Moscow & Cairo to drop USD, use national currencies in bilateral trade – Putin

[Mahmoud_EGY]

Russia and Egypt might soon exclude the US dollar and use their national currencies in the settlement of accounts in bilateral trade, Russian President Vladimir Putin said in an interview to Egyptian media ahead of his Monday visit to the country.


The issue of abandoning the dollar in trade is “being actively discussed,” Putin told Al-Ahram daily newspaper ahead of his two-day trip to Egypt. The Russian president was invited for a bilateral meeting by his Egyptian counterpart Abdul Fattah al-Sisi.

“This measure will open up new prospects for trade and investment cooperation between our countries, reduce its dependence on the current trends in the world markets,” Putin said.

“I should note that we already use national currencies for trade with a number of the CIS [Commonwealth of Independent States] states, and China. This practice proves its worth; we are ready to adopt it in our relations with Egypt as well. This issue is being discussed in substance by relevant agencies of both countries.”

Egypt is a long-time and trusted partner of Russia and the relationship between the two countries has been rapidly developing, the Russian president said.

“The volume of bilateral trade has increased significantly over the past years: In 2014, it increased by almost half compared to the previous year and amounted to more than $4.5 billion,” he said urging for this trend to be strengthened.

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He also praised the development of “mutually beneficial and effective” cooperation in the sector of agriculture. “Egypt is the major buyer of Russian wheat, Russia provides about 40 percent of grain consumed in the country; as for us, we import fruits and vegetables.”

Moscow imposed a full ban of EU, US, Australian, Canadian, and Norwegian food exports to Russia on August 7 for one year. Amid Russian sanctions, Egypt said in August that it was ready to boost agricultural deliveries to Russia by 30 percent.

During 2013, Egypt’s deliveries of agricultural products to Russia amounted $440 million, while during the first half of 2014, Cairo supplied $460 million, said the head of the Ministry of Agriculture of the Russian Federation, Nikolay Fedorov in August 2014.

Moscow and Cairo are also engaged in energy, automobile manufacturing and transport cooperation, developing the intergovernmental trade, economic and scientific-technical cooperation commission as well.

During Sisi’s last visit to Russia in August 2014, the two leaders agreed to look at a possibility of creating a free trade zone between Egypt and the countries of the Customs Union. Meeting in the Black Sea resort city of Sochi, the presidents also agreed upon the creation of a Russian industrial zone in Egypt, which will be part of a new Suez Canal project.

Egypt launched a Suez Canal development project worth $4 billion in August 2014. The project envisages the digging of a new canal parallel to the original built 145 years ago with the aim of speeding up traffic along the existing waterway and boosting the country’s economy.
Moscow & Cairo to drop USD, use national currencies in bilateral trade – Putin — RT Business

 

[C130]

is this bad?? I dunno

 

[SvenSvensonov]

is this bad?? I dunno

Based on the current weakness of both nations currencies versus the dollar, I'd say its bad for Egypt and Russia. Remember, when the going gets tough and instability rocks the world, it isn't the Yuan or Ruble people flock to. It isn't the Euro or Yen either. It's the USD.

Still, they are denominating bilateral trade in their respective currencies, Egypt will still accept other currencies via trade with other nations. It's just diversifying its portfolio. Nothing wrong with that, it helps reduce exposure and that's a good thing.

Russia on the other hand is up to its old tricks.

Currency-hedged ETFs in vogue as investors clamor for more| Reuters

People flock to the USD as the ultimate hedge against uncertainty. The Ruble is nowhere near any sane persons hedge currency list, too volatile. And honestly, who'd want to sit on a pile of them anyways. They're worth less than our paper-towels based on the current USD-Ruble exchange rate.

Current exchange rate .015 Ru = 1.00 USD.

USD to RUB Exchange Rate - Bloomberg

And from a US perspective, we really couldn't care less what Russia does with our currency. From an Egyptian perspective, they diversify their assets and reduce their exposure risk. From a Russian perspective, they undercut the USD... sort of. A win for all nations.

Good on Egypt!!! Anything that lessens their economic risk and makes their economy more stable in a time of instability and uncertainty is welcomed!

 

[Cheetah786]

is this bad?? I dunno

Trade is never bad, only problem here is Egypt relies heavily on American aid.

