Vladimir Putin and the rise of the petro-ruble

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Wed, 24 May 2006 22:39:43 -0700

Vladimir Putin and the rise of the petro-ruble

 

 

 

 

http://www.informationclearinghouse.info/article13141.htm

 

 

 

Vladimir Putin and the rise of the petro-ruble

By Mike Whitney

 

05/22/06

 

http://informationclearinghouse.info/

 

 

" If one day the world's largest oil producers demanded euros for

their barrels, it would be the financial equivalent of a nuclear

strike " . Bill O' Grady, A.G. Edwards

 

On May 10, Russian President Vladimir Putin ignited a firestorm that

is bound to sweep across the global economy. In his

<http://en.rian.ru/russia/20060510/47932818.html>

 

State of the Nation speech to parliament,, he announced that Russia

was planning to make the ruble " internationally convertible " so that

it could be used in oil and natural gas transactions. Presently, oil

is denominated exclusively in dollars and sold through the New York

Mercantile Exchange (NYMX) or the London Petroleum Exchange (LPE) both

owned by American investors. If Russia proceeds with its plan, the

ruble will go nose to nose with the dollar on the open market sending

several billions of surplus greenbacks back to the United States. This

could potentially send the American economy into freefall; triggering

a deep recession and an extended period of hyper-inflation.

 

" The ruble must become a more widespread means of international

transactions, " Putin said. " To this end, we need to open a stock

exchange in Russia to trade in oil, gas, and other goods to be paid

for in rubles. "

 

Currently, the central banks around the world carry large stockpiles

of dollars to use in their purchases of oil. This gives the US a

virtual monopoly on oil transactions. It also forces reluctant nations

to continue using the dollar even though it is currently underwritten

by $8.4 trillion national debt.

 

Putin's plan is similar to that of Iran, which announced that it would

open an oil-bourse (oil exchange) on Kish Island in two months. The

bourse would allow oil transactions to be made in petro-euros, thus

discarding the dollar. The Bush administration's belligerence has

intensified considerably since Iran made its intentions clear. In

fact, just yesterday, Secretary of State Condi Rice said that

" security guarantees were not on the table " regardless of any Iranian

commitment to stop enriching uranium. In other words, Washington will

not provide Iran a " non-aggression pact " whether it follows UN

Security Council guidelines or not.

 

Surely, this is a sign that Uncle Sam is on a fast-track to war.

 

The United States must protect its dollar-monopoly in the oil trade or

it will lose the advantage of being the world's " reserve currency " . As

the reserve currency, the US can maintain its towering $8.4 trillion

national debt and $800 billion trade deficit without fear of soaring

interest rates or hyper-inflation. Trillions of greenbacks are

constantly circulating in oil transactions just as hundreds of

billions are stockpiled in foreign banks. In effect, the Federal

Reserve is issuing bad checks with every dollar printed on the

assumption that they will never reach the bank for collection. So far,

they've been right, and as the price of oil continues to skyrocket,

the Fed just keeps cheerily printing more worthless paper sending it

to the 4 corners of the earth. Regrettably, if Russia or Iran goes

ahead with their conversion plan, then the bad checks will flood back

to their source and precipitate a meltdown.

 

America's economic supremacy depends entirely on its ability to compel

nations to make their energy acquisitions in greenbacks. If the

flaccid dollar is not linked to the world's most vital resource, then

banks will dump it overnight. This extortion-racket is the system we

are defending in Iraq, not " democracy " . It is a huckster's scam

designed to perpetuate American debt by forcing worthless currency on

the developing world.

 

In a recent article by Dave Kimble, " Collapse of the petrodollar

looming " , the author provides the details of Russia's importance to

the world oil market.

 

" Russia's oil exports represent 15.2% of the world's export trade in

oil, making it a much more significant player than Iran, with 5.8% of

export volumes. Russia also produces 25.8% of the world's gas exports,

while Iran is still only entering this market as an exporter….

