Russia & China Declare All Out War on US Petrodollar — Prepare for Exclusive Trade in Gold

The formation of a BRICS gold marketplace, which could bypass the U.S. Petrodollar in bilateral trade, continues to take shape as Russia’s largest bank, state-owned Sberbank, announced this week that its Swiss subsidiary had begun trading in gold on the Shanghai Gold Exchange.

Russian officials have repeatedly signaled that they plan to conduct transactions with China using gold as a means of marginalizing the power of the dollar in bilateral trade between the geopolitically powerful nations. This latest movement is quite simply the manifestation of a larger geopolitical game afoot between great powers.

According to a report published by Reuters:

Sberbank was granted international membership of the Shanghai exchange in September last year and in July completed a pilot transaction with 200 kg of gold kilobars sold to local financial institutions, the bank said.

Sberbank plans to expand its presence on the Chinese precious metals market and anticipates total delivery of 5-6 tonnes of gold to China in the remaining months of 2017.

Gold bars will be delivered directly to the official importers in China as well as through the exchange, Sberbank said.

Russia’s second-largest bank VTB is also a member of the Shanghai Gold Exchange.

To be clear, there is a revolutionary transformation of the entire global monetary system currently underway, being driven by an almost perfect storm. The implications of this transformation are extremely profound for U.S. policy in the Middle East, which for nearly the past half century has been underpinned by its strategic relationship with Saudi Arabia.

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THE RISE & FALL OF THE PETRODOLLAR

The dollar was established as the global reserve currency in 1944 with the Bretton Woods agreement, commonly referred to as the gold standard. The U.S. leveraged itself into this power position by holding the largest reserve of gold in the world. The dollar was pegged at $35 an ounce — and freely exchangeable into gold.

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By the 1960s, a surplus of U.S. dollars caused by foreign aid, military spending, and foreign investment threatened this system, as the U.S. did not have enough gold to cover the volume of dollars in worldwide circulation at the rate of $35 per ounce; as a result, the dollar was overvalued.

America temporarily embraced a new paradigm in 1971, as the dollar became a pure fiat currency (decoupled from any physical store of value), until the petrodollar agreement was concluded by President Nixon in 1973.

The quid pro quo was that Saudi Arabia would denominate all oil trades in U.S. dollars, and in return, the U.S. would agree to sell Saudi Arabia military hardware and guarantee the defense of the Kingdom.

A report by the Centre for Research on Globalalization clarifies the implications of these most recent moves by the Russians and the Chinese in an ongoing drive to replace the US petrodollar as the global reserve currency:

Fast forward to March 2017; the Russian Central Bank opened its first overseas office in Beijing as an early step in phasing in a gold-backed standard of trade. This would be done by finalizing the issuance of the first federal loan bonds denominated in Chinese yuan and to allow gold imports from Russia.

The Chinese government wishes to internationalize the yuan, and conduct trade in yuan as it has been doing, and is beginning to increase trade with Russia. They’ve been taking these steps with bilateral trading, native trading systems and so on. However, when Russia and China agreed on their bilateral US$400 billion pipeline deal, China wished to, and did, pay for the pipeline with yuan treasury bonds, and then later for Russian oil in yuan.

This evasion of, and unprecedented breakaway from, the reign of the US dollar monetary system is taking many forms, but one of the most threatening is the Russians trading Chinese yuan for gold. The Russians are already taking Chinese yuan, made from the sales of their oil to China, back to the Shanghai Gold Exchange to then buy gold with yuan-denominated gold futures contracts – basically a barter system or trade.

The Chinese are hoping that by starting to assimilate the yuan futures contract for oil, facilitating the payment of oil in yuan, the hedging of which will be done in Shanghai, it will allow the yuan to be perceived as a primary currency for trading oil. The world’s top importer (China) and exporter (Russia) are taking steps to convert payments into gold. This is known. So, who would be the greatest asset to lure into trading oil for yuan? The Saudis, of course.

All the Chinese need is for the Saudis to sell China oil in exchange for yuan. If the House of Saud decides to pursue that exchange, the Gulf petro-monarchies will follow suit, and then Nigeria, and so on. This will fundamentally threaten the petrodollar.

According to a report by the Russian government media, significant progress has been made in promoting bilateral trade in yuan, between the two nations, as the first step towards an even more aambitiousplan—using gold to make transactions:

One measure under consideration is the joint organization of trade in gold. In recent years, China and Russia have been the world’s most active buyers of the precious metal.

On a visit to China last year, deputy head of the Russian Central Bank Sergey Shvetsov said that the two countries want to facilitate more transactions in gold between the two countries.

In April, Sberbank expressed interest in financing the direct import of gold to India—also a BRICS member. Make no mistake that a BRICS gold marketplace could be used to bypass the dollar in bilateral trade, and undermine the hegemonic control enjoyed by the US petrodollar as the global reserve currency.

