Russia’s “turn to the East”, imposed by Western sanctions, is transforming Russia’s financial sector, both ideologically and practically, with effects that will be long-lasting. All decisions in this regard are now made in Beijing, which imposes its planned schemes forcing Moscow to accept the role that the Chinese ascribe to it in the “Yuan world”.
Moscow () – China has not joined the international sanctions against Russia for the invasion of Ukraine, and this is allowing the Russian economy to bear the consequences of the crisis related to the abrupt interruption of trade with Western countries without too much drama. . The measures to counter sanctions and support the “strong ruble” that accompanied Moscow’s policy in 2022, together with the strong gains from rising oil and gas prices, are definitely behind us, and the future is beginning to take shape. panorama of the new “division of the world” at the economic level.
Russia’s “turn to the east”, a classic of its political and economic history since the Middle Ages, is first of all transforming Russia’s financial sector, both ideologically and practically. The main Russian banks have been excluded from the Swift system, and at this point nobody thinks that it is enough to wake up tomorrow from a bad dream to return to the relations that existed a year and a half ago. The present, and a future of unpredictable duration, is the embrace with the Chinese partners, which the protagonists of Russian finance find very unreliable and completely non-transparent, although at this point there is no alternative.
Already last May, the executive director of the National Association of Financial Communications of Russia, Roman Chernov, had reported that about 30 Russian banks had somehow connected with the Chinese national banking system for transactions with the CIPS system (Cross-Border Interbank Payment System), which allows making payments in yuan as secondary partners. In June, Russian banks collided with new measures to reduce foreign exchange transactions with banks in the EU, Great Britain, the US and even Switzerland, this time not because of sanctions, but because of the decision of the Bank of China, in its capacity. as the main correspondent for all business in Chinese currencies, without publicly explaining the reasons.
These shocks in the banking information field are explained by the transformation at various levels of the entire sector, which implies very complicated procedures at a technical level -starting with programming changes, and the agreement of legal aspects- that can last for a long time. And all the decisions about it are now made in Beijing, which imposes its schemes on Russian banks, already integrated into the Chinese system. The Russians have no say in the ongoing processes of rule change and confirmation, and are forced to accept the role the Chinese ascribe to them in the “world Yuan”, which in the context of finance does not recognize any “world Yuan”. Russian”.
It is difficult to understand China’s economy from the outside, reading it in analogy with Western countries or Russia itself, at least that of the last thirty years. Chinese companies compete globally by inserting themselves into world market mechanisms, but internally China continues to be a replica of the former Soviet Union, with only a little makeup. The planned economy means total control by the central government, in all sectors, and the Russians had already forgotten that.
Russian sinologist Mikhail Karpov reminds his compatriots of things they will now have to get used to again, particularly the divide between what needs to be planned and what can be handled privately, which creates a lot of confusion among operators , as the same president of the Central Bank, Elvira Nabiullina, continues to warn in Russia. In addition, there are no clear and shared control rules, because the Beijing government can impose limits and changes without needing to agree with anyone. Lastly, the financial market can appear ductile at times and collapse suddenly at others, with unexpected and unappealable bankruptcies, depending on the convenience of the regime. And the first to be eliminated, if necessary, will be the Russian partners, now slaves to the yuan, which imposes its golden rule: friends forever, but money has no friends.
