Thursday, May 15, 2014

China and Russia tag team the US ( foreign policy edition ) --- May 15 , 2014 ..... As Russia wrangles with the US / EU and Nato regarding the Ukraine situation , note that China has moved forward with its energy aspect of its South China Sea strategy - that this is occurring just prior to Putin visit to China next week ( May 20 - 21 ) to define how China and Russia will work together moving forward on issues such as energy , trade and the " international arena " , is not a coincidence !

Top line News on Major Gas Deal Status ( Almost a done deal )

Gazprom CEO hopeful China’s gas contract price suitable for Russia

 May 17, 15:34 UTC+4
"We have entered the final stage of negotiations", Aleksei Miller said
PETROPAVLOVSK-KAMCHATSKY, May 17, 15:17 /ITAR-TASS/. Aleksei Miller, the CEO of Russia’s major gas company Gazprom feels confident the gas contract with China will be signed under the conditions suitable for Russia.
Speaking in the Vesti v Subbotu (News on Saturday) TV programme, Miller said: “Anyway, we have entered the final stage of negotiations. The contract, as a document, is fully accomplished as it is a serious and meaty document.”
“There remains only one item - the so-called basic or zero price in the formula that has been already agreed on with our Chinese partners,” he said. “We are almost there as only one digit is to be inserted [in the contract] and the 30-year contract will be finalised on the 38 bcm-gas flow from Eastern Siberia to China.”
Miller said “these 38 bcm are just a beginning. We’ve come to an agreement with China that as soon as we put signatures under the eastern route contract, the talks on the western route are opened.”
“The western route has one but principal difference regarding its resource base as it’s the same base we supply gas to Europe from. Nevertheless, reserves of gas are sufficient and the resource base is giant,” Miller said. “So we can provide a considerable amount of gas to China as well, and these volumes will compare with the volumes of European supplies in the medium term.

Moscow Says Massive "Holy Grail" Gas Deal With China Is 98% Ready

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We have previously profiled the "holy grail" gas deal between Russia and China on several occasions, and with its announcement scheduled for next week (barring some unmitigated disaster) during Putin's first visit to China since Xi's appointment as president last March, it is time to do a status update on where it stands even if according to SCMP, at this point finding the "holy grail" is merely a formality.
The Hong Kong publication reports that China and Russia hope to sign a massive deal for natural gas supply when their leaders meet in a regional summit in Shanghai next week, a senior diplomat has said. Under the deal, Russia will supply 38 billion cubic metres of natural gas annually to China for 30 years. Deputy Foreign Minister Cheng Guoping told reporters yesterday that President Xi Jinping would discuss the deal and other points of co-operation with his Russian counterpart, Vladimir Putin, who will visit Shanghai on Tuesday.
Russian Deputy Energy Minister Anatoly Yanovsky said on Monday that the deal was "98 per cent ready". Supply would begin no later than the end of 2018.
Indicating just how important China now is to Russia, Bloomberg adds that traveling with Putin will be the who-is-who of Russian politics and business:
  • Gazprom CEO Alexey Miller also in delegation as Russian President Vladimir Putin visits China on May 20-21, Yuri Ushakov, Kremlin foreign policy aide, tells reporters in Moscow.
  • Ushakov also says that Russia-China trade may reach $100b as early as this year.
  • Gazprom working on China gas deal, Rosneft working on Sinopec deal, Novatek working on deal
  • China-Russia talks demand compromises on both sides
  • Worsening relations with U.S. and allies "clearly to some degree influence" China talks
  • Billionaire Oleg Deripaska also traveling to China
As reported previously, the deal is between Russia's Gazprom and China National Petroleum Corporation (CNPC), but the two sides have yet to agree on pricing despite more than a decade of negotiations. Xi will meet Putin on the sidelines of the Conference on Interaction and Confidence Building Measures in Asia, to be attended by 46 nations and agencies.
"The companies of the two nations are exchanging views on the pricing issue," Cheng said. "We will strive to get the companies to sign the natural gas co-operation deal and [have it] witnessed by both state leaders while Putin is in China."
Cheng said Xi and Putin reached a consensus over natural gas co-operation when Xi attended the Sochi Winter Olympics in February. Companies of both nations have reached agreement on many aspects of the deal.
Russian business daily Vedomosti reported last month that the companies were negotiating a price in the range of US$360 to US$400 per 1,000 cubic metres.

