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‘Golden ruble 3.0’

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The tough sanctions blockade has created necessary prerequisites for a 180-degree reversal of Russian foreign trade. The main foreign economic partners of Russia were the EAEU member states, China, India, Iran, Turkey, the UAE, etc. And with each of these countries, the Russian Federation has a trade surplus. According to the preliminary assessment of the Bank of Russia, in January – September 2022, it strengthened to $198.4 billion, which is $123.1 billion more compared to the same period last year. This surplus was taken out of the country (while half went to repay the external debts of Russian companies with their replacement by domestic ruble lending) and is reflected in the balance of payments article “net capital outflow”.

In friendly countries, the process of de-dollarization has begun, the share of settlements in “soft” currencies is growing. In September, Russia became the third country in the world in terms of the use of the yuan in international settlements. According to the Central Bank, in recent months, yuan trading accounts for up to 26% of foreign exchange transactions in the Russian Federation. The yuan/ruble pair on the Moscow Stock Exchange has many times overtaken the dollar and the euro in terms of daily trading volume. When using yuan, rupee, rial, etc. in foreign trade settlements of the Russian Federation. and the presence of a trade surplus results in the accumulation of multibillion-dollar cash balances on the accounts of Russian exporters in “soft” currencies in the banks of the above-mentioned partner countries.

The accumulation of funds in “soft” currencies will keep on increasing. But ever since this money is also subject to exchange rate and possible sanctions risks, there is a need to sterilize their excessive mass. The best way is to buy non-sanctioned gold in China, the UAE, Turkey, possibly Iran and other countries for local currencies. The “foreign” gold purchased by the Russian Central Bank can be stored in gold and foreign exchange reserves (gold reserves), within certain limits being in the central banks of friendly countries, can be used for cross-country settlements, currency swaps and clearing operations. Some of the gold can be recovered to Russia.

Russia’s transition to trade in national currencies in relations with friendly countries is a right tactical choice, but not a strategic one. If pricing continues in dollars on Western exchanges, trade flows are insured by English companies, then there is no real independence from the Western “crooked mirror” – derivative pricing systems.

Regardless of unprecedented sanctions stress, Russia’s task is not to learn how to play by the “crooked rules” of the West, but to build transparent and mutually beneficial rules of the game with friendly countries, create its own pricing systems, exchange trading, and investment. Thus said gold can be a unique tool in the fight against Western sanctions, if you recalculate the prices of all major international goods (oil and gas, food and fertilizers, metals and solid minerals) in it. Fixing the price of oil in gold at the level of 2 barrels. for 1 g, it will give a 2-fold increase in the price of gold in dollars, calculated Credit Suisse strategist Zoltan Pozhar. This would be an adequate response to the “price ceilings” introduced by the West – a kind of “floor”, a solid foundation. So India and China can take the place of global commodity traders instead of Glencore or Trafigura.

Gold (along with silver) has been the core of the global financial system for millenia, an honest measure of the value of paper money and assets. Now the gold standard is considered an “anachronism”. It was canceled in its final form half a century ago (the United States announced the “temporary” closure of the “golden window” adopted in 1944 in Bretton Woods), re-linking the dollar to oil. But the age of the petrodollar is coming to a finale: now talks of the petroyuan and other mechanisms to limit the abuse of the issuer of the reserve world currency by its status are being held. Russia, together with its eastern and southern partners, has a unique chance to “jump off” the sinking ship of a dollar-centric debt economy, ensuring its own development and mutual trade in accumulated and extracted strategic resources.

This is not the first attempt by Russia to introduce a solid ruble based on a peg to gold. The gold standard in the 19th century was lobbied in Europe by Rothschild – this gave him (and Britain) the chance to subordinate continental Europe to the British financial system over gold loans. Russia joined the “club” under Count Witt. The “Golden Ruble 1.0” ensured the process of capitalist accumulation, while tying domestic bankers and industrialists to the sources of Western capital. There was no large scale gold mining in Russia at that time. The industry appeared only under Stalin.

