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Russia's "de-dollarized trade" with India is a face-melting farce
Good riddance to oil-for-rupees, the biggest scam of 2023 (so far)
India and Russia have reportedly abandoned their plan to switch to rupees for bilateral trade. The short-lived scheme was widely praised as a blackbelt judo-attack against US dollar hegemony.
In reality, oil-for-rupees was terrible in every conceivable way.
Here’s how this ephemeral settlement system would have worked:
India, using rupees, gobbles up all the discounted Russian crude it can get its hands on.
India processes this “sanctioned” oil, and then exports it to the West for delicious dollars and euros.
Russia accumulates a mountain of rupees because India’s national currency isn’t fully convertible, and in the best-case scenario can be exchanged for rubles only after great difficulty and long delays.
Russia can’t buy stuff with its Mount Everest of rupees because Indian manufacturers want to be paid in dollars.
Indian exports to Russia are miniscule, creating a titanic trade imbalance in which Moscow ships oil to India in exchange for currency that it doesn’t need and can’t even use.
Who benefits? Definitely not Russia.
Let’s dive into the details. At the end of April, Kommersant published an excellent synopsis of Russia’s “de-dollarized” trade with India:
Russian exports to India almost quadrupled from April 2022 to January 2023, according to the country’s Ministry of Industry and Trade. Such rapid growth was primarily due to the increased supply of oil, coal and fertilizers.
Imports from India, on the other hand, decreased, in particular, due to a decrease in supplies of machinery and equipment to the Russian Federation. Trade between countries is accompanied by difficulties with settlements - foreign banks often block payments, and the transition to rupees and rubles is limited due to the peculiarities of currency regulation and a strong imbalance in mutual supplies. […]
From April 2022 to January 2023, trade between the countries increased to $39.8 billion [up from $9.9 billion in the previous fiscal year]. Russian exports accounted for $37.28 billion [93% of total bilateral trade]. […]
India's demand for oil is expected to continue to grow - this country is increasing production and exports of petroleum products to Europe against the backdrop of an embargo on the import of such products from Russia. [India’s petroleum exports to the European Union have reportedly risen by 22% over the last year, while sales to the United States nearly tripled in April compared to the previous month.]
The pronounced imbalance of trade between Russia and India complicates the transition to settlements in national currencies - the rupees received from the sale of Russian goods cannot be spent on the purchase of products of Indian manufacturers (payments are mainly made in dollars). […]
The rupee’s conversion into foreign currency is carried out only within India on the stock exchange or in authorized banks. The rupee has limited convertibility, and its exchange in large volumes requires the permission of Indian regulators.
The good news is that oil-for-nothing was aborted before it could do serious, irreversible damage.
The bad news is that BRICS-friend India will continue paying in dollars for cheap Russian crude, which will continue to be rerouted to the Satanic Nazi West at a premium. (Indian refineries have also been experimenting with using the UAE dirham, which is pegged to the dollar.)
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