(John Ransom, Headline USA) India is adopting direct payments with Russia, in order to facilitate rupee-to-ruble trade, as Western nations have blocked US dollar settlements for Russia through the inter-bank system SWIFT.
The result will be a further weakening of the US dollar, an outcome that was predicted by some experts when President Joe Biden first proposed excluding Russia from the Society for Worldwide Interbank Financial Telecommunication system, said the Business Standard in New Delhi.
By trading rubles directly with India, or China, or any one of a number of countries, it will help facilitate direct trade with those countries and weaken the position of the United States because there will be fewer dollars in the world financial system.
Even Russia and EU were inseparable but now they are separate right. China just had a trade and Tariff war with USA. Remember.Yuan-Ruble-Indian Rupee trade is the way forward. If US can impose sanctions why can’t these countries impose raw material sanctions on US.
— Vishal Daga (@vishaldaga3) March 29, 2022
“Export to Russia [from India] is not much, only in agriculture and pharmacy products. Now that the whole of the West is banning Russia, there will be a lot of opportunities for Indian firms to enter Russia,” A Sakthivel, president of the Federation of Indian Export Organisations told CNBC.
SWIFT is an inter-bank system that helps settle financial transactions using secure messages and handles about 10 billion messages per year, in dollar-denominated transactions, according to EcoFacts.org.
“Excluding Russian banks from SWIFT, which has been called the ‘nuclear option,’ risks permanent damage to international financial integration and the U.S. dollar hegemony,” said EconFact, creating a world that would no longer be as dependent upon the US dollar for trade.
The development also shows how countries are falling back on historical patterns of behavior that guided their actions during the Cold War.
During the Cold War, India was a non-aligned nation and enjoyed a normal relationship with Russia, untroubled by the communist government.
CNBC reports that India gets about 85% of its military equipment from countries that used to be part of the Soviet Union. And India is the designated instructor of English for the Vietnamese Navy.
“The government will take into account all the factors. The government is playing it very carefully,” Sakthivel told CNBC when asked how India will juggle angering the American administration by helping Russia avoid sanctions and preserving US relations.
