Yesterday Russia announced the dramatic news at its own 'Davos-style' economic forum in St. Petersburg which is running this week that it will dump the US dollar from its $186 billion National Wealth Fund. As we detailed previously it comes as Washington continues to tighten the sanctions screws on Moscow, blaming it for everything from a series corporate cyberattacks that's appeared to target American infrastructure to election interference to expansionist aims in Ukraine to cracking down on opposition activists.
On Friday President Vladimir Putin hinted further at the rationale behind what was obviously a retaliatory and defiant we don't need the US strong bit of messaging from Russian Finance Minister Anton Siluanov at the forum - who emphasized the day before, "We can make this change rather quickly, within a month". Putin followed during his address by charging the United States with using the dollar as a tool to "wage economic and political war" on rival countries. Thursday's prior National Wealth Fund announcement had delineated it will alternately pursue investments in euro, Chinese yuan as well as gold assets.
Putin in his Friday speech hung a further threat over Washington, saying according to Reuters that Russia "may consider settling transactions for oil and gas in other national currencies and the euro."
And further, "Putin said it would be a serious blow to the US dollar if Russia's oil companies stopped using the currency, but that Moscow did not want to do that." Here's more of his comments addressing this future provocative last-ditch scenario:
Putin also said European nations should pay for Russian gas in euros, as Moscow pursues its de-dollarization efforts amid US sanctions.
"The euro is completely acceptable for us in terms of gas payments. This can be done, of course, and probably should be done," he said.
Putin went on to deplore what he said was Washington’s use of the dollar as an economic and political tool, saying that "its use as an instrument of competition and political struggle has hurt its role as the world reserve currency".
"We need to find ways to regularize these relations," he said of the admittedly "extremely low level" status in relations with the Biden administration. With just under two weeks to go until the much anticipated in-person summit with Joe Biden set for June 16 in Geneva, he additionally accused the US of openly seeking to "hold back" Russia's development.
Wasn't the invasion of Iraq fundamentally an oil currency war?— unworry (@unworry) June 4, 2021
OPEC momentum towards the euros as an oil transaction currency standard and the macroeconomics of the "petro-dollar" was considered a real threat to US economic hegemony at the time
So what's Putin playing at ...? https://t.co/kUvpvkDH5g
He asserted that Russia ultimately "has no issues with the US" but it's the United States that "has an issue with us: they want to hold back our development, they talk about it publicly."
All of this appears to confirm the pessimistic assessments of officials on either side head of the summit, who are not expecting any "breakthroughs" - instead it appears the rhetoric continues growing hotter, and threats getting progressively louder. But Washington has long take threats of dumping the dollar as fighting words, as its recent legacy of regime change wars might attest.