Gold played an important role both in industrialization and in the post-war refusal of the USSR to join the dollar standard (at the time the country accumulated record gold reserves). Having signed the Bretton Woods Agreements, the USSR did not ratify them, having determined the binding of the ruble not to the dollar (which was a condition for participation in the Marshal’s plan), but to gold and to “the entire wealth of the country.” The “Golden Ruble 2.0” ensured an accelerated recovery of the economy after the war, made it possible to implement nuclear and missile projects. The reformer Khrushchev abolished the binding of the ruble to gold, having carried out in 1961. Monetary reform with the actual devaluation of the ruble by 2.5 times and linking it to the dollar, creating conditions for the subsequent transformation of the country into a “raw material appendage” of the Western financial system.

Now objectively there are conditions for the “Golden Ruble 3.0”.

The sanctions imposed against Russia have hit the Western economy like a boomerang. The geopolitical instability provoked by them, rising prices for energy and other resources, inflation and other negative factors put the global economy under great pressure, especially the global financial market. In 2023, all these circumstances will surely affect the change in investment policy stereotypes in the world – from risky investments in complex financial instruments to investing in traditional assets, primarily in gold. According to analysts of Saxo Bank, in 2023 increased demand for this metal will lead to the fact that the price of it will rise from the current $ 1800 per ounce to $ 3000. As a result, there is a real opportunity to significantly increase gold reserves in the very near future – due to both increase in physical volumes of gold and a revaluation of its value.

Large gold reserves allow the country to conduct a sovereign financial policy and minimize dependence on external creditors. The amount of reserves affects the reputation of the country, its credit rating and investment attractiveness. Large reserves make it possible to plan the state budget for a long term, eliminating many economic and political risks. In 1998, the lack of sufficient international reserves was one of the causes of the crisis, which ended in default for Russia. Now our country already has large gold and foreign exchange reserves, having the fifth indicator in the world (after China, Japan, Switzerland and India) and ahead of the United States, but this is still not enough.

The volume of annual gold production is estimated at only $200 billion (at current prices), the volume of accumulated reserves is $7 trillion, of which central banks have no more than a fifth, and in the third quarter they bought a record 400 tons of gold. For the first time in many years, the People’s Bank of China announced an increase in its gold reserves. But the Bank of Russia publicly informed the market that buying gold is a bad idea, as it leads to excessive monetization of the economy, and set a discount to the world price for about 15%. As a result, gold miners are experiencing double stress: The West has outlawed Russian gold, prohibiting any transactions with it, and the Central Bank of the Russian Federation pushes gold (as well as currency) abroad, giving companies the right to export everything through intermediaries with melting or re-branding of metal in “good jurisdictions”.

In China, which ranks first in gold production, there is a legislative ban on the export of all mined gold. According to the Shanghai Gold Exchange, over the past 15 years, customers have seized (received in physical form) 23,000 tons of this metal. India is considered the world champion in the accumulation of gold – more than 50,000 tons (the Reserve Bank of India has almost 2 orders of magnitude less). For the last quarter of a century, gold has been flowing from West to East through the main hubs (London, Switzerland, Turkey, UAE, etc.) with a capacity of 2000-3000 tons per year. Has the “despicable metal” remained in the vaults of the Western Central Banks, or is it all “demonetized” through swaps and leasing? The West will never say that, and there will be no Fort Knox audit.

Over the past 20 years, the volume of gold mining in Russia has almost doubled, while in the United States it has dropped by nearly 2 times. It’s like with the uranium deal (HEU-KNOW): having demonetized real wealth, the United States has lost competence and interest in the production and processing of these strategic resources (both gold and uranium, etc.) – the printing press will ensure the purchase of everything we want. The same thing happened, for example, with the extraction of rare earth metals, it almost entirely went to China. The time has come to reap the benefits: the States are desperately buying palladium, uranium, and other resources in Russia (as their customs statistics for recent quarters show).