Gazprom chief executive officer Alexey Miller said last year that the supply could be boosted to 60 billion cubic metres a year over the period of the contract. The gas would be supplied via two pipelines entering northeast and northwest China.

Russia has been trying to diversify its energy export base beyond the European market, where Gazprom generates about 80 per cent of its revenue.

China relied on imports for nearly a third of its natural gas needs, Xinhua said.

It imported 53 billion cubic metres of natural gas last year, according to the China National Petroleum Corporation.

Putin's visit will be his first to China since Xi was named president in March last year.
Quid pro quo: "Observers expect both leaders to take a united stand on major international issues, and Putin may seek China's support on Russia's dealings with Ukraine."
And also on the dollar as we reported in "Russia Holds "De-Dollarization Meeting": China, Iran Willing To Drop USD From Bilateral Trade." In which case expect random Chinese space rockets to mysteriously explode during take off too.


Philippines Releases Photos Of China's Construction In Disputed South China Sea

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Submitted by Zachary Keck via The Diplomat,
On Thursday the Philippines released photos to validate its claim that China is building structures and a possible airstrip on the disputed Johnson Reef.
As Shannon reported yesterday, on Wednesday the Philippines accused China of building structures on the disputed Johnson Reef in the South China Sea, which Manila said was in violation of the non-binding 2002 Declaration on the Conduct of Parties in the South China Sea agreement signed between China and the 10 member states of the Association of Southeast Asian Nations (ASEAN).
On Thursday the Philippines Department of Foreign Affairs (DFA) released four overhead shots of the Reef that date from between March 2012 and March of this year. The photos appear to show in stages China’s reclamation of the Johnson Reef, which the Philippines refers to as Mabini Reef. A DFA spokesperson said that the photos had been obtained by Philippine intelligence sources.

“These actions are considered destabilizing and in violation of the Declaration on the Conduct of Parties in the South China Sea (DOC) and international law,” the DFA said in a statement, the local news outlet GMA Online reported.
The Philippines has speculated that China is preparing to build an airstrip on the disputed reef in order to enhance its power projection capabilities in the South China Sea. Building structures on the reef could also bolster China’s claims of sovereignty over surrounding waters and isles.
The Philippines considers the Johnson Reef to be part of the Kalayaan Island Group (KIG), which it controls. Along with the Philippines and China, Vietnam and Taiwan also claim the Johnson Reef.
DFA spokesperson Charles Jose also expressed concerns on Thursday that China’s moves on the Johnson Reef are designed to undermine the Philippines ongoing international arbitration efforts. The Philippines has appealed to an international tribunal to determine the outstanding sovereignty issues it has with China in South China Sea. Beijing has refused to participate in the proceedings, which it characterizes as illegitimate.
According to Jose, China is trying to re-define the Johnson Reef as an island in order to bolster its claims of sovereignty over surrounding waters. Under the terms of the UN Convention of the Law of the Seas (UNCLOS), a feature that is defined as an island contains a 200 nautical mile exclusive economic zone (EEZ). Thus, a state possessing sovereignty over an island can claims the EEZ it generates. By contrast, smaller features like reefs or rocks do not have EEZs, according to UNCLOS.
“In our protest to China, we said this reclamation could undermine the arbitral tribunal’s review of our case because of the reclamation,” Jose said at a press briefing on Thursday, GMA Online reported. He added: “The nature of (Mabini Reef’s) land feature is being altered so the status quo is being changed.”

