Comrades: The $ has a new threat

Pa ElGrande

MOSCOW, May 10 (Reuters) - Russian President Vladimir Putin on Wednesday gave the government until July 1 to complete its work on making the rouble convertible, a goal which Russia wants to achieve ahead of a Jan. 1, 2007 schedule.

"Today, I propose speeding up abolition of remaining restrictions and completing this work before July 1," Putin said in his annual address to the nation. "But real convertibility of the rouble in many ways depends on its attractiveness as a currency for keeping savings."

Russia wants to end remaining capital controls ahead of schedule, accelerating the process of making the rouble fully convertible.

The curbs, which include deposit requirements on currency movements in and out of the country, protect the Russian economy from the effects of speculative capital flows. Analysts say the move would require Russia to tighten fiscal policy significantly and sterilise petrodollar inflows.

Putin wants work on rouble convertibility finished
http://today.reuters.com/investing/financeArticle.aspx?type=economicNews&storyID=2006-05-10T084144Z_01_L10487270_RTRIDST_0_FINANCIAL-ROUBLE-PUTIN.XML

DEVALUED, derided and largely displaced by harder currencies, the Russian rouble has had a rough ride since the Soviet Union collapsed. But now the Russian parliament has decided to raise the currency’s profile to fit the country’s newfound status as an energy superpower.

The state Duma has approved a Bill that would impose fines on government officials who talk in terms of dollars or euros, rather than roubles.

Oleg Smolin, a Communist member of the Duma, said: “This Bill proposes that we wage war with a shadow instead of fighting the real problems of the Russian economy

Fake roubles are proof of troubled currency's revival
http://www.timesonline.co.uk/article/0,,3-2198485,00.html

In his annual State of the Nation address to both houses of parliament on 10 May 2006, Novosti reports President Putin said that work on making the Rouble an internationally convertible currency would be completed by 1 July 2006, six months ahead of schedule. To promote the currency, he announced that an oil and gas stock exchange will be created in Russia, that would trade in Roubles.

"The rouble must become a more widespread means of international transactions. 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 roubles." - Putin

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.
Meanwhile the world looks on, hoping that the great powers really know what they are doing, and that World War 3 won't start because of a subtle miscalculation in brinkmanship

Collapse of the petrodollar looming
http://www.energybulletin.net/16110.html

In my state of the nation address in 2003 I set the task of ensuring the convertibility of the rouble. Certain plans were drawn up. I must say that they are being fulfilled.

I now propose to speed up the repeal of the remaining restrictions and to have this work completed by 1 July this year

Putin address to nation: Excerpts
http://news.bbc.co.uk/1/hi/world/europe/4757969.stm

With prices reaching 70 USD, the gold-foreign exchange reserves of Russia have grown by 200 billion USD. What will happen when the price of a barrel exceeds 90 or 100 USD (as forecast for 2007 by Goldman Sachs)? Apart from the aforementioned 200 billion USD, there is also a rather large surplus in the Russian oil fund (formed in the Norwegian tradition), that should function as capital for future generations, those that may mot have an opportunity to exploit oil and to live off natural resources. The rise of oil prices also provides the secure growth of Russian GDP, the possibility of restructuring, and the early payment of foreign debt, resulting in an increase in the However, the other side of the coin has Russia entering a so called state of “revived economy”, and in the long term this can be even more dangerous than a decrease in energy substance prices. So, monthly inflation this year oscillates from 1.5 to 3% a month, and accompanied by the fall in the dollar and a steady “raw material” rouble, is causing an erosion of earnings for those citizens whose salary is fixed in so called “conditional units” to the dollar exchange rate plus-minus 3%. The number of such citizens is not something that can be ignored, particularly in Moscow and Petersburg, the basic consumer centres of Russia. And while consumption and import (above all of mass consumption goods) are growing intensively, economic growth and industrial production are slowing down. The question is where these easily earned oil dollars are going? That is, why aren’t they sufficiently directed to the growth of industrial production, technological development and diversification of Russian import in a way the Kremlin would like to see?

High Oil Prices Stress Russian Economy
http://www.focus-fen.net/index.php?focus=analys&a=2&aid=7933&acat=4

Once a large supply of oil can be obtained without propping up the USD$, then America is done for and they know it. Putin’s challenge to the dollar is the first salvo in a guerilla war that will end with the crash of the petrodollar 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.

paddyman

While im personaly praying for the end of the petro-dollar world we live in i dont beleive russia the rouble would have the power to derail it.

