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Russia, India to bypass the dollar in defence deals

American sanctions are increasingly making the USD irrelevant

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Presently, some $2 billion worth of arms deals are presently hitting a snag over how settlement is to be made for defence transactions between Russia and India as US sanctions stand in the way. The issue has led to the US Dollar being dropped as a means of payment, with the Ruble and Rupee being considered as alternatives.

The Economic Times reports:

New Delhi: Efforts to break the logjam over Russian defence deals because of US sanctions have zeroed in on a rupee-rouble transfer as the only way out but both sides are finding it difficult to find banking institutions through which such payments can be routed.

Financial sanctions by the US have hit India’s arms trade with Russia hard, with payments for weapons and equipment worth over $2 billion getting stuck, including those for critical projects such as the repair of leased nuclear attack submarine INS Chakra.

Senior officials told ET that after several rounds of consultations, it has become evident that a rupee-rouble transfer-–pegged on the exchange rate of an international currency—is the solution. As of now, India signs defence contracts with Russia for which payments are made in US dollars.

With US sanctions making this impossible, contract payments have been frozen since April. A top official said that a foreign currency-—say the Singapore dollar-—could be used as the benchmark and contract payments would be conducted directly.

However, the two nations are still struggling to find banks that would run the risk of facing US sanctions for transferring the money. Sources said that on the Indian side, the banks being talked to include Vijaya Bank and Indian Bank.

On the Russian side, its largest banking entity in India, Sberbank, was involved in talks. However, the Russian bank has not given any commitment on making the payments. A decision is still to be taken but the idea is to involve banks with the least exposure to American sanctions.

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.

US sanctions ban 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.

Payments worth over $100 million were blocked in less than a month with payments of over $2 billion facing uncertainty. This includes a payment of over $15 million to Russia that would have been used to repair the damaged INS Chakra nuclear submarine that met with an accident in late 2016.

Also impacted are ongoing submarine repairs besides purchases of missiles and ammunition. The signing of a $5-billion deal to purchase the S400 air defence system from Russia is also under a cloud.

The US has imposed sanctions against Russia for interfering in the 2016 presidential election and its actions in Crimea, Ukraine and Syria.

India has long been one of Russia’s top military equipment customers going back nearly six decades, and another deal is in the works for India to purchase the S-400 SAM system from Russia, a deal worth some $5 billion.

During the past five years, 62 percent of India’s defense imports have been from Russia.

In addition to defence, India and Russia have a strong cooperation in areas of energy and communications, as well as their positions on international issues ranging from climate change to fighting terrorism, combatting Trump’s tariffs regimes, and the preservation of the Iran nuclear deal.

Russian investments in India encompass areas such as nuclear energy and telecommunications; Indian companies have invested heavily in Russian hydrocarbons and are involved in the joint exploration and extraction of oil and gas

A few weeks ago, in Sochi, Narendra Modi, the Indian Prime Minister, met with Russian President Vladimir Putin in an effort to boost their relations as well as to identify further areas of mutual interest. India seems also to be keen on potentially doing business within the EAEU, of which Russia is a member, further strengthening their trade relationship. Russia was also instrumental in getting India membership in the Shanghai Cooperation Organization (SCO), a Eurasian political, economic and security bloc.

Not only is India keen to preserve its business ties, whether Washington likes it or not, through diplomacy, but they are actively engaged in doing commerce with other nations which Washington has issued sanctions against, including Iran, also using national currencies in their bilateral trade, and Venezuela, so that dodging Washington’s demands relative to Russia is not the only example of India’s determination to stand up for its interests.

Recently, China debuted its Petroyuan, an oil futures market using the Chinese yuan instead of US dollars. Putin has called for Russia to move away from the dollar, asked the Europeans to conduct trade with Russia using the Euro, and developed its own SWIFT system for domestic transfers in order to avoid using the American based financial processing system.

China and Russia have been moving towards doing bilateral commerce using their national currencies, also avoiding the use of the USD. The more the US tries to use its currency, financial systems, and market share as a club, the more the nations of the world seek independence from it. In an economic sense, it is another way in which America is making itself irrelevant to the rest of the world.

 

 

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ColinNZRed Pilled ThoughtCrimesAJnormski1 Recent comment authors
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ColinNZ
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ColinNZ

This is the REAL trade war, and the US is about to get owned … it will take time, but it is unstoppable now.

Red Pilled ThoughtCrimes
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Red Pilled ThoughtCrimes

they NEED the money from tariffs

AJ
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AJ

Why cant India just pay in physical gold & avoid the banks altogether.

normski1
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normski1

Where there’s a will there’s a way and I’m confident Russia and India will find a solution to the problem!.

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BREXIT chaos, as May’s cabinet crumbles (Video)

The Duran Quick Take: Episode 18.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris take a quick look at the various scenarios now facing a crumbling May government, as the Brexit Withdrawal Agreement is forcing cabinet members to resign in rapid succession. The weekend ahead is fraught with uncertainty for the UK and its position within, or outside, the European Union.