US Officially "Takes No Position" On China's Provocative Actions In Disputed Waters

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In a somewhat stunningly hypocritical step for a nation that seems so hell-bent on proclaiming Russia's provocative actions as tantamount to World War over Ukraine, the White House has issued a statement "taking no position" on China's "disputes" in the China Seas...
So - the Chinese undertook "provocative actions" into the "disputed territory" of another sovereign (allied) nation... and the US retaliates with no sanctions, no damnation, no hellfire? Good to know who your friends are...

As Bloomberg reports,
Biden, in meeting with China Army Chief of General Staff Fang Fenghui, says “no nation should take provocative steps to advance claims over disputed areas in a manner that undermines peace and stability in the region,”according to White House statement.

Underscores U.S.’s “serious concern about China’s unilateral actions” near Paracel Islands

Biden, Fang met at White House
This comes after earlier new from China...
A top Chinese general on Thursday defended the deployment of an oil rig that has inflamed tensions in the disputed South China Sea and triggered deadly protests in Vietnam, blaming Hanoi and saying China cannot afford to "lose an inch" of territory.

General Fang Fenghui also pointed blame at U.S. President Barack Obama's strategic "pivot" to Asia as Vietnam and China grapple with one of the worst breakdowns in relations since the neighbors fought a brief border war in 1979.


A U.S. official said Vice President Joe Biden told the visiting Chinese army chief that Beijing's actions in the maritime disputes were "dangerous and provocative.

Standing at the Pentagon alongside the top U.S. military officer, General Martin Dempsey, Fang said Vietnam was at fault for stirring up trouble by dispatching ships in an attempt to "disrupt" Chinese drilling activity.

"I think it's quite clear ... who is conducting normal activity and who is disrupting it," Fang said, speaking through an interpreter.


Speaking about regional tensions, Fang said Beijing did not create trouble, but was also unafraid of it and suggested China was ready to defend its territorial integrity.

"Territory which has passed down by our ancestors into the hands of our generation - we cannot afford to lose an inch," he said.
Which appears to be Chinese for "from my cold dead hands"

China Slams US "Hypocrisy", Tells Obama To Stop "Inspiring Militancy"

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Tensions between China and the U.S. continue to grow. On Wednesday, Beijing called U.S. Secretary remark about "provocative behavior" of China in the South China Sea "inspiring militancy," and insisted that the U.S. "stop encouraging the provocation" of the Philippines and Vietnam. As China Daily reportsChina has expressed the view that the U.S. must abandon the "hypocrisy" and stop publicly support Vietnam and the Philippines in territorial disputes with China.
As RIA reports, Tensions between China and the U.S. continues to grow, experts say. On Wednesday, Beijing called U.S. Secretary remark about "provocative behavior" of China in the South China Sea "inspiring militancy," writes China Daily .
Chinese Foreign Minister Wang Yi said in a telephone conversation with John Kerry that China insists that the U.S. "stop encourage provocation" of the Philippines and Vietnam.

According to analysts, so China has expressed the view that the U.S. must abandon the "hypocrisy" and stop publicly support Vietnam and the Philippines in territorial disputes with China.

Earlier it was reported that the Philippine government to seize the Chinese fishing boat and 11 crew members on charges of catching endangered sea turtles in the territory disputed waters of the South China Sea. Shortly before that, Vietnam demanded that China stop drilling for oil in the South China Sea.

Tensions between China, Vietnam and the Philippinesbegan to increase after last week, President Barack Obama signed a new military agreement with the Philippines, which aims to persuade Asian allies of American support in case of conflict with Beijing.

According to experts, thereason why the conflict risks becoming much more serious than just a territorial dispute is because Philippines quickly became embroiled in the geopolitical rivalry between the U.S. and China, while the two powers are fighting for strategic dominance in the western Pacific Ocean, says Al Jazeera article "Strategic Dilemma of the Philippines, between the eagle and the dragon."