Russia's economy is bad/corrupted/outdated and in need of major major reform, something that will even a best take 20 years before it would be an economic superpower in the world.

The only thing about this is unlike iraq/iran/venesula who have tried to change to a petro-euro system is america will not be invading/sending war-ships to russia in any hurry at all. So its a start.

Best way to change is for europe (with u.k and norway) setting up a petro-euro boarse and get other countries like iran/venesula to use.

Then we could change things.

Zebra3

paddyman wrote:

Best way to change is for europe (with u.k and norway) setting up a petro-euro boarse and get other countries like iran/venesula to use.

No chance of America's lackey doing that.

zuma

Zebra3 wrote:

No chance of America's lackey doing that.

I agreee....no way in hell would the UK participate and risk annoying their big brother!

silverharp

There is talk of Iran setting up a Euro bourse for oil, not sure how popular it would be though. Mr Chavez converted the country's FX reserves to Euro's and is atarting to sell oil in Euro's. Russia has doubled it's gold reserves in the last year. I also bet the OPEC countries would like to see the end of the dollar or at least will be reluctant to invest large amounts of money this time round. The dollar will have alot of problems in the coming years

Zebra3

silverharp wrote:

I also bet the OPEC countries would like to see the end of the dollar....

But the Saudis would hardly do that considering how much they have invested in the American economy. Surely it's in their interests to prop up the American position?

paddyman

yeah iran has been talking about that for a good while now but it just keeps been delayed and delayed.

"There is talk of Iran setting up a Euro bourse for oil, not sure how popular it would be though."

I doubt many countires are in favor of iran been the country to set it up but alot of countries would be in favor of the euro-boarse. Many countries have so much u.s currency that once it devalues a few percent they loose hundreds of millions to billions. Im sure they would be glad to be able to diversify there holdings and not be so vunerable.

And yes were all aware of how much the u.k sucks up to its big brother but the u.k is its own country and while it wont initially jump on board there's a good chance it will have to for its own good.

This is my opinion not fact on whats going to happen so...

The oil market is the largest market in the world and every country is completed attached to it, the more developed/richer the country the more its need of oil grows. Its mostly this need that has the countries of the world holding trillions of u.s $ in reserves as they need money to buy sell oil because is mostly sold in u.s $.

With a Euro-boarse been used (which will happen some-day), hundreds of billions (maybe trilion) of $ will be put onto the market so countries can buy euros to hold in the reserves so they can use it to sell/buy oil. This will send the $ down in value fast.

If the value of the $ gets low enough it will become cheaper/cost countries less to buy/sell oil in euros. The uk is not going to mess up its economy just to keep the u.s happy, it may well have to use the euro-boarse, and will be under alot of pressure to do so since its in the heart of euro-land.

the International Petroleum Exchange in London is the 2nd or 3rd largest in the world (cant remember which), its worth a lot of money to uk. I think they will do what they have to do to keep it that way, even if it means a less happy u.s.

Tricity Bendix

Best way to change is for europe (with u.k and norway) setting up a petro-euro boarse and get other countries like iran/venesula to use.

Shouldn't they adopt the euro as a currency first?

zuma

b.ie curious wrote:

Shouldn't they adopt the euro as a currency first?

Thats just not the British attitude Im afraid!!!

Zebra3

And with Murdoch owning so much $ based wealth, he's not gonna push a pro-euro agenda with his vast British media empire, is he?

Sad as it is, the readership of The Sun = a vast sway of the British electorate, and Murdoch controls (a lot of) what they read.

paddyman

Well the u.k doesn't need to adapt the euro to trade on a euro priced boarse. They have billions worth of euro in there currency reserve (read before its 40%), this is what is used to buy/sell.

Its just like the u.s$, no-body uses the dollar except them, but everyone trades in it and therefore must buy and store it in the central banks. If its known the dollar is going to get weaker/devalue the smart thing to do is get rid of it or else you will loose billions (depending on how much you have), but if $ is the only currency you can use to buy oil ETC then you cant sell because you need it and have to take the hit.

Now if you can use the euro which is stronger you now have another option and can save yourself billions by selling your $'s and trading in the Euro.

So i would think that the uk will use it if its set up.

Essey

I think they have bigger problmes than oil Comrade

http://www.msnbc.msn.com/id/13124097/site/newsweek/