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Russia, Iran Proceed With Bilateral Trade, Drop Dollar; Russian Warships Park In Syria; Iran Accelerates Nuclear Enrichment

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Zero Hedge
January 9, 2012

For anyone wondering how the abandonment of the dollar reserve status would look like we have a Hollow Men reference: not with a bang, but a whimper… Or in this case a whole series of bilateral agreements that quietly seeks to remove the US currency as an intermediate. Such as these: “World’s Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade“, “China, Russia Drop Dollar In Bilateral Trade“, “China And Iran To Bypass Dollar, Plan Oil Barter System“, “India and Japan sign new $15bn currency swap agreement“, and now this: “Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says.” And ironically, the proposal to dump the greenback did not come from Iran. Per Bloomberg: “Iran and Russia replaced the U.S. dollar with their national currencies in bilateral trade, Iran’s state-run Fars news agency reported, citing Seyed Reza Sajjadi, the Iranian ambassador in Moscow. The proposal to switch to the ruble and the rial was raised by Russian President Dmitry Medvedev at a meeting with his Iranian counterpart, Mahmoud Ahmadinejad, in Astana, Kazakhstan, of the Shanghai Cooperation Organization, the ambassador said.” Is Iran gradually becoming the poster child of an energy rich country that just says no to the dollar: “Iran has replaced the dollar in its oil trade with India, China and Japan, Fars reported.” Next thing you know China, Russia and Japan will engage in bilateral trade agreements with the Eurozone in exchange for purchasing European or EFSF (which at last check are now forced to give 30% guaranatees) bonds, and bypassing dollars completely. But yes, aside from everyone else, virtually everyone (footnote 1) is still using the dollar as currency of global exchange.

And just to make sure that the message is heard loud and clear, Russia just docked several warships in Syria, the same country the US told all American citizens to leave two months ago. From China Daily:

Russian warships patrolling the eastern Mediterranean Sea have docked at Russia’s naval supply facility in the Syrian port of Tartus, the private Addounia TV reported Saturday.

 

Governor of Tartus Imad Naddaf received the ships’ leaders and expressed appreciation to Russia’s support for Syria, the report said.

Russia’s state-owned Itar-Tass news agency quoted a source from the Russian Navy as saying that “It is planned that the port of Tartus will be visited by a big anti-submarine ship of the Northern Fleet ‘Admiral Chabanenko’ and an escort ship ‘Yaroslav Mudry’.”

 

“Our ships are supposed to stay in Syria for several days,” the source said, without giving more details about the warships’ mission in the country.

 

The move is considered by many observers as an apparent show of Russia’s support for Syrian President Bashar al-Assad whose country has been gripped by a nearly 10-month bloody unrest.

 

The Russian Navy, however, claimed the move was part of scheduled exercises and had no connection with the situation in Syria.

 

The warships, led by “Admiral Kuznetsov,” the country’s only aircraft carrier, have started their patrol missions in the Northeast Atlantic and the Mediterranean Sea on December 6 to “ensure the security of the sea navigation and other Russian maritime economic activities,” according to the Russian Navy.

That this is happening just as Reuters inform us that Iran is about to move the invasion timetable by a few months is rather disturbing - recall that “according to Ehud Barak, the Israeli Defense Minister, after September, a successful military attack on Iran’s nuclear sites will no longer be possible,because Iran will widen the redundancy of its facilities and spread them out over more sites, including the impenetrable  site at Fordow (near Qom), which is located inside a mountain.” From Reuters:

Iran will in the “near future” start enriching uranium deep inside a mountain, a senior official said, a move likely to further antagonize Western powers which suspect Tehran is seeking nuclear weapons capability.

 

A decision by the Islamic Republic to conduct sensitive atomic activities at an underground site – offering better protection against any enemy attacks – could complicate diplomatic efforts to resolve the long-running row peacefully.

 

Iran has said for months that it is preparing to move its highest-grade uranium refinement work to Fordow, a facility near the Shi’ite Muslim holy city of Qom in central Iran, from its main enrichment plant at Natanz. The centrifuges and other equipment needed to start enrichment were installed at Fordow last year.

 

Iran is already refining uranium to a fissile purity of 20 percent – far more than the 3.5 percent level usually required to power nuclear energy plants – above ground at Natanz.

 

The country said last year it would move this higher-grade enrichment to Fordow, which like other Iranian nuclear sites is regularly inspected by the IAEA, and also sharply boost output capacity.

 

The United States and Israel, Iran’s arch foes, have not ruled out strikes against the Islamic state if diplomacy fails to resolve the dispute.Iran disclosed the existence of Fordow to the IAEA only in September 2009 after learning that Western intelligence agencies had detected it.

The bottom line is that once the transition to Fordow is complete there will be no more possible ways to spin an invasion. Which gives a rough “window of opportunity” – expect to see it reflected ever more in the price of Brent as the September deadline is pushed forward by weeks and months.

As for the escalation in the USD-depegging, all that needs to happen now is for the brand spanking new Chinese aircraft carrier to do some wargames of its own in the Straits of Hormuz for the pre-terminal escalation chaos to be complete.

This article was posted: Monday, January 9, 2012 at 4:06 am





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