Professor at the Chinese Institute of International Relations Dan Dzhankun believes that the U.S. is fully engaged in the problems encountered in the Asia-Pacific region because of its relationship with China. However, Washington's aggressive behavior in the territory of South-East Asia is unlikely to stabilize the situation. "The Obama administration is moving away from a century of U.S. diplomatic tradition in maintaining the balance between the other two countries," - said the expert, noting that "sabotage relations between the south-eastern countries may have important implications for the situation in the region and even the world. And fatal mistakes in strategy, which adheres Obama can not be ignored."
Seems like the potential for "costs" are growing...

Russia .....

Russia Dumps 20% Of Its Treasury Holdings As Mystery "Belgium" Buyer Adds Another Whopping $40 Billion

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Back in mid-March, there was a brief scare after the start of the Ukraine conflict, whenFed custody holdings plunged by a record $104.5 billion (if promptly bouncing back the following week), leading many to believe that Russia may have dumped its Treasurys, or at least change its bond custodian. We noted that we wouldn't have a definitive answer until the May TIC number came out to know for sure how much Russia had sold, or if indeed, anything. Moments ago the May TIC numbers did come out, and as expected,Russia indeed dumped a record $26 billion, or some 20% of all of its holdings, bringing its post-March total to just over $100 billion - the lowest since the Lehman crisis.

But as shocking as this largely pre-telegraphed dump was, it pales in comparison with what Zero Hedge first observed, is the country that has quietly and quite rapidly become the third largest holder of US paper: Belgium. Or rather, "Belgium" because it is quite clear that it is not the country of Begium who is engaging in this unprecedented buying spree of US paper, but some account acting through Belgian custody.
This is how we explained it last month:
... to clarify for our trigger-happy Belgian (non) readers: it is quite clear that Belgium itself is not the buyer. What is not clear is who the mysterious buyer using Belgium as a front is. Because that same "buyer", who to further explain is not China, just bought another whopping $31 billion in Treasurys in February, bringing the "Belgian" total to a record $341.2 billion, cementing "it", or rather whoever the mysterious name behind the Euroclear buying rampage is, as the third largest holder of US Treasurys, well above the hedge fund buying community, also known as Caribbean Banking Centers, which held $300 billion in March.

In summary: someone, unclear who, operating through Belgium and most likely the Euroclear service (possible but unconfirmed),has added a record $141 billion in Treasurys since December, or the month in which Bernanke announced the start of the Taper, bringing the host's total to an unprecedented $341 billion!
Make that an unprecedented $381 billion because as we just learned "Belgium" bought another $40 billion in March!
Curiously, this happened as Japan sold $10 billion in TSYs, and as China remained unchanged.  Further, foreign official accounts actually declined from $4.069 trillion to $4.054 trillion, which means this is what the US Treasury would classify as a "Private" buyer. 
So to summarize, of the total $60 billion increase in foreign Treasury holdings, which rose from $5.89 trillion to $5.95 trillion, "Belgium" accounted for two thirds, most likely doing the purchases under the guise of a "private", unofficial account! 
And once again, it is Belgium in "", because whoever is buying through the tiny European country, whose GDP is just double its reported total TSY holdings, is neither its government nor its people.
The question remains: who? Who has bought a whopping $200 billion in Treasurys using Belgium as a proxy since October?


Russia Will Hold Massive Air Drill Along Ukraine Border On Ukraine Presidential Election Day

