Huge Blow Coming To The Petrodollar
Both Russia and China have been increasingly vocal about having the U.S. dollar replaced as the world’s reserve currency, or at least having additional currencies added to the list. China has been furiously buying up gold with goal of strengthening the yuan while at the same time devaluing the dollar. Russia has been moving away from using the dollar in international business deals.
Now, Russia is on the verge of announcing a deal that would make it the supplier of the majority of China’s natural gas, signaling a giant move away from the petrodollar. Russian president Vladimir Putin will be visiting China in May with the hopes of securing the deal. According to ZeroHedge.com, state-owned Russian gas firm Gazprom hopes to pump 38 billion cubic meters (bcm) of natural gas per year to China from 2018 via the first pipeline between the world’s largest producer of conventional gas to the largest consumer.
“May is in our plans,” a Gazprom spokesman said, when asked about the timing of an agreement. A company source told ZeroHedge, “It would be logical to expect the deal during Putin’s visit to China [in May].”
Last Saturday, China showed support to Russia on the world stage by abstaining in a U.N. Security Council vote on a draft resolution declaring invalid the referendum in which Crimea went on to back a union with Russia. And just yesterday, Putin thanked China for its understanding over Ukraine.
Most experts agree that U.S. policy is helping to bring together these two eastern world powers, uniting them in a common goal to surpass the U.S., and its currency, on the world stage.
“The worse Russia’s relations are with the West, the closer Russia will want to be to China. If China supports you, no one can say you’re isolated,” said Vasily Kashin, a China expert at the Analysis of Strategies and Technologies (CAST) think tank.
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