Eurasian Developments, June 10th
June 10, 2014 • 12:11PM

Russia Will Trade with Asia in China's Renminbi

London's Financial Times reported June 8 that Russia will be conducting trade with Asian nations in China's renminbi (or yuan) currency. "This is not a blip; it's a trend," the FT cites one European banker in Moscow.

"Andrei Kostin, chief executive of state bank VTB, said that 'Given the extent of our bilateral trade with China, developing the use of settlements in rubles and yuan [renminbi] is a priority on the agenda, and so we are working on it now. Since May, we have been carrying out this work.'"

The paper continues, "The move to open accounts to trade in renminbi, Hong Kong dollars or Singapore dollars highlights Russia's attempt to pivot towards Asia as its relations with Europe become strained. Sanctions are pushing Russian companies to reduce their dependence on western financial markets while U.S. and European banks have dramatically slowed their lending activity in Russia since the annexation of Crimea in March."

Brzezinski and Rudd Hope Sino-Russian Cooperation will Go Away

The Center for Strategic and International Studies, Washington, D.C. think-tank invited four Western "China experts" to give their analysis of the late May bilateral energy agreements between Russia and China where Russia agreed to sell China 38 billion cubic meters of natural gas over the next 30 years. The speakers included Zbigniew Brzezinski, Kevin Rudd, former Australian Prime Minister, Ambassador Stapleton Roy and CSIS's Christopher Johnson.

As can be imagined, the speakers discussed the developing relationship between the two emerging superpowers as if they were on an exotic hunting safari, commenting on the wild animals' migration patters. However, while much was done to try to diminish the significance of this historic, long-term economic commitment between the two powers, and nothing was said of the sad state of affairs of the West's economic situation, there was an air of gravity about these developments and their implications.

China Plans Intensive Diplomacy at BRICS Summit in Brazil

In the context of the July 15 summit of the five BRICS nations (Brazil, Russia, India, China, and South Africa) in Fortaleza, Brazil, Chinese President Xi Jinping will be carrying out intensive diplomatic activity to consolidate China's economic, trade, political and scientific relations with Ibero-America.

Aside from the BRICS summit itself, Xi Jinping will make a state visit to Brazil itself, welcomed by President Dilma Rousseff, followed by state visits to Argentina, Venezuela and Nicaragua.

In addition, Prensa Latina reported May 26, the Chinese President and Rousseff will host a mini-summit in Brasilia on July 15 with the "quartet" of the heads of state who make up the leadership of the Community of Latin American and Caribbean States (CELAC)—Ecuador, Costa Rica, Cuba and a representative from the Caribbean Community (Caricom)—to discuss strengthening ties between that entity and China. Heads of state of other CELAC members may also be invited to attend.

China's ambassador to Brazil, Li Jinzhang, reported to foreign media in a May 25 press conference that the CELAC mini-summit in Brasilia "will be of historic importance, symbolizing that China-Latin American cooperation is entering a new phase." At the end of this year, foreign ministers of CELAC will be meeting in Beijing, with China's foreign minister and other officials to officially launch the CELAC-China Forum, whose purpose will be to advance cooperation in areas, such as trade, investment in science and technology, financing of agriculture, transfer of advanced technology. Costa Rica's Deputy Foreign Minister Gioconda Ubeda told Prensa Latina that the CELAC-China relationship is one of a "win-win collaboration," based on mutual respect, that will greatly aid the development of Caribbean and Latin American nations.

Cooperation Between Eurasian Economic Union and South America's Mercosur on the Agenda

A topic being discussed increasingly among Russian and Ibero-American officials is the desirability of establishing cooperative ties between the newly-created Eurasian Economic Union (EEU) and South America's Common Market of the South (Mercosur). This will unnerve European Union leaders who've been trying for over twelve years, unsuccessfully, to cement a free-trade agreement with Mercosur.

In a May 29 speech in Moscow, summarizing his talks with Venezuelan Foreign Minister Elias Jaua, Russian Foreign Minister Sergei Lavrov reported that "we are interested in the development of contacts with the Common Market of the South (Mercosur), both within the ambit of the Russian Federation, and between Mercosur and integration associations in the Eurasian sphere—I mean the Customs Union and the Eurasian Economic Union..."

A day before meeting with Jaua, on May 27, Lavrov had met with Argentina's Foreign Minister Hector Timerman, and told him that "we are interested in establishing formal relations between Mercosur and the Eurasian Economic Union," which was about to be formally established on May 29 in Kazakhstan. Prensa Latina news service reported May 30 that during Timerman's subsequent meeting with Kazakhstan's foreign minister, on a visit to that country, "both foreign ministers agreed that the Eurasian Union ... anticipates broad cooperation with Mercosur." Kazakhstan is also aggressively pursuing trade, nuclear energy and economic cooperation agreements with several Ibero-American nations.

Further reflecting the ferment around this issue, the deputy director of Russian State TV, Sergey Brilev, will inaugurate in mid-July the Bering-Bellinghausen Institute for the Americas (IBBA), with offices in Montevideo (Uruguay), Buenos Aires and Moscow, for the purpose of exploring "the advantages offered by the various integration processes opened up in Russia with the recent [Eurasian] Customs Union and in Latin America with the veteran Mercosur."