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Just in case the message was unclear when Russia held its "massive nuclear attack" drill last week, Putin - unlike Obama who has had a problem with clarifying over the past three months just what "costs" means - intends to hammer the point ten days from today when Ukraine is set to hold its presidential elections, when the Russian military has scheduled to hold yet another military drill, "Aviadarts 2014", this time involving fighter jets (including as Su-27, Su-24, Su -25, Su-34 and MiG-29 jets and Mi-8 , Mi-24 , Mi-28, Ka-52 helicopters) and will see the participation of 71 crews of military aircraft and helicopters rehearsing the "countering of enemy air defenses, destruction of ground targets and carpet bombing enemy territory." Somehow we think Ukraine (and NATO) will get this particular message loud and clear.
More from Russian paper RBC Daily, google translated:
After last year's success the Ministry has decided to introduce new types of military exercises in sports-adversarial format. On such demonstration competitions military not just work out procedures during the " battle" , but also demonstrate commanders , journalists, and the audience that they can do it better than others. The first and second phases of the exercise "Aviadarts - 2014" took place in the beginning of the year. According to RBC's central apparatus of the Defense Ministry officer , the third stage of the exercise " Aviadarts 2014 " in Voronezh site " Pogonovo " will be held from 21 to 26 May. 71 fighter jet crews will participate,more than the number of planes and helicopters took part in the May 9 parade in Sevastopol. Based aircraft at the time of the competition will be in Ryazan, Lipetsk and Voronezh region.

The press service of the Air Force (Air Force) Russia, RBC said that the drill will involve operational- tactical aircraft (Su- 27, Su- 24, Su - 25, Su -34 and MiG- 29), Army ( Mi -8 , Mi-24 , Mi- 28, Ka -52) , the distal ( Tu-22M3 ) and military transport aircraft ( IL-76 ) . From the Western Military District ( WEST ) Challenge flight training will be attended by bomber crews Su and MiG fighters from air bases located in eight regions , said the press service of the WEST .

During the exercises, formation flying pilots will work as part of couples and units piloting technique , problems of air navigation, combat use of the missile , bomb and gun arms against ground targets, as well as overcoming the simulated enemy air defense systems, said a source in the Defense Ministry .

Will be prepared for the competition The target unique situation , said RBC chief of the press service WEST Oleg Kochetkov first ground targets will be presented not only a wooden model , but a real aircraft and automotive armor . Military even transported by air to the transport helicopter Mi-26T two handicaps MiG- 25RB ( cargo weight - 15 tons ) .

"The active phase of the exercise, when the pilots will perform tasks directly in the air, including the use of military weapons , 24-25 May," - said RBC group chief information security Air Force Colonel Igor Klimov. 21st , he said, will be opening on May 22-23 - the theoretical exams and delivery standards for physical training, and the 26th - closing with the award winners .
The punchline:
Deputy director of the Institute of Political and Military Analysis, Alexander Hramchihin did not rule out that the choice of date of the air drill was not random , but deliberately. " It is possible that the Ministry of Defense were guided with the current military and political situation in Ukraine ," - said the expert. " May 9 we have demonstrated excellent West capabilities of our aircraft, which flew to the Crimea and back , apparently, decided to build on the success ", adds the director of the Center for Military Forecasting Anatoly Tsiganok.

In June and July will be held the final , fourth stage " Aviadartsa " said RBC's group chief information security Air Force , Colonel Igor Klimov . It will take part foreign crews have already confirmed their participation , Belarus and Kazakhstan . Also was invited to the French side , but so far no response . In addition, in the final stage for the first time will participate aviadartsa and helicopter crews of Emergency Situations, Ministry of Internal Affairs and the Federal Security Service of Russia.
As for the yet unplanned fifth stage of the Avia-Darts, it may involve the landing of Mig-29s on the airport in Kiev.
And just in case Russian military engagements were not enough, RIA also reportedthat a Russian Pacific Fleet squadron, led by the guided-missile cruiser Varyag, sailed from Vladivostok on Wednesday to participate in the Russia-China exercises Naval Interaction-2014, a military spokesman told RIA Novosti.

The squadron, which also includes the large anti-submarine ship Admiral Panteleyev, the large amphibious ship Admiral Nevelskoy, the destroyer Bystry, the tanker Ilim and the sea-going tugboat Kalar, is heading to Shanghai, said Capt. 1st Rank Roman Martov.

