The first Eurasia Economic Forum, held last week in Bishkek, Kyrgyzstan, should be regarded as a milestone in setting the parameters for the geoeconomic integration of the Eurasian heartland.
Sergei Glazyev, Russia's Minister in Charge of Integration and Macroeconomics of the Eurasia Economic Union (EAEU), is coordinating the drive to design an alternative monetary-financial system - a de facto post-Bretton Woods III - in cooperation with China.
According to Glazyev, the forum "discussed the model of a new global settlement currency pegged to baskets of national currencies and commodities. The introduction of this currency instrument in Eurasia will entail the collapse of the dollar system and the final undermining of the US military and political power. It is necessary to start negotiations on signing an appropriate international treaty within the framework of the SCO."
Glazyev described the initiative to upend the western global financial system in more detail during an exclusive interview with The Cradle in April.
It's particularly relevant to understand how Glazyev interconnects the EAEU's drive with the increasing geopolitical and geoeconomic role of the Shanghai Cooperation Organization (SCO), which unites at the same table key Eurasian powers: China, Russia, India, Pakistan, Kazakhstan and Iran.
That connects directly with Russian President Vladimir Putin, at the meeting of the Supreme Eurasian Economic Council, supporting the extension of a temporary free trade agreement between the EAEU and Iran, which is the newest (and only West Asian) full member of the SCO. Putin said this should go ahead despite the "confrontation by the collective West."
The EAEU, inaugurated in 2015 with five full members - Russia, Kazakhstan, Kyrgyzstan, Belarus and Armenia - represents a market of 184 million people and a collective GDP of over $5 trillion. The next step with Iran will be to implement a full free trade agreement, possibly before the end of the year, according to Iranian deputy trade minister Alireza Peymanpak. Egypt, Indonesia and the UAE are also candidates to strike deals with the EAEU.
Iran, which has for over four decades now been forced to find creative solutions to bypass serial, imperial sanction packages, may have a conceptual lesson or two to teach Russia. Barter arrangements are gaining ground: Tehran is offering spare parts and gas turbines to Moscow's power plants in exchange for much needed zinc, aluminum, lead and steel for its metal and mining industries, according to Iranian trade and industries minister Reza Fatemi Amin.
And more barter on a wide range of commodities is ahead, as discussed during a recent visit to Tehran by Russian Deputy Prime Minister Alexander Novak.
The other RIC
Slowly but surely, the new RIC (Russia-Iran-China) - as opposed to the old RIC in BRICS (Russia-India-China) - is attempting to integrate their financial systems. Iran is a matter of national security strategy for China, as an energy provider and essential partner of the Belt and Road Initiative (BRI) in West Asia.
Russia-China, though, is a much more complex matter. Extremely fearful of provoking US sanctions, Chinese banks are refraining - at least for the moment - to increase their deals with Russian banks, which brings us to the case of UnionPay - the Chinese bank card provider - increasingly popular, especially across Asia, declined from partnering with Sberbank even before Russia's largest bank was excluded by the EU and the US from the global bank messaging platform SWIFT.
UnionPay also canceled plans with other Russian banks to issue UnionPay cards linked with the Russian Mir payment system, profiting from the exit of Visa and Mastercard from the Russian market.
This is still a careful balancing act for China. Earlier this year at the Boao Forum in Asia, President Xi Jinping was adamant in opposing the "wanton use of unilateral sanctions." And over 80 percent of Chinese companies already established in Russia appeared to continue their business as usual.
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