Goodbye Dollar! Goodbye Euro!

Russian state banks rushed to China for yuans
Beijing today is the place from where most important information about Russia’s banking sector comes. It is one of the key tasks of the government to retrieve its monopolistic positions in almost all spheres, the banking sphere included. That is why special attention is paid to so-called state banks. Vnesheconombank president informed from China today that the bank is going to be an agent of the government only. The Vneshtorgbank president, also on a working visit to China as well, confirmed the information that the government will buy Vneshtorgbank shares back from the Central Bank. And, as long as Russia’s Prime Minister Mikhail Kasyanov plans to cover the majority of China’s demand for oil, gas, and the construction of infrastructure objects, Vnesheconombank and Vneshtorgbank are evidently to serve these intergovernmental transactions.

The signing of an agreement between Russia’s Central Bank and the People’s Bank of China has become the key breakthrough in the banking sphere during Kasyanov’s visit to China. The chief bankers have agreed to settle all inter-bank accounts in rubles and yuans starting next year. Negotiating officials say that such a way of settling accounts will be introduced as an experiment to create the necessary mechanisms to settle accounts. What is really very important about this agreement is that Russia and China demonstrated the so-called Eurasian solidarity and decided to give up the dollar and euro in the settlement of their accounts.

Another breakthrough is also very important. PRAVDA.Ru has already reported on the reforms of the Russian state banks Vnesheconombank and Vneshtorgbank. Some time ago, Andrey Kostin left Vneshtorgbank for Vnesheconombank. This year, he became president of Vneshtorgbank. With a team of his own, he managed to work with the commercial assets of Vnesheconombank. Moreover, the European Bank for Reconstruction and Development is ready to be a potential Vneshtorgbank shareholder. Currently, Andrey Kostin is on a working visit to China together with Prime Minister Kasyanov. And the visit is turning out to be rather successful for him and Vneshtorgbank: China’s Industrial Commercial Bank and Vneshtorgbank signed important agreements. The Chinese bank will give a $200 million loan to Vneshtorgbank to finance supplies of hi-tech equipment from China to Russia, a method so typical of America. Despite low financing for development, Russia still produces hi-tech equipment of a good quality. However, such equipment is poorly promoted on the overseas markets, despite decreasing the prices. The production of practically all of the world’s electronic firms is concentrated in China. The production exceeds the demand, and the sale of Chinese electronics is also unsuccessful because of severe competition on the work markets. The Asian economic crisis only aggravated the situation. That is why Russia and China decided to satisfy each other’s needs. Russia will supply oil, gas, electric power, timber, and armament. In return, Russia will receive electronics and raw materials necessary for the Russian metallurgical industry from china. However, China is not going to repeal the restrictions on Russian steel imports introduced this year. And to make sure that Russia will not reject supplies of Chinese electronics, Russia’s largest bank will be given a loan. Doesn’t this look like a bribe on a governmental level? In the context of today’s world economy, it means the promotion of national goods on overseas markets. Russia will purchase Chinese equipment with money provided by China itself.

Vnesheconombank president Vladimir Chernukhin is also member of the delegation visiting China. Today, he refuted information about the division of the bank into commercial and governmental sections. He said that the bank will simply concentrate more on the most urgent needs of the state. One of these needs is servicing of Russian-Chinese intergovernmental accounts.

In Chernukhin’s words, Vnesheconombank now serves Russian-Chinese contracts to the sum of about $10 billion. Vnesheconombank president is currently negotiating new contracts with China to the sum of $2-3 billion. The contracts involve mostly military and technical co-operation. Dmitry Slobodyanyuk PRAVDA.Ru

Translated by Maria Gousseva

Read the original in Russian: http://www.pravda.ru/main/2002/08/22/46078.html

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