Gold mining, which today barely occupies 1% of GDP, may well grow (due to the growth of both production and relative oil prices) to 2-3% of GDP and become the basis for the rapid growth of the entire commodity sector (30% of GDP) and the balancing of foreign trade, which up to now relies on the tyranny of issuers of “hard” currencies and risks of devaluation and insufficient convertibility of “soft” currencies. In this case, Russia, due to a well-organized global “gold rush” (and the Russian population, following the world central banks, has already increased investments in gold by 4 times compared to last year), will be able to increase gold production (only due to three large deposits already being commissioned) from 330 tons by 1.5 times to 500 tons, becoming a world leader in this strategic industry as well. As a “bonus” we will get: a strong ruble, a strong budget and – when implementing a strategy of advanced development – a strong economy.


Authors: Sergey Glazyev (Russian Academy of Sciences) and Dmitry Mityaev (Executive Secretary of the Scientific and Technical Council under the Chairman of the EEC Board)
27 December 2022 – Vedemosti
Translated by Elena Gülsün from Russian. 

Russia

Europe ready for arms and missile control talks with Russia, FT says

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Representatives of European nations are ready to renegotiate arms control and military conflict prevention agreements with Russia, according to a Financial Times report citing unnamed European officials.

The US is seeking to include European countries in discussions on a future security architecture.

In this context, Europeans look favourably upon returning to arms control mechanisms, including agreements limiting missile deployment and the restoration of arrangements operating during the Cold War era.

The newspaper cited the Open Skies Treaty, which allowed the US and the Union of Soviet Socialist Republics (USSR) to monitor each other’s military installations, and accords restricting the deployment of specific missile types among potential examples.

Participating states of the Organization for Security and Co-operation in Europe (OSCE) signed the Open Skies Treaty in March 1992.

Signatory states are obliged to permit observation flights by other party nations over their territories using photographic and video surveillance.

Russia withdrew from the treaty in 2021.

Russian authorities emphasized in statements at the time that Russia had done everything possible to preserve the agreement, “despite numerous violations of the Open Skies Treaty by the US, its allies, and dependent states.”

According to information obtained by the newspaper, US President Donald Trump’s administration is seeking Moscow’s consent to organize a multilateral meeting involving European representatives.

A source speaking to the Financial Times noted that the European security architecture is among the main agenda items at the United Arab Emirates (UAE) summit, though Trump will make the final decision regarding the nature of security guarantees the US will offer.

The first day of trilateral negotiations among Russia, the US, and Ukraine concluded on 10 November in Abu Dhabi, the capital of the United Arab Emirates, with the meeting lasting more than four hours.

According to Politico, the parties plan to address territorial matters, including borders and lines of contact, on 11 November during the second day of negotiations.

Sources speaking to the publication stated that resolving the territorial issue and the future security mechanisms of Ukraine and Europe are interconnected and must be discussed in parallel.

“It is obvious that the current system does not work. We need to create something new that will work effectively today,” one source said.

According to Politico and the Financial Times, American negotiators Steve Witkoff and Jared Kushner plan to invite Europeans to join the negotiations after the trilateral meeting concludes.

“We need Europe at the negotiating table,” a source told Politico.

The Financial Times source likewise stressed that European participation is essential to reach an agreement aimed at ending the conflict.

European capitals fear that Moscow and Washington could agree on security guarantees for Ukraine and the continent’s new security architecture without the involvement of European Union (EU) and NATO allies.

Furthermore, the issue of EU participation in talks resolving the conflict in Ukraine has caused differences of opinion between Moscow and European capitals.

Russia previously stated that the EU currently has no place at the negotiating table due to its stance on the conflict.

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US raises NATO-style guarantees for Kyiv ahead of Abu Dhabi talks

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US President Donald Trump’s administration has asked the Russian side whether Moscow objects to granting Ukraine security guarantees akin to NATO’s Article 5 on collective defence, and to having such guarantees provided directly by the alliance itself.

According to a Financial Times report citing a US official, the final decision on the nature of the US security guarantees will be made by US President Donald Trump.

The US official said the White House is seeking Russia’s consent for multilateral negotiations that would also include European representatives.