 

[Frogman]

Trade is never bad, only problem here is Egypt relies heavily on American aid.

A nation with a gdp of 272 billion USD ‎(2013) does not rely on $1.3B in military aid and $250m in civillian aid (both of which were suspended for the past two years) even in the midst of an economic crisis, these are not figures even worth mentioning.

https://www.google.co.uk/search?new...=X&ei=WgXYVLOZKomE7Qaj5YH4AQ&ved=0CKABEN4nMBA

 

[Steve781]

Trade is never bad, only problem here is Egypt relies heavily on American aid.

Is 1.5 billion that much though? It may have been at one time but things are quite different now. The US should just end the aid as there is no longer any need for it now that Israel and Egypt are getting along.

 

[Falcon29]

Egypt as a nation should increase ties and trade with both Russia and China. So should all Arab nations. Better to have political, economic and military ties from at least more than one nation.

That being said, @Mahmoud_EGY , I don't believe this is a move motivated by Al-Sisi in order to hurt the US interests in region. Otherwise he would oppose Israel's interests in the region. If Egypt wants to have leading role in region at least for Arabs. It is better it fixes ties with with other Arab nations , movements and entities and adopt a mainstream approach in dealing with Palestinian struggle. This would rally Arabs under Egyptian lead and Arab nations will support it financially to help it play this role.

I don't believe Egyptian leaders have these vision though. Especially with the high rates of corruption. I also see it very unlikely that Egypt will drop US currency. Not sure why this would be mentioned unless Egypt and Russia are looking for strategic ties that might change the region. Which as I said earlier, is unlikely noting Egypt's strong ties under Al-Sisi with main US ally Israel.

 

[Pomegranate]

That my friend is a very good move by Russia i think china would do that as well and the other would follow them

 

[Falcon29]

A nation with a gdp of 272 billion USD ‎(2013) does not rely on $1.3B in military aid and $250m in civillian aid (both of which were suspended for the past two years) even in the midst of an economic crisis, these are not figures even worth mentioning.

It is temporarily suspended for one year because it damages US credibility and proclaimed values. Not because they don't want to. For 2015 the spending bill was altered and US secretary of state can waive the conditions that were introduced in 2014. And the aid can return as it was.

 

[Frogman]

It is temporarily suspended for one year because it damages US credibility and proclaimed values. Not because they don't want to. For 2015 the spending bill was altered and US secretary of state can waive the conditions that were introduced in 2014. And the aid can return as it was.

Not arguing about the politics, just the economics, the Egyptian economy is not reliant on US civvy or military aid even in its current economic crisis. Gulf aid however from 2011 to now ensured the LE didn't collapse and that the nations foreign reserves weren't depleted, they have also helped in getting Egypt's credit rating out of the untrustworthy zone, plus other things. A lot of things would have certainly been tougher without said aid, whether complete collapse could have happened IDK, but Egypt is certainly a decade or more away from sorting out its financial woes under any leadership.

 

[Falcon29]

Not arguing about the politics, just the economics, the Egyptian economy is not reliant on US civvy or military aid even in its current economic crisis. Gulf aid however from 2011 to now ensured the LE didn't collapse and that the nations foreign reserves weren't depleted, they have also helped in getting Egypt's credit rating out of the untrustworthy zone, plus other things. A lot of things would have certainly been tougher without said aid, whether complete collapse could have happened IDK, but Egypt is certainly a decade or more away from sorting out its financial woes under any leadership.

I agree the US aid is insignificant to influence Egyptian affairs or economy. The aid is just general implementation of Camp David agreement. However, ties with Egyptian army brass can. And to be honest that is how nations have influenced Egypt in past.

I believe Egypt needs more than a decade. But I don't know how it would get there with rising population.

 

[Cheetah786]

A nation with a gdp of 272 billion USD ‎(2013) does not rely on $1.3B in military aid and $250m in civillian aid (both of which were suspended for the past two years) even in the midst of an economic crisis, these are not figures even worth mentioning.

Trust me I am not in favour of aid, and as a pakistani well aware of its negative effects on our economy. 1.3 billion isn't meant to help Egyptian just like the money goes into pakistani generals account minus the commission paid to Americans ageancies distributing it. It's safe to assume Egyptian aid is also going to generals to buy their royalties. Past two years GCC is supporting military governemnