Russia proposes use of Euro in trade with European nations to counter US sanctions

Moscow/Brussels: Russia has proposed to trade with the European countries in the Euro currency to retaliate against the US-imposed sanctions. Russian Finance Minister and the Deputy Finance Minister have issued statements to that effect and it is considered to be Russia’s effort to reduce the US dollar dominance in international trade. Earlier, Russia had taken the decision to trade with China, the largest importer of crude oil, in the currency Yuan.

Since the last few years, Russia has initiated aggressive and systematic steps to reduce the influence of the US dollar in its economy. For this purpose, Russia has already increased its gold reserves to a large extent such that the proportion of gold in the overall foreign reserves, has reached record levels. The country has also begun diluting its investment in and also sold the US Treasury bond holdings worth more than $80 billion in the last six months.

Other than investments in gold and the dilution of investment in the US Treasury bond holdins, Russia has been stressing on conducting the trade in local currency with leading countries including China. It has increased its investment in the Chinese Yuan and the Euro. The increase in its investment, also makes apparent the objective to expand trade in these currencies. For this reason, the proposal to use Euro for trade is said to be put forth.

Last week during an interview, Russian Finance Minister Anton Siluanov indicated the use of Euro in trade with the European countries. In the crude oil trade, using currencies other than the US dollar is beneficial for Russia as well as its European partners, said Siluanov. Previously, Russia had also expressed willingness to be a part of the alternative ‘payment system’ to be initiated by the European Union(EU). It would seemingly ease the trade in Euro for both parties.

Following the Russian Finance Minister, Deputy Minister Vladimir Kolychev also indicated that trade in Euro would be beneficial to Russia and its European partners. ‘This is the best opportunity to initiate trade in the local currency for short to medium term. Russia can also start trading in Euro for its oil. It would also strengthen the position of Euro as a reserve currency,’ said Kolychev.

He also claimed that the European countries will not face any difficulties in case the United States imposes sanctions against the Russian companies and banks. In fact, the companies that are facing financial difficulties today due to the US sanctions can also be rescued through it, noted the Russian Deputy Finance Minister further.

Russian President Vladimir Putin had openly accepted that his efforts were directed towards eliminating the presence of the US dollar from the Russian economy. He had clarified that such steps were being taken in order to avoid the effects of the consistent imposition of US sanctions.

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