“Upon arrival, sailors will take part in the joint Russia-China exercises in the South China Sea,” he said.

Six Chinese ships and vessels will be involved in the drills, according to Martov.

The drills come as Russian President Vladimir Putin is due to arrive in Shanghai on an official visit May 20 to cement economic ties with China, including on energy, the Kremlin said.

This will be the two countries' third such joint training exercise this year, aimed at strengthening the cooperation of their fleets and the ability to withstand various threats in open water.

Last year, the drills of the kind took place in July in the Sea of Japan and involved about 20 ships and vessels from both sides.
And now, once Kevin Henry returns from his Starbucks coffee break, it will be time to BTFD and/or BTFATH - after all the Fed is firmly in control of surreality, even if its excel models tend to #ref! out now and then.

RIA Novosti.....

Russia and China planning and strategizing - setting the Agenda.....

Russian, Chinese Energy Giants Discuss Cooperation

Russian, Chinese Energy Giants Discuss Cooperation
13:27 14/05/2014
Tags: cooperationCNPCRosneftChinaRussia
MOSCOW, May 14 (RIA Novosti) – The head of Russia's largest oil company Rosneft met with a senior Chinese energy official on Wednesday to discuss joint cooperation projects with China's state-owned giants Sinopec and the China National Petroleum Corporation, Rosneft said in a statement.
“The sides said they were satisfied with the level of cooperation, marking a common intention to develop and expand partnership,” the Moscow-based company said in a statement after talks between Igor Sechin and Wu Xinxiong, the director of the Chinese National Energy Administration.
Rosneft is involved in a number of projects with its Chinese partners.
In October last year, Rosneft and China’s national oil giant CNPC signed a memorandum on establishing a joint venture for upstream developments in East Siberia, with Rosneft holding 51 percent and CNPC the remaining 49 percent.
The joint venture will develop the Srednebotuobinsk field, with Rosneft’s Taas Yuriakh unit holding the license for the field’s development. The Russian company has also reached an agreement with Sinopec to supply 10 million tons of oil per year during a 10-year period.
In February, Sechin said Rosneft could strike a deal with its Chinese partners to establish a joint venture on extracting oil in Russia, including on the continental shelf.
Preparations are underway for the visit of Russian President Vladimir Putin to Shanghai next week to cement economic ties with China, including on energy. During the visit, Russia and China could agree on long-term gas supplies and increasing oil supplies.
The current standoff between Russia and the EU over Crimea is likely to give an impetus to Moscow’s long-awaited deal on exporting up to 60 billion cubic meters of gas per year via the eastern route to China, the largest market for Russian gas in the Asia-Pacific region.

Russian, Chinese Energy Giants May Sign Gas Contract During Putin’s Visit

16:03 15/05/2014
Tags: CNPCGazpromChinaRussia
MOSCOW, May 15 (RIA Novosti) – Russian and Chinese energy giants Gazprom and China National Petroleum Corporation (CNPC) may ink a long-awaited deal on gas supplies during a visit of President Vladimir Putin to Shanghai next Tuesday if they agree on pricing, the SINA news portal reported Thursday citing a Chinese diplomat.
“The two countries’ companies [Gazprom and CNPC] are now in Moscow exchanging views on the price of gas supplies to China. If they manage to agree, the deal will be signed during the visit of President Putin to China in the presence of both companies’ heads,” China’s Vice Foreign Minister Cheng Guoping said.
The Chinese diplomat said the sides have come to an agreement on practically all the issues, except for gas pricing.
Putin will arrive in Shanghai next week to cement economic ties with China, including on energy. During the visit, Russia and China could agree on long-term gas supplies and increasing oil supplies.
In March 2013, Gazprom and CNPC signed a memorandum of understanding on Russian gas supplies to China along the so-called eastern route via the Power of Siberia pipeline.
Gazprom CEO Alexei Miller said the company could receive advance payment from China for the gas, which could start flowing in 2018. The project has been estimated to pump up to 38 billion cubic meters annually, which could later increase to 60 billion cubic meters.