“At this stage, we firmly believe Europe must be part of the negotiations to end the war,” the official said on the matter.

According to the report, prior to the trilateral talks, Trump’s special envoy Steve Witkoff and his son-in-law Jared Kushner will hold consultations with representatives from Ukraine, the European Union, NATO, Germany, France, the United Kingdom, and Italy.

Rustem Umerov, representing the Ukrainian delegation, also confirmed that Kyiv will hold separate coordination meetings with European partners in Abu Dhabi to align positions and subsequent steps.

The newspaper reported that while European diplomats are sceptical about the prospects of a breakthrough in the Abu Dhabi talks, they consider participation in the diplomatic process essential to support Ukraine and prevent broader European security issues from being addressed without their involvement.

Ukrainian President Volodymyr Zelenskyy stated in late October that talks held in Oslo between Ukraine, EU countries, and US representatives discussed granting Kyiv security guarantees similar to the provisions of NATO’s Article 5 collective defence clause.

In February, Zelenskyy described credible guarantees for Kyiv as the “only real basis” for peace.

The issue of security guarantees will form one of the agenda items at the trilateral negotiations between Russia, the US, and Ukraine, scheduled for 10-11 November in Abu Dhabi.

These contacts mark the first trilateral meeting in roughly nine months, following the previous round held in Geneva in February.

Presidential Aide Vladimir Medinsky will head the Russian delegation at the talks, while the US side will be represented by the president’s special envoys Steve Witkoff and Jared Kushner.

Rustem Umerov will lead the Ukrainian delegation.

Moscow insists that the future security guarantees slated for discussion at the meetings must also cover Russia.

Kremlin spokesman Dmitry Peskov noted that guarantees can only be mutual.

At the beginning of the year, Russian Deputy Foreign Minister Aleksandr Grushko stated that security guarantees for Russia are an essential component in reaching a peace agreement on Ukraine.

“We accept that a peaceful settlement in Ukraine must take Ukraine’s security interests into account, but the key issue is, of course, Russia’s security interests,” Grushko said.

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Putin proposes Arctic energy cooperation to US to ease gas sanctions

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Following a diesel arrangement with the US and the prospect of expanding Russian fertiliser shipments, Moscow is offering Washington joint cooperation in the Arctic.

Russian President Vladimir Putin announced that Moscow is considering the possibility of working together with US partners in the Arctic region.

Speaking at the Gas Exporting Countries Forum (GECF) summit, Putin described the regional situation:

“We are actively working in the Arctic, which I mentioned, with many countries around the world, and we are interested in joint work. Until very recently, our European partners and our Chinese partners were working alongside us at our fields. Now we are considering the possibility of joint work with American partners.”

So, which fields could a partnership between the two countries in the Arctic encompass, and what could Moscow offer Washington in exchange for lifting sanctions on Russian gas? Liquefied natural gas (LNG) projects stand at the heart of the matter.

European companies pulled out of Russian gas projects such as Yamal LNG and Arctic LNG 2 due to sanctions imposed on Russia after 2022.

According to Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation and the National Energy Security Fund (NESF) who spoke to the Vzglyad newspaper, cooperation with Chinese companies moved to a new dimension following the departure of the Europeans.

Two Chinese shareholders, CNPC and CNOOC, are involved in the Arctic LNG 2 project. Initially, both companies froze their participation out of concern over US sanctions targeting the venture.

Mikhail Vakilyan, an expert at the Institute for the Development of Fuel and Energy Complex Technologies, told Vzglyad that Beijing did not alter its policy, but rather that Chinese firms CNPC and CNOOC simply did not want to risk their access to the US dollar.

Yet, a year and a half later, the picture shifted entirely. In the second half of 2025, China began purchasing gas from the sanctioned Arctic LNG 2 facility and dedicated a standalone terminal to the project.

Furthermore, it opened a second terminal this year serving exclusively Russian LNG.

China even resumed module deliveries needed to complete the third train of Arctic LNG 2, despite having halted shipments previously.