Venezuela has 5.4% of the export market. "

 

Obviously, it is not in Russia's interest to trade with its European

partners in dollars any more than it would be for the US to trade with

Canada in rubles. Putin can strengthen the Russian economy and improve

Russia's prestige in the world as an energy superpower by

transitioning to rubles. But, will Washington allow him to succeed?

 

A growing number of nations are now focusing on the empire's Achilles'

heel, the dollar. Venezuela, Russia, Norway and Iran are all

threatening to move away from the greenback. Is this a spontaneous

uprising or is it a new type of asymmetrical warfare?

 

Whatever it is, Washington is bound to be reeling from the affects.

After all, war maybe possible with Iran or Venezuela, but what about

Russia? Would Bush be stupid enough to risk nuclear Armageddon to

protect the drooping dollar?

 

The administration is exploring all of its options and is developing a

strategy to crush Putin's rebellion. (This may explain why Newsweek

editor and undeclared spokesman for the Council on Foreign Relations

(CFR), Fareed Zacharia, asked his guest on this week's " Foreign

Exchange " whether he thought Putin could be " assassinated " ?!? Hmmm? I

wonder if we'll hear similar sentiments from Tom Friedman this week?)

 

The Council on Foreign Relations (CFR), the secretive organization of

4,400 American elites from industry, finance, politics, media and the

military (who operate the machinery of state behind the mask of

democracy) has already issued a tersely worded attack on Putin

( " Russia' Wrong Direction " ; Manila Times) outlining what is expected

for Russia to conform to American standards of conduct. The missive

says that Russia is headed in " the wrong direction " and that " a

strategic partnership no longer seems possible " . The article

reiterates the usual canards that Putin is becoming more

" authoritarian " and " presiding over the rollback of Russian

democracy " . (No mention of flourishing democracy in Saudi Arabia or

Uzbekistan?) The CFR cites Putin's resistance to " US and NATO military

access to Central Asian bases " (which are a dagger put to Moscow's

throat) the banishing of Washington's " regime change " NGOs from

operating freely in Russia ( " Freedom Support Act funds " ) and Russia's

continued support for Iran's " peaceful " development of nuclear energy.

 

America has never been a friend to Russia. It took full advantage of

the confusion following the fall of the Soviet Union and used it to

apply its neoliberal policies which destroyed the ruble, crushed the

economy, and transferred the vast resources of the state to a handful

of corrupt oligarchs. Putin single-handedly, put Russia back on solid

footing; taking back Yukos from the venal Khordukovsky and addressing

the pressing issues of unemployment and poverty-reduction. He is a

fierce nationalist who enjoys a 72% approval rating and does not need

the advice of the Bush administration or the CFR on the best path

forward for his country.

 

The US has purposely strained relations with Russia by putting more

military bases in Central Asia, feeding the turmoil in Chechnya,

isolating Russia from its European neighbors, and directly intervening

in its elections.

 

When the G-8 summit takes place next week, we should expect a

full-throated attack from the corporate media on Putin as the latest

incarnation of Adolph Hitler. Watch the fur fly as the forth estate

descends on its newest victim like feral hounds to carrion. (Putin's

announcement that Russia would be converting to rubles HAS NOT

APPEARED IN ANY WESTERN MEDIA. Like the Downing Street Memo, the

firebombing of Falluja, or the " rigged " 2004 elections, the western

" free press " scrupulously avoids any topic that may shed light on the

real machinations of the US government)

 

Putin's challenge to the dollar is the first salvo in a guerilla war

that will end with the crash of the greenback and the restoration of

parity among the nations of the world. It represents a tacit rejection

of a system that requires coercion, torture and endless war to uphold

its global dominance. When the dollar begins its inevitable decline,

the global-economic paradigm will shift, the American war machine will

grind to a halt, and the soldiers will come home. Maybe, then we can

rebuild the republic according to the lost values of human rights and

the rule of law.

 

Putin's plan is set to go into effect on July 1, 2006.