed IS oil infrastructure in recent weeks. It is likely that the downing of the Russian SU-24 by Turkey was a reaction to Russia’s intervention in the forbidden oil trade.

Russia to sanction Turkey where it hurts. As a retaliatory measure for the planned downing of a Russian fighter plane through Turkey, Russia has made a few proposals how it can hit back at Turkey. Russian tourism agency Rostourism has ceased any form of cooperation with Turkey. The move will lead to losses as high as $ 10 billion per year for the Turkish tourism sector. Furthermore, Moscow has said that it is likely that the current construction of the nuclear power plant Akkuyu in Turkey by Russian engineers will suffer from the sanctions as well. Meanwhile US think-tank Stratfor speculates that Russia can hit Turkey the most by cutting of gas exports to the country and by putting an import ban on Turkish food imports. It has already been reported that 162 tonnes of chicken from Turkey had been stopped at the Russian border at Kaliningrad. The official reason was missing documents, but it is probable that there is a deeper reason behind that.

Weekend Economic Glance, Nov, 23-29

Tourists in 1000s Source: Information development support center

Damascus to offer Moscow development of Syrian deep sea oil resources. Syrian authorities have expressed their hopes that Russia would invest into the countries oil sector. “We have data that oil and gas deposits on a shelf off the coast of Syria have enormous potential. And we hope to see not only Russian warships in Syria, but also platforms for extracting oil,” Syrian Foreign Minister Walid Muallem said. He added that one Russian firm has already signed a contract and expressed his hopes that more companies would follow. Russia is seen as the Syria’s biggest ally. Cooperation between Syria, Russia and Iran would make sense from an energy sector point of view. This triangle could offer Europe an energy supply alternative to the US allies gulf allies like Saudi Arabia and Qatar.

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