Russia Can Diversify Away From EU as China Welcomes Gas Cooperation

18:59 14/05/2014
Tags: gasEUChinaRussia
BRUSSELS, May 14 (RIA Novosti) – Supplying gas to China is a logical move for Russia, given Chinese demand and the country's willingness to pay a fair price, Gazprom advisor Marcel Kramer said Wednesday.
“The Chinese are making an important step of getting more natural gas in their energy mix,” said Kramer, an advisor to Gazprom’s management on the South Stream pipeline and European affairs.
“It is wise from a Russian point of view to work on diversifying its markets and on supplying those people who want to get the supply and are willing to pay a fair price for it,” Kramer said during a conference on EU-Russian energy cooperation in Brussels.
He added that the move is a signal for the EU, amid considerable uncertainty about whether US natural gas will actually be supplied to Europe.
Kramer explained that the recent shift to Asian markets such as China and India does not mean that Gazprom is suspending ties with EU partners.
“We should not forget that Europe is still extremely important as a market for Russian exports and there is a very strong commitment in Russia, also in Gazprom, toward maintaining a strong reputation in the European market as a reliable supplier," Kramer said.
Preparations are underway for the visit of Russian President Vladimir Putin to Shanghai next week to cement economic ties with China, including on energy. During the visit, Russia and China could agree on long-term gas supplies and increasing oil supplies.
The current standoff between Russia and the EU over tensions in Ukraine is likely to give an impetus to Moscow’s long-awaited deal on exporting up to 60 billion cubic meters of gas per year via the eastern route to China, the largest market for Russian gas in the Asia-Pacific region.

Putin to Visit China Next Week for Trade, Energy Deals – Kremlin

Russian President Vladimir Putin
13:03 13/05/2014
Tags: Vladimir PutinChina
MOSCOW, May 13 (RIA Novosti) – Russian President Vladimir Putin is due to arrive in China on an official visit May 20 to cement economic ties with Beijing, including on energy, the Kremlin said Tuesday.
“During the upcoming talks between the leaders in Shanghai the sides are due to discuss a range of bilateral issues. A number of important documents in the trade and economic, energy and humanitarian spheres are being drafted in the framework of the visit,” the Kremlin said in a statement.
The parties will also discuss the prospects of the Russian-Chinese cooperation on the international arena.
“The visit is expected to inaugurate the new stage of comprehensive and strategic partnership in bilateral relations," the statement said.
Putin is due to attend the 4th Conference on Interaction and Confidence Building Measures in Asia (CICA) Summit in Shanghai on May 21, which aims at enhancing cooperation towards promoting peace, security and stability in Asia.
The Russian leader is to hold a number of bilateral meetings with the participants of the summit.
Russian Deputy Energy Minister Anatoly Yanovsky said Monday a contract on Russian gas deliveries to China was nearing completion and the finishing touches could be added ahead of Putin’s upcoming visit to China.
In early March, Gazprom chief Alexei Miller said the Russian energy giant hoped to sign in May a 30-year agreement with China to supply it with an annual 38 billion cubic meters of natural gas.
The tentative agreement between Gazprom and China National Petroleum Corporation has been overseen by Putin and Chinese premier Xi Jinping, but its completion has been delayed over pricing disagreements.
Export volumes are expected to eventually rise to 60 billion cubic meters per year.
Beijing has been cementing its business ties with Moscow amid strained relations between Russia and the EU, which along with the US recently imposed sanctions against Russian officials and companies in response to the reunification with the formerly Ukrainian republic of Crimea.
In the interview with the China Daily newspaper, Russian Foreign Minister Sergei Lavrov, who visited Beijing last month, said Russia and China seek to create a “more democratic” multi-polar world, with the United Nations and international laws playing the central role in the new balance of power.