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“In 2014 Russia and China signed two mammoth 30-year contracts for Russian gas to China. The contracts specified that the exchange would be done in Renminbi [yuan] and Russian rubles, not in dollars. That was the beginning of an accelerating process of de-dollarization that is underway today,” according to strategic risk consultant F. William Engdahl.

Russia and China are now creating a new paradigm for the world economy and paving the way for a global de-dollarization.

“A Russian-Chinese alternative to the dollar in the form of a gold-backed ruble and gold-backed Renminbi or yuan, could start a snowball exit from the US dollar, and with it, a severe decline in America’s ability to use the reserve dollar role to finance her wars with other peoples’ money,” Engdahl concludes.

Podesta Group Hired By Russia’s Largest Bank to Lobby For Ending Sanctions

(ZeroHedge) Russia’s largest bank, Sberbank, has confirmed that it hired the consultancy of Tony Podesta, the elder brother of John Podesta who chaired Hillary Clinton’s presidential campaign, for lobbying its interests in the United States and proactively seeking the removal of various Obama-era sanctions, the press service of the Russian institution told TASS on Thursday.

“The New York office of Sberbank CIB indeed hired Podesta Group. Engagement of external consultants is part of standard business practices for us,” Sberbank said.

Previously, The Daily Caller reported that Tony Podesta was proactively lobbying for cancellation of a range of anti-Russian sanctions against the banking sector. In particular, he represented interests of Sberbank and was paid $170,000 for his efforts over a six-month period last year to seek to end one of the Obama administration’s economic sanctions against that country.  Podesta, founder and chairman of the Podesta Group, is listed as a key lobbyist on behalf of Sberbank, according to Senate lobbying . His firm received more than $24 million in fees in 2016, much of it coming from foreign governments, to the nonpartisan Center for Responsive Politics.

Former President Barack Obama imposed the Russian following the break out in violence in east Ukraine in 2014.

Podesta’s efforts were a key part of under-the-radar lobbying during the 2016 U.S. presidential campaign led mainly by veteran Democratic strategists to remove sanctions against Sberbank and VTB Capital, Russia’s second largest bank.

The two Russian banks spent more than $700,000 in 2016 on Washington lobbyists as they sought to end the U.S. sanctions, according to Senate lobbying and documents filed with the Department of Justice.

The Podesta Group charged Sberbank $20,000 per month, plus expenses, on a contract from March through September 2016.

Both Sberbank and VTB Capital have faced severe cash shortages due to plunging oil prices, plus the U.S. sanctions. If Obama’s sanctions were lifted, however, both banks could legally seek funds from American financial institutions. The lobbying campaign targeted Congress and the executive branch, with Podesta and other lobbyists arranging at least two meetings between Sberbank officers and Department of State officials, according to Elena Teplitskaya, Sberbank’s board chairman, who spoke to House aides in August.

“The Democrats are sitting there trying to convince us that the Russians are trying to throw the election to Trump,” a congressional aide who requested anonymity and met Teplitskaya told TheDCNF.

“And then they’re with us here in the House and meeting directly with the administration behind closed doors on the issue of the sanctions. The hypocrisy could not be any richer,” he said.

As the Caller puts it, “the discovery of high-profile Democrats like Podesta being paid lucrative fees for lobbying to lift U.S. sanctions on Russia contrasts with charges from Democrats that President Donald Trump and his key aides are soft on Russia while the Obama administration was tough on Moscow.”

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Podesta is one of the Democrat’s highest profile lobbyists who enjoys close personal and business connections to former Presidents Obama and Bill Clinton. John Podesta was chief of staff in Clinton’s White House and special counselor in the Obama White House.

Some more details on the meeting: joining the Podesta lobbying campaign was David Adams, who describes himself on the Podesta Group website as a “trusted adviser” to Hillary Clinton, serving as her as assistant secretary of state for congressional affairs. Another Podesta lobbyist was Stephen Rademaker, a former Department of State official in the George W. Bush administration. The Podesta Group represented Sberbank and its subsidiaries, Troika Dialog Group in the Cayman Islands, SBGB Cyprus Ltd in Nicosia, Cyprus, and SB International in Luxembourg. Troika Dialog also was related to Klein, Ltd., a Cayman Island organization that once funneled tens of millions of dollars to environmental groups to oppose low-cost fracking in the U.S., which was hurting the Russian oil industry.

Regular readers will recall that the Sberbank-Podesta relationship goes back many years. Sberbank was the lead financial institution in the Russian deal to purchase Uranium One, owned by one of Bill Clinton’s closest friends, Frank Giustra. Giustra and Bill Clinton lead the Clinton-Giustra Enterprise Partnership, an integral part of the Clinton Foundation. Giustra has additionally donated $25 million to the Clinton Foundation.

Giustra sought to sell his stake in uranium reserves that included ore deposits in the Western United States, and Hillary Clinton, who as secretary of state, approved the sale. And in one felled swoop, 20 percent of America’s uranium ore was sold to the Russian state atomic agency.