Moscow seeks markets and turbines, offering technology for Alaska

Despite all these developments, Russia’s expectations from the US in the Arctic remain clear. Mikhail Vakilyan summarised this requirement:

“Russia needs two things: first, markets; and second, hardware. Lifting sanctions on Arctic LNG 2 and its gas carriers will bring back buyers in Japan, India, and South East Asia, eliminating the discount currently enjoyed by China as the sole customer. As for hardware, the turbines driving the liquefaction compressors at Yamal LNG and Arctic LNG 2 are manufactured by the US company Baker Hughes. Maintenance, spare parts, and modernization for these machines are blocked by US export bans.”

Igor Yushkov viewed the process through the lens of a political and economic trade-off:

“The exact same scheme seen in the diesel agreement is operating here. In exchange for easing anti-Russian sanctions and putting pressure on Ukraine, we are offering the US mutually beneficial projects and broader economic cooperation. We are showing that this cooperation can be versatile across various fields such as diesel, fertilisers, LNG, and similar sectors.”

The tangible offer Russia could present to the US in the LNG sector in exchange for sanctions relief is technological support for an LNG plant to be built in Alaska, referring to the $25 billion Polar LNG project.

Yushkov explained the card held by Russian energy company Novatek:

“Novatek possesses a technological solution applied at Arctic LNG 2 that would also suit the LNG project in Alaska. These are reinforced concrete gravity-based structures carrying liquefaction equipment; essentially floating LNG factories. Novatek has already built two such platforms alongside their equipment and established an offshore super-structure construction centre in Belokamenka. The issue is that both this centre and the Arctic LNG 2 plant itself fell under US sanctions. Therefore, in exchange for lifting sanctions at least on the super-structure construction centre, we could build such a facility for Alaska.”

According to the expert, Russia could cast the reinforced concrete platform at this centre in Belokamenka, install the LNG plant atop it, and tow it to Alaska once completed.

Because building from scratch in the Arctic itself is both costly and creates constraints regarding time and equipment transport, this method offers a much simpler solution.

Nevertheless, Yushkov warned that the plan is not finalised:

“Owing to numerous sanctions-related issues and questions surrounding the project’s economics, it is not certain this scenario will materialize; however, the Americans are still interested in our technologies for Alaska, and Russia is stating it can capitalize on this and deliver it.”

Conversely, Yushkov recalled that Russia remains the primary rival to the US, particularly in the gas sector, and that the US administration has systematically squeezed Russian gas out of the European market in recent years.

According to the expert, helping US LNG capture the market share lost by Russia is hardly a brilliant idea.

Europe’s 2027 ban, China price talks, and rare earth metals

Arctic LNG 2 is not the only Russian project that could benefit from potential cooperation with the US; a new opening could also emerge for Yamal LNG, which is unaffected by US sanctions.

The crux here is not sanctions, but the European Union’s upcoming ban on all Russian LNG shipments starting from 1 January 2027.

Vakilyan explained the approaching risk and a potential solution using figures:

“In the first half of the year, Europe took nearly the entire output of the plant, amounting to 9.89 million tonnes. In two months, these volumes will need a new route and a new buyer; a US trading company appears very well suited for this role.”

Another winner in the equation could be Gazprom, which is conducting negotiations with China for the Power of Baikal pipeline, formerly known as Power of Siberia 2.

Vakilyan said: “Cooperation with the US is Russia’s trump card in price negotiations. China has long negotiated with Gazprom assuming Russian gas has nowhere else to go; an American company in the Arctic would disrupt that calculation.”

Viewed from a wider perspective, Russia and the US share two additional points of contact: oil projects and rare earth metals.

The Vostok Oil project, which awaits the lifting of sanctions on Rosneft, is the first among them.

Vakilyan listed the other areas:

“It is impossible to make headway on the Pobeda shelf, which could not be developed since 2014, without the Americans; that site requires subsea production complexes and drilling services in icy seas, where US companies are strongest. Another issue not apparent at first glance is rare metals. The Trump administration is seeking them across the globe, and Tomtor, one of the largest rare earth metal deposits, lies in the Arctic region of Yakutia.”

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