Russia Holds "De-Dollarization Meeting": China, Iran Willing To Drop USD From Bilateral Trade

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That Russia has been pushing for trade arrangements that minimize the participation (and influence) of the US dollar ever since the onset of the Ukraine crisis (and before) is no secret: this has been covered extensively on these pages before (see Gazprom Prepares "Symbolic" Bond Issue In Chinese YuanPetrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With ChinaRussia And China About To Sign "Holy Grail" Gas Deal;40 Central Banks Are Betting This Will Be The Next Reserve Currency; From the Petrodollar to the Gas-o-yuan and so on).
But until now much of this was in the realm of hearsay and general wishful thinking. After all, surely it is "ridiculous" that a country can seriously contemplate to exist outside the ideological and religious confines of the Petrodollar... because if one can do it, all can do it, and next thing you know the US has hyperinflation, social collapse, civil war and all those other features prominently featured in other socialist banana republics like Venezuela which alas do not have a global reserve currency to kick around.
Or so the Keynesian economists, aka tenured priests of said Petrodollar religion, would demand that the world believe.
However, as much as it may trouble the statists to read, Russia is actively pushing on with plans to put the US dollar in the rearview mirror and replace it with a dollar-free system. Or, as it is called in Russia, a "de-dollarized" world.
Voice of Russia reports citing Russian press sources that the country's Ministry of Finance is ready to greenlight a plan to radically increase the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. Governmental sources believe that the Russian banking sector is "ready to handle the increased number of ruble-denominated transactions".
According to the Prime news agency, on April 24th the government organized a special meeting dedicated to finding a solution for getting rid of the US dollar in Russian export operationsTop level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia.
Well, if the west wanted Russia's response to ever escalating sanctions against the country, it is about to get it.
The "de-dollarization meeting” was chaired by First Deputy Prime Minister of the Russian Federation Igor Shuvalov, proving that Moscow is very serious in its intention to stop using the dollar. A subsequent meeting was chaired by Deputy Finance Minister Alexey Moiseev who later told the Rossia 24 channel that "the amount of ruble-denominated contracts will be increased”, adding that none of the polled experts and bank representatives found any problems with the government's plan to increase the share of ruble payments.
For the benefit of our Russian-speaking readers, the interview with Moiseev is below and the transcript can be found here.
Further, if you thought that only Obama can reign supreme by executive order alone, you were wrong - the Russians can do it just as effectively. Enter the"currency switch executive order":
It is interesting that in his interview, Moiseev mentioned a legal mechanism that can be described as "currency switch executive order”,telling that the government has the legal power to force Russian companies to trade a percentage of certain goods in rubles. Referring to the case when this level may be set to 100%, the Russian official said that "it's an extreme option and it is hard for me to tell right now how the government will use these powers".
Well, as long as the options exists.
But more importantly, none of what Russia is contemplating would have any practical chance of implementation if it weren't for other nations who would engage in USD-free bilateral trade relations. Such countries, however, do exist and it should come as a surprise to nobody that the two which have already stepped up are none other than China and Iran.
Of course, the success of Moscow's campaign to switch its trading to rubles or other regional currencies will depend on the willingness of its trading partners to get rid of the dollar. Sources cited by mentioned two countries who would be willing to support Russia: Iran and China. Given that Vladimir Putin will visit Beijing on May 20, it can be speculated that the gas and oil contracts that are going to be signed between Russia and China will be denominated in rubles and yuan, not dollars.
In other words, in one week's time look for not only the announcement of the Russia-China "holy grail" gas agreement describedpreviously here, but its financial terms, which now appears virtually certain will be settled exclusively in RUB and CNY. Not USD.
And as we have explained repeatedly in the past, the further the west antagonizes Russia, and the more economic sanctions it lobs at it, the more Russia will be forced away from a USD-denominated trading system and into one which faces China and India. Which is why next week's announcement, as groundbreaking as it most certainly will be, is just the beginning.