Umm Muhammed Umar

In an interesting development in the Russia- Ukraine conflict, Russia’s $140 billion worth of Chinese bond holdings, or major foreign assets, could be used to skirt sanctions. Sanctions had essentially frozen the Central Bank of Russia, from transacting in the Dollar. Radio Islam spoke to Sanusha Naidu.

The Russian foreign currency now, with the Ruble tanking, and in a freefall, means that the Russian Central Bank cannot bail out the economy, and is looking for money to be able to flush into the Russian economy. People cannot withdraw more than what a daily rate stipulates, and there’s no Dollar. Naidu said, “so the 140 billion worth of Chinese bonds that the Russian Central Bank may hold, like all countries hold, is something that could be a lifeline for the Russian economy.” She added, “these bonds, which is also Chinese Yuan, could actually act as a positive disrupter, a positive catalyst for major foreign asset reserves for the Chinese for the Russian currency, that they can access.” Naidu explained that this would work by the Russians liquidating assets, and using the money from the liquidation, to meet payment obligations. She said that even more importantly, Russia could use the Chinese currency in terms of the asset liquidation, and use the Yuan as a cross border payments transaction. This would also help also deal with the fact that Russian banks have been taken off the SWIFT payment system, which implies means that there could be a direct Dollar currency swap with the Yuan, which would provide much needed liquidity. Naidu said, “it’s not a fool proof system; there’re still other things that need to be looked at, but I think it does offer the Russians, that one kind of outlet.”

The crushing Russian sanctions have also dealt a blow to Thailand in its bid to revive tourism. In the last two months, in particular in January, the Thai economy had experienced a boost from Russian tourists. They were the largest group visiting the island. Naidu said that the sanctions had taken Russian banks off the Swift payment system, which resulted in tour operators finding themselves encountering serious problem: “How do you make transfers? How do you actually then secure bookings? How do you then ensure that the money that was supposedly to be paid to these tourist operators actually getting the money?” she said the sanctions did not involve simply isolating Russia. The industries that were impacted by the COVID 19 pandemic, were taking a second hit by the sanctions imposed against Russia.

Finally, then staying with the impact of the Ukrainian conflict to what what’s the latest assessment in terms of its impact on Asia responses and muteness

Lastly, Asian countries in general have been impacted by the conflict. In just a few examples, North Korea, was one of the countries from the four countries that said no to the UN resolution. South Korea was very vulnerable as it expected that, given the situation, North Korea’s denuclearization could be slow. Japan is releasing the oil reserves. It is also thinking about how to increase its nuclear capabilities and increase its security.