During the pending sale, the Podesta Group represented Giustra’s company and tried to advance the transaction.

We do not expect to read about the Podesta lobbying relationship with Russia’s largest bank in such truth-seeking, at least according to their ad campaigns, publications as the NYT and/or WaPo.

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Largest Bank in Russia Confirms It’s Hiring Podesta Group to Lobby Against Sanctions

(ZHE) Russia’s largest bank, Sberbank, has confirmed that it hired the consultancy of Tony Podesta, the elder brother of John Podesta who chaired Hillary Clinton’s presidential campaign, for lobbying its interests in the United States and proactively seeking the removal of various Obama-era sanctions, the press service of the Russian institution told TASS on Thursday.

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“The New York office of Sberbank CIB indeed hired Podesta Group. Engagement of external consultants is part of standard business practices for us,” Sberbank said.

Previously, The Daily Caller reported that Tony Podesta was proactively lobbying for cancellation of a range of anti-Russian sanctions against the banking sector. In particular, he represented interests of Sberbank and was paid $170,000 for his efforts over a six-month period last year to seek to end one of the Obama administration’s economic sanctions against that country. Podesta, founder and chairman of the Podesta Group, is listed as a key lobbyist on behalf of Sberbank, according to Senate lobbying . His firm received more than $24 million in fees in 2016, much of it coming from foreign governments, to the nonpartisan Center for Responsive Politics.

Former President Barack Obama imposed the Russian following the break out in violence in east Ukraine in 2014.

“Podesta’s efforts were a key part of under-the-radar lobbying during the 2016 U.S. presidential campaign led mainly by veteran Democratic strategists to remove sanctions against Sberbank and VTB Capital, Russia’s second largest bank.

“The two Russian banks spent more than $700,000 in 2016 on Washington lobbyists as they sought to end the U.S. sanctions, according to Senate lobbying and documents filed with the Department of Justice.

“The Podesta Group charged Sberbank $20,000 per month, plus expenses, on a contract from March through September 2016.”

Both Sberbank and VTB Capital have faced severe cash shortages due to plunging oil prices, plus the U.S. sanctions. If Obama’s sanctions were lifted, however, both banks could legally seek funds from American financial institutions. The lobbying campaign targeted Congress and the executive branch, with Podesta and other lobbyists arranging at least two meetings between Sberbank officers and Department of State officials, according to Elena Teplitskaya, Sberbank’s board chairman, who spoke to House aides in August.

“’The Democrats are sitting there trying to convince us that the Russians are trying to throw the election to Trump,’ a congressional aide who requested anonymity and met Teplitskaya told TheDCNF.

“’And then they’re with us here in the House and meeting directly with the administration behind closed doors on the issue of the sanctions. The hypocrisy could not be any richer,’ he said.”

As the Caller puts it, “the discovery of high-profile Democrats like Podesta being paid lucrative fees for lobbying to lift U.S. sanctions on Russia contrasts with charges from Democrats that President Donald Trump and his key aides are soft on Russia while the Obama administration was tough on Moscow.”

Podesta is one of the Democrat’s highest profile lobbyists who enjoys close personal and business connections to former Presidents Obama and Bill Clinton. John Podesta was chief of staff in Clinton’s White House and special counselor in the Obama White House.

Some more details on the meeting: joining the Podesta lobbying campaign was David Adams, who describes himself on the Podesta Group website as a “trusted adviser” to Hillary Clinton, serving as her as assistant secretary of state for congressional affairs. Another Podesta lobbyist was Stephen Rademaker, a former Department of State official in the George W. Bush administration. The Podesta Group represented Sberbank and its subsidiaries, Troika Dialog Group in the Cayman Islands, SBGB Cyprus Ltd in Nicosia, Cyprus, and SB International in Luxembourg. Troika Dialog also was related to Klein, Ltd., a Cayman Island organization that once funneled tens of millions of dollars to environmental groups to oppose low-cost fracking in the U.S., which was hurting the Russian oil industry.

Regular readers will recall that the Sberbank-Podesta relationship goes back many years. Sberbank was the lead financial institution in the Russian deal to purchase Uranium One, owned by one of Bill Clinton’s closest friends, Frank Giustra. Giustra and Bill Clinton lead the Clinton-Giustra Enterprise Partnership, an integral part of the Clinton Foundation. Giustra has additionally donated $25 million to the Clinton Foundation.

“Giustra sought to sell his stake in uranium reserves that included ore deposits in the Western United States, and Hillary Clinton, who as secretary of state, approved the sale. And in one felled swoop, 20 percent of America’s uranium ore was sold to the Russian state atomic agency.

“During the pending sale, the Podesta Group represented Giustra’s company and tried to advance the transaction.”

We do not expect to read about the Podesta lobbying relationship with Russia’s largest bank in such truth-seeking, at least according to their ad campaigns, publications as the NYT and/or WaPo.

By Tyler Durden / Republished with permission / Zero Hedge / Report a typo