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OpEdNews Op Eds    H2'ed 4/2/22

Meet the New Resource-Based Global Reserve Currency

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Pepe Escobar
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US Capitol tour guide demonstrating that John Trumbull's 'Declaration of Independence' painting appears on the back of the two-dollar bill
US Capitol tour guide demonstrating that John Trumbull's 'Declaration of Independence' painting appears on the back of the two-dollar bill
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It was something to behold - Dmitri Medvedev, former Russian President, unrepentant Atlanticist, current deputy chairman of the Russian Security Council, decided to go totally unplugged in an outburst matching the combat star turn of Mr. Khinzal, that delivered palpable shock and awe all across NATOstan.

Medvedev said "hellish" Western sanctions not only have failed to cripple Russia, but are instead "returning to the West like a boomerang." Confidence in reserve currencies is "fading like the morning mist" and ditching the US dollar and the euro is not unrealistic anymore - "the era of regional currencies is coming."

After all, he added, "no matter if they want it or not, they'll have to negotiate a new financial order (") And the decisive voice will then be with those countries that have a strong and advanced economy, healthy public finances and a reliable monetary system."

Medvedev relayed his succinct analysis even before D Day - as in the deadline this Thursday established by President Putin after which payments for Russian gas by "unfriendly nations" will only be accepted in rubles.

The G7, predictably, had struck a (collective) pose: we won't pay. "We" means the 4 that are not large Russian gas importers. "We", moreover, means the Empire of Lies dictating the rules. As for the 3 that will be in dire straits, not only they are major importers but also happen to be WWII losers - Germany, Italy and Japan, still de facto occupied territories. History does have a habit of playing perverted tricks.

Denial didn't last long. Germany was the first to break - even before industrialists from Ruhr to Bavaria staged a mass revolt. Scholz, the puny Chancellor, called Putin, who had to explain the obvious: payments are being converted into rubles because the EU froze Russia's foreign exchange reserves - in a crass violation of international law.

With Taoist patience, Putin also expressed hope this would not represent a deterioration in contract terms for European importers. Russian and German experts should sit down together and discuss the new terms.

Moscow is working on a set of documents defining the new deal. Essentially, that spells out no rubles, no gas. Contracts become null and void once you violate trust. The US and the EU broke legally biding agreements with unilateral sanctions and on top of it confiscated foreign reserves of a - nuclear - G20 nation.

The unilateral sanctions made dollars and euros worthless to Russia. Hysteria fits won't cut it: this will be resolved - but under Russia's terms. Period. The Foreign Ministry had already warned that refusal to pay for gas in rubles would lead to a serious global crisis of non-payments and serial global-level bankruptcies, a hellish chain reaction of blocked transactions, freezing of collateral assets and closures of credit lines.

What will happen next is partially predictable. EU companies will receive the new set of rules. They will have time to examine the documents and make a decision. Those that say "no" will be automatically excluded from receiving direct Russian gas shipments - all politico-economic consequences included.

There will be some compromise, of course. For instance, quite a few EU nations will accept to use rubles and increase their gas acquisitions so they may resell the surplus to their neighbors and make a profit. And some may also decide to buy gas on the go on energy exchanges.

So Russia is not imposing an ultimatum on anybody. The whole thing will take time - a rolling process. With some sideway action as well. The Duma is contemplating the extension of payment in rubles to other essential products - such as oil, metals, timber, wheat. It will depend on the collective voracity of the EU chihuahuas. Everyone knows that their non-stop hysteria may translate into a colossal rupture of supply chains across the West.

Bye bye oligarchs

While the Atlanticist ruling classes have gone totally berserk but still remain focused on fighting to the last European to extract any remaining, palpable EU wealth, Russia is playing it cool. Moscow has been quite lenient in fact, brandishing the specter of no gas in Spring rather than Winter.

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Pepe Escobar is an independent geopolitical analyst. He writes for RT, Sputnik and TomDispatch, and is a frequent contributor to websites and radio and TV shows ranging from the US to East Asia. He is the former roving correspondent for Asia (more...)
 

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