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Russia Steps Up Efforts To Cut Reliance On U.S. Dollar, Payments System

Russian Deputy Foreign Minister Sergei Ryabkov speaks at a Russian-American forum in May.
Russian Deputy Foreign Minister Sergei Ryabkov speaks at a Russian-American forum in May.

Russia will speed up efforts to reduce dependence on the U.S. dollar and credit-card system in the wake of tough new sanctions imposed by Washington, a top diplomat says.

Sales of oil, natural gas, and other raw materials around the world are primarily conducted in U.S. dollars, and the sanctions hit particularly hard at Russia's energy sector.

"We will of course intensify work related to import substitution, reduction of dependence on U.S. payment systems, on the dollar as a settling currency and so on. It is becoming a vital need," Russian Deputy Foreign Minister Sergei Ryabkov said in an interview with Mezhdunarodnaya Zhizn (International Life) magazine published on August 7, Russian news agencies reported.

Otherwise, "we will always sit on their hook," he said.

Ryabkov said in the interview that the sanctions will not succeed in their stated goals: to pressure Russia to end its aggression in Ukraine and stop backing the Syrian government in a bloody six-year civil war.

The sanctions are also aimed at stopping Russia from meddling in U.S. elections, but Moscow denies ever doing this.

"Russia does not yield to concessions under pressure and generally does not do anything under orders," Ryabkov said, repeating an assertion by Russian Prime Minister Dmitry Medvedev that the sanctions will only make Russia's economy stronger in the end.

"It is quite customary in our history and it is a typical method to derive pluses from minuses," he said.

Economists say the sanctions have dealt a serious blow to Russia's economy since 2014, at first helping to plunge it into a deep recession and then holding back growth, despite a weak recovery from recession that began at the end of last year.

In Russia's efforts to wean itself off the dollar, it has sought to negotiate payments for the oil and gas it sells in global markets in currencies other than the dollar, while it has introduced a new national payment system to cut reliance on Visa, MasterCard, and other Western payment systems.

The Western card companies stopped providing services through some Russian banks after Washington imposed sanctions over Moscow's aggression in Ukraine and illegal annexation of Crimea in 2014.

Russia at that time introduced its own payment system called Mir, which translates as "World" or "Peace" and is owned by the Russian central bank.

"Your card is free from external factors. Created in Russia," runs an advertisement for Mir cards.

To date, more than 13.9 million Mir cards have been issued in Russia, to roughly 10 percent of the country's population, according to the Russian National System of Payment Cards.

More than 380 banks working in Russia accept these cards, which are issued by 120 banks. Most businesses, including cafes, shops, restaurants, and gas stations, accept payments with Mir cards.

Mir cards are also welcome in Crimea, where Western banks are prohibited from operating under sanctions imposed by the European Union and United States.

Ryabkov told Mezhdunarodnaya Zhizn that Russia had become accustomed to sanctions since 2014, and believed it can work around them.

He said the U.S. Congress was able to overwhelmingly pass such severe restrictions on trade only because the United States didn't conduct much trade with Russia to begin with.

Ryabkov asserted that U.S. legislators would have balked at such stiff penalties if they had hurt more American businesses doing trade with Russia.

Two-way trade between the United States and Russia totaled $38.1 billion in 2013 before sanctions were imposed, and fell to $20.3 billion in 2014, according to the U.S. Trade Representative's office.

By contrast, U.S. trade with the European Union totaled over $3.6 trillion in 2014, and trade with China was nearly $687 billion, according to the U.S. Census Bureau.

With reporting by Reuters, Interfax, TASS, RIA Novosti, and Mezhdunarodnaya Zhizn
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