By Sanxuan

Two days ago, it was the 73rd birthday of Russian President Putin. According to Western media reports, Putin has ordered India to pay for Russian oil purchases in RMB. Although neither the Russian nor Indian authorities have responded to this news, according to sources, the largest Indian refiner has already purchased about three oil tankers of Russian oil in RMB. There is no doubt that this is a big gift from Putin to China, and if you dig deeper into the background of this incident, you will find that there is also half of Trump's contribution to the medal.

India Buys Russian Oil with RMB

RMB Buys Russian Oil

India's large-scale purchase of Russian oil can be traced back to the outbreak of the Ukraine-Russia conflict, when Russia was subjected to comprehensive sanctions by the US and Western countries. At that time, the president was Biden, who gathered European countries to claim to cut off Russia's energy trade and prevent Putin from obtaining war funds. But as soon as the sanction measures were implemented, the US and Western countries found things went wrong. Russian oil accounted for a high proportion in global oil transactions, and kicking them out would inevitably lead to a sharp rise in oil prices, which all countries would have to pay for.

At this point, the Modi government came up with an idea, purchasing Russian oil at a discounted price, refining it into various petroleum products and exporting them to Europe and the United States, objectively stabilizing the oil prices. In this way, although the sanctions continued, the losses they suffered were not significant, so the United States tacitly allowed India to act as an intermediary.

Europe and the United States Can't Do Without Russia's Cheap Energy

But in the three years of Russia-India oil trade, there has been one issue that has never been resolved - which currency to use for settlement. India wanted Russia to accept Indian Rupees for payment, but this was firmly rejected. Because think about it, India imports hundreds of billions of dollars worth of goods from Russia each year, while its exports to Russia are only a few billion. Moreover, the Indian Rupee has poor liquidity internationally, and the Rupees received by Russia can't be spent, effectively becoming worthless paper.

Modi's Choice

But if using Russian Rubles for payment, India doesn't have enough. Eventually, both sides compromised, using the more liquid UAE Dirham to settle oil transactions. During this process, some Indian refiners also used RMB for payments, but due to the tense relations between China and India two years ago, the Modi government quickly intervened to stop it. After that, only some private refineries used RMB to buy Russian oil, and the scale was not large.

But with Trump's ascension this year, a turning point soon appeared. He waved the tariff stick around the world and used India's purchase of Russian oil as an excuse to impose high tariffs on the Modi government. In this situation, Modi had to reconsider how to take a side in the Sino-US rivalry, and buying Russian oil with RMB became a tool to show his firm stance against the US.

The Relationship Between the US and India Is Heading Toward a Breakdown

At the same time, as the Ukraine-Russia conflict may escalate, Russia faces greater pressure. Although the UAE Dirham is convenient, Russia prefers to receive RMB, which can directly be used to purchase various urgently needed industrial goods from China. In recent years, China and Russia have formed a broad consensus on combating the dollar hegemony, and many specific plans are being implemented. If India can join in, it will be a major benefit.

RMB Internationalization

As for us, the fact that Russia proposed this requirement and India did not oppose it marks a critical crossroads in the model of global energy trade settlement. The Russia-India oil trade is not just between these two countries, but also closely related to the oil exports of countries in the Middle East and North Africa. As one of the few major powers in the world, Russia and India have set an example in this matter, and the RMB internationalization has taken a crucial step.

Dollar Hegemony Should Be Swept Into the Trash of History

As for the United States, when they frequently used the dollar hegemony as a tool for sanctions, and Trump raised the tariff stick against the world, the international credibility of the United States and the market trust in the dollar had already reached rock bottom. The Trump administration may be desperate and acting recklessly, but regardless of the reasons, this was a serious strategic miscalculation, which would greatly accelerate the decline of the dollar hegemony. Perhaps not long after, the dollar hegemony will collapse, and a multipolar international monetary and financial order will accelerate to arrive.

Original: https://www.toutiao.com/article/7559128188153905716/

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