RUSSIA-CHINA DO WORLD’S LARGEST ENERGY DEAL AND ADDS BANKING

Why Russia, China, & Mongolia Are Boosting Trilateral Ties by Ankit Panda
September 13, 2014

http://thediplomat.com/2014/09/why-russia-china-mongolia-are-boosting-trilateral-ties/

Putin called for Russia, China and Mongolia to increase trilateral contacts and cooperate on joint projects in infrastructure, mining, and energy. = Makes sense given their geographic closeness. = At the Shanghai Cooperation Organization’s (SCO) summit in Dushanbe. = Putin said: “The natural geographic proximity of Mongolia, Russia and China makes it possible for us.” Putin acknowledged Mongolia’s historical friendship towards both the People’s Republic of China and Russia. Mongolia was an active partner during the Second World War. Beijing wasted no time in voicing support for the Mongolian initiative. The two countries eventually included the idea for a trilateral with Russia in a joint declaration signed during Xi’s visit to Mongolia.

Mongolia In 2013 signed 63 bilateral agreements, including with the United States, European Union, China, and Japan. Increasing cooperation with China and Russia, particularly in the areas of infrastructure, mining, and energy, can only help Mongolia and help it continue to become a more visible player in Asian diplomacy.

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Russia, China sign deal to bypass U.S. dollar by Michael PIZZI May 20, 2014

http://america.aljazeera.com/articles/2014/5/20/russia-china-bankdeal.html

Russia and China took a small step toward undercutting the domination of the U.S. dollar as the international reserve currency when Russia’s second biggest financial institution, VTB, signed a deal with the Bank of China to bypass the dollar and pay each other in domestic currencies. = Agreement on Cooperation between Jinping and Putin was followed by the long-awaited announcement of a massive natural gas deal 10 years in the making. = “Our countries have done a huge job to reach a new historic landmark”…in the $100 billion in annual trade — PUTIN.

Dollar has long served as a safe and reliable reserve currency in international transactions, so U.S. can borrow almost unlimited cash and spend well beyond its means, which some economists say has afforded the United States an outsize influence on world affairs.

The BRICS countries — Brazil, Russia, India, China and South Africa, a bloc of the world’s five major emerging economies — have long sought to diminish their dependence on the dollar as a means of reshaping the world financial and geopolitical order. In the absence of a viable alternative, however, replacing it has proved difficult.

“China sees the dominance of the dollar in international trade transactions as a remnant of American global dominance, which they hope to overthrow in the years ahead. This is a small step in that direction, to reduce the primacy of the dollar in international trade.” — Michael Klare, a professor of peace and world security studies at Hampshire College

The crisis and sanctions in Ukraine have motivated Russia to look East to China for future trade and shared successes. Putin may have finally made good on promised retaliation against what he views as Western hegemony in Russia’s near abroad. Russia is desperately pursuing closer ties with China.

Breaking USA Dollar Dominance in international trade = Goal of BRICS for some time. = “The Ukraine crisis and the threats voiced by the U.S. administration may well provide the catalyst for that to start happening.” — Chris Weafer, a founding partner of Macro-Advisory, a consultancy in Moscow.

The Russia-China bank deal = Small in the grand scale of things and Most of Russia’s export contracts in the oil and gas markets are still priced in dollars. Russia is not in a position to abandon its ties with Europe. But the bank deal is another indicator that Russia and China are in the middle of a wider rapprochement, which analysts say is premised not on ideological alignment but on a mutual desire to undercut the U.S. in their respective spheres of influence. “This is a marriage of mutual strategic interests, not a marriage of love. China wants energy and weapons from Russia, and Russia wants diplomatic backing and cash. It’s a quid pro quo.”

China agreed to $450 billion of Russian natural gas from Siberia into China over 30 years

Gazprom, the Russian state-owned gas company gets its most profitable from Europe and “Exports to China can generate a small profit, [but] only if the government makes it free of taxes and duties.”

Both countries are wary of USA’s “pivot east,” in its foreign policy after decades of war in the Middle East and toward the fast-growing economies of China and Asia. China may feels threatened by U.S. encroachment.

Putin got the better of the West in Crimea, but WEST has isolated Russia. Russia has repeatedly threatened to simply shut off its natural gas pipelines to Europe and find new markets for Russian energy exports. = Very real strategy since Europe expects declining energy demand in the long term because of stringent environmental regulations. = Russia wants to continue to be a petrostate so it shifted its marketing of Asia.” like ExxonMobil is doing. — This is market-driven more than it’s political.