Eurasian Economic Union De-Dollarizes 70 Percent of its 2018 Trade

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The member states of the Eurasian Economic Union (EAEU) – Armenia, Belarus, Kazakhstan, Krygyzstan and Russia increased the share settlements in local currencies to 70 percent in the first half of 2018, according to Sergey Prikhodko, the First Deputy Chief of the Russian Government. He made the comments at the Eurasian Intergovernmental Council who are currently meeting in Minsk. The Council includes the heads of government of the Eurasian Economic Union (EAEU) member states.

According to Prikhodko, the bulk of the settlements in local currencies accounts for trade with Russia and is implemented via rubles. Opportunities for increasing the share of such settlements mainly depend on developing trade ties between the member countries of the alliance. “The further growth of the (70%) figure will be achieved via ensuring macroeconomic and financial stability, creating a common financial market, and harmonization of legislative control over the financial sector.” Prikhodko added.

The EAEU is not the only alliance of countries willing to replace the US dollar with alternative currencies in trade. Earlier this year, the BRICS group (Brazil, Russia, India, China and South Africa) of emerging economies took steps towards increasing settlements in local currencies to avoid using the US dollar. Countries like China, Russia, Iran, Iraq, Venezuela and others are also planning to substitute the US national currency in oil trade amidst the policy of using sanctions as a trade weapon curently implemented by Washington.

The EAEU in geographical terms extends from the Western borders of China to the eastern borders of the European Union and is the “Road” portion of China’s Belt & Road Initiative. The EAEU has a population of some 183 million and a GDP of some US$5 Trillion. Intra-EAEU trade has been significantly increasing and rose 38% last year.

Apart from the five member nations, the EAEU also includes Moldova as an observer state, while Tajikistan, Uzbekistan, Mongolia, Turkmenistan, Iran, Turkey, Syria and Tunisia are also all reportedly planning to join the union. The EAEU is also in the process of agreeing numerous Free Trade Agreements, a full FTA was signed off with Vietnam two years ago, a non-preferential FTA with China this year, in addition to a deal with Iran. Other Asian nations, including Singapore, India, Indonesia and Turkey are all currently negotiating FTA with the Union. Thailand upgraded its trade ties with the EAEU just last week.

“The move to de-dollarise is gaining momentum as trade between Russia, China, Eurasian and Asian nations continues to grow.” comments Chris Devonshire-Ellis of Dezan Shira & Associates. “The trend is clear – the Chinese RMB Yuan and Russian Ruble will in time re-assert their position as globally alternative currencies, while the United States will lose traction,control and monitoring of currency movements throughout the Eurasian region. China and Russia are already developing alternative payments systems to services such as SWIFT. The currencies in use across the Belt & Road will in time be predominantly Chinese and Russian.”

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