The Petro-Yuan Bombshell and Its Relation to the New US Security Doctrine

• The Petro-Yuan Bombshell and Its Relation to the New US Security Doctrine
  by Pepe Escobar, http://russia-insider.com/en
  “Russia and China … have concluded that pumping the US military budget by buying US bonds … is an unsustainable proposition …”
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  The new 55-page “America First” National Security Strategy (NSS), drafted over the course of 2017, defines Russia and China as “revisionist” powers, “rivals,” and for all practical purposes strategic competitors of the United States.
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  The NSS stops short of defining Russia and China as enemies, allowing for an “attempt to build a great partnership with those and other countries.” Still, Beijing qualified it as “reckless” and “irrational.” The Kremlin noted its “imperialist character” and “disregard for a multipolar world.” Iran, predictably, is described by the NSS as “the world’s most significant state sponsor of terrorism.”
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  Russia, China and Iran happen to be the three key movers and shakers in the ongoing geopolitical and geo-economic process of Eurasia integration.
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  The NSS can certainly be regarded as a response to what happened at the BRICS summit in Xiamen last September. Then, Russian President Vladimir Putin insisted on “the BRIC countries’ concerns over the unfairness of the global financial and economic architecture which does not give due regard to the growing weight of the emerging economies,” and stressed the need to “overcome the excessive domination of a limited number of reserve currencies.”
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  That was a clear reference to the US dollar, which accounts for nearly two-thirds of total reserve currency around the world and remains the benchmark determining the price of energy and strategic raw materials.
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  And that brings us to the unnamed secret at the heart of the NSS; the Russia-China “threat” to the US dollar.   
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  The CIPS/SWIFT face-off
  The website of the China Foreign Exchange Trade System (CFETS) recently announcedthe establishment of a yuan-ruble payment system, hinting that similar systems regarding other currencies participating in the New Silk Roads, a.k.a. Belt and Road Initiative (BRI) will also be in place in the near future.   
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  Crucially, this is not about reducing currency risk; after all Russia and China have increasingly traded bilaterally in their own currencies since the 2014 US-imposed sanctions on Russia. This is about the implementation of a huge, new alternative reserve currency zone, bypassing the US dollar.   
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  The decision follows the establishment by Beijing, in October 2015, of the China International Payments System (CIPS). CIPS has a cooperation agreement with the private, Belgium-based SWIFT international bank clearing system, through which virtually every global transaction must transit. 
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  What matters, in this case, is that Beijing – as well as Moscow – clearly read the writing on the wall when, in 2012, Washington applied pressure on SWIFT; blocked international clearing for every Iranian bank; and froze $100 billion in Iranian assets overseas as well as Tehran’s potential to export oil. In the event that Washington might decide to slap sanctions on China, bank clearing though CIPS works as a de facto sanctions-evading mechanism.
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