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If Theresa May’s ill-fated Brexit Withdrawal Agreement is eventually rejected this could trigger a vote of no confidence, snap elections or even a new referendum…

Here are six possible scenarios facing Theresa May and the UK (via The Guardian)

1 Parliament blocks Theresa May’s draft withdrawal agreement and political declarations

May faces an enormous task to win parliamentary approval, given that Labour, the SNP, the DUP and 51 Tories have said they will not vote for it.

If the remaining 27 EU member states sign off the draft agreement on 25 November, the government will have to win over MPs at a crucial vote in early December.

If May loses the vote, she has 21 days to put forward a new plan. If she wins, she is safe for now.

2 May withdraws the current draft agreement

The prime minister could decide that she will not get the draft agreement through parliament and could seek to renegotiate with the EU.

This would anger Tory backbenchers and Brussels and would be seen as a humiliation for her government. It might spark a leadership contest too.

3 Extend article 50

May could ask the European council to extend article 50, giving her more time to come up with a deal that could be passed by parliament – at present, the UK will leave on 29 March 2019.

Such a request would not necessarily be granted. Some EU governments are under pressure from populist parties to get the UK out of the EU as soon as possible.

4 Conservative MPs trigger a vote of no confidence in the prime minister

If Conservative MPs believe May is no longer fit for office, they could trigger a no-confidence vote.

Members of the European Research Group claim that Graham Brady, the chair of the powerful 1922 Committee, will receive the necessary 48 letters this week.

A vote could be held as soon as early next week. All Tory MPs would be asked to vote for or against their leader. If May wins, she cannot be challenged for at least 12 months. If she loses, there would be a leadership contest to decide who will become prime minister.

5 General election – three possible routes

If May fails to get support for the current deal, she could call a snap general election.

She would table a parliamentary vote for a general election that would have to be passed by two thirds of MPs. She would then set an election date, which could be by the end of January.

This is an unlikely option. May’s political credibility was severely damaged when she called a snap election in 2017, leading to the loss of the Conservative party’s majority.

Alternatively, a general election could be called if a simple majority of MPs vote that they have no confidence in the government. Seven Tory MPs, or all of the DUP MPs, would have to turn against the government for it to lose the vote, triggering a two-week cooling-off period. May would remain in office while MPs negotiate a new government.

Another route to a general election would be for the government to repeal or amend the Fixed-term Parliaments Act which creates a five-year period between general elections. A new act would have to be passed through both the Commons and the Lords – an unlikely scenario.

6 Second referendum

May could decide it is impossible to find a possible draft deal that will be approved by parliament and go for a people’s vote.

The meaningful vote could be amended to allow MPs to vote on whether the country holds a second referendum. It is unclear whether enough MPs would back a second referendum and May has ruled it out.

 

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Brexit Withdrawal Agreement may lead to Theresa May’s downfall (Video)

The Duran – News in Review – Episode 151.

Alex Christoforou

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The Brexit Withdrawal Agreement has been published and as many predicted, including Nigel Farage, the document is leading to the collapse of Theresa May’s government.

During an interview with iTV’s Piers Morgan, remain’s Alistair Campell and leave’s Nigel Farage, were calling May’s Brexit deal a complete disaster.

Via iTV

Alastair Campbell: “This doesn’t do remotely what was offered…what is the point”

“Parliament is at an impasse”

“We have to go back to the people” …”remain has to be on the ballot paper”

Nigel Farage:

“This is the worst deal in history. We are giving away in excess of 40B pounds in return for precisely nothing. Trapped still inside the European Union’s rulebook.

“Nothing has been achieved.”

“In any negotiation in life…the other side need to know that you are serious about walking away.”

“What monsieur Barnier knew from day one, is that at no point did Theresa May intend to walk away.”

“Fundamental matter of trust to the electors of our country and those who govern us.”

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss Theresa May’s Brexit Withdrawal Agreement, and why the deal is a full on victory for the European Union and a document of subjugation for the United Kingdom.

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Coming in at 585 pages, the draft agreement will be closely scrutinized over the coming days but here are some of the highlights as outlined by Zerohedge

  • UK and EU to use the best endeavours to supersede Ireland protocol by 2020
  • UK can request extension of the transition period any time before July 1st, 2020
  • EU, UK See Level-Playing Field Measures in Future Relationship
  • Transition period may be extended once up to date yet to be specified in the text
  • EU and UK shall establish single customs territory and Northern Ireland is in same customs territory as Great Britain

The future relationship document is less than seven pages long. It says the U.K. and EU are seeking a free-trade area with cooperation on customs and rules: “Comprehensive arrangements creating a free trade area combining deep regulatory and customs cooperation, underpinned by provisions ensuring a level playing field for open and fair competition.”

The wording might raise concerns among Brexiters who don’t want regulatory cooperation and the measures on fair competition could amount to shackling the U.K. to EU rules.

As Bloomberg’s Emma Ross-Thomas writes, “There’s a clear sense in the documents that we’re heading for a customs union in all but name. Firstly via the Irish backstop, and then via the future relationship.”

Separately, a government summary of the draft agreement suggests role for parliament in deciding whether to extend the transition or to move in to the backstop.

But perhaps most importantly, regarding the controversial issue of the Irish border, the future relationship document says both sides aim to replace the so-called backstop – the thorniest issue in the negotiations – with a “subsequent agreement that establishes alternative arrangements for ensuring the absence of a hard border on the island of Ireland on a permanent footing.”

On this topic, recall that the U.K.’s fear was of being locked into the backstop arrangement indefinitely in the absence of a broader trade deal. The draft agreement includes a review process to try to give reassurance that the backstop would never be needed. Basically, the U.K. could choose to seek an extension to the transition period – where rules stay the same as they are currently – or opt to trigger the backstop conditions. In fact, as Bloomberg notes, the word “backstop,” which has been a sticking point over the Irish border for weeks, is mentioned only once in the text.

As Bloomberg further adds, the withdrawal agreement makes clear that the U.K. will remain in a single customs area with the EU until there’s a solution reached on the Irish border. It’s what Brexiteers hate, because it makes it more difficult for the U.K. to sign its own free-trade deals, which they regard as a key prize of Brexit.

Predictably, EU Commission President Juncker said decisive progress has been made in negotiations.

Meanwhile, as analysts comb over the documents, Jacob Rees-Mogg, chairman of the European Research Group, has already written to Conservative lawmakers urging them to vote against the deal. He says:

  • May is handing over money for “little or nothing in return”
  • The agreement treats Northern Ireland differently from the rest of the U.K.
  • It will “lock” the U.K. into a customs union with the EU
  • It breaks the Tory election manifesto of 2017

The full document…

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4 resignations and counting: May’s government ‘falling apart before our eyes’ over Brexit deal

The beginning of the end for Theresa May’s government.

The Duran

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Via RT


Four high profile resignations have followed on the heels of Theresa May’s announcement that her cabinet has settled on a Brexit deal, with Labour claiming that the Conservative government is at risk of completely dissolving.

Shailesh Vara, the Minister of State at the Northern Ireland Office was the first top official to resign after the prime minister announced that her cabinet had reached a draft EU withdrawal agreement.

An hour after his announcement, Brexit Secretary Dominic Raab – the man charged with negotiating and finalizing the deal – said he was stepping down, stating that the Brexit deal in its current form suffers from deep flaws. Esther McVey, Secretary of State for Work and Pensions, submitted her letter of resignation shortly afterwards. More resignations have followed.

Labour’s shadow Cabinet Office minister, Jon Trickett, predicted that this is the beginning of the end for May’s government.

The government is falling apart before our eyes as for a second time the Brexit secretary has refused to back the prime minister’s Brexit plan. This so-called deal has unraveled before our eyes

Shailesh Vara: UK to be stuck in ‘a half-way house with no time limit’

Kicking off Thursday’s string of resignations, Vara didn’t mince words when describing his reservations about the cabinet-stamped Brexit deal.

Theresa May’s EU withdrawal agreement leaves the UK in a “halfway house with no time limit on when we will finally become a sovereign nation,” his letter of resignation states. Vara went on to warn that the draft agreement leaves a number of critical issues undecided, predicting that it “will take years to conclude” a trade deal with the bloc.

“We will be locked in a customs arrangement indefinitely, bound by rules determined by the EU over which we have no say,” he added.

Dominic Raab: Deal can’t be ‘reconciled’ with promises made to public

Announcing his resignation on Thursday morning, Brexit Secretary Dominic Raab tweeted: “I cannot in good conscience support the terms proposed for our deal with the EU.”

Raab claimed that the deal in its current form gives the EU veto power over the UK’s ability to annul the deal.

No democratic nation has ever signed up to be bound by such an extensive regime.

Former Conservative Party leader Iain Duncan Smith said that Raab’s resignation as Brexit secretary is “devastating” for May.

“It sounds like he has been ignored,” he told the BBC.

Raab’s departure will undoubtedly encourage other Brexit supporters to question the deal, political commentators have observed.

Esther McVey: Deal ‘does not honor’ Brexit referendum

Work and Pensions Secretary Esther McVey didn’t hold back when issuing her own letter of resignation. According to McVey, the deal “does not honour” the result of the Brexit referendum, in which a majority of Brits voted to leave the European Union.

Suella Braverman: ‘Unable to sincerely support’ deal

Suella Braverman, a junior minister in Britain’s Brexit ministry, issued her resignation on Thursday, saying that she couldn’t stomach the deal.

“I now find myself unable to sincerely support the deal agreed yesterday by cabinet,” she said in a letter posted on Twitter.

Suella Braverman, MP Parliamentary Under Secretary of State for the Department for Exiting the EU © Global Look Press / Joel Goodman
Braverman said that the deal is not what the British people voted for, and threatened to tear the country apart.

“It prevents an unequivocal exit from a customs union with the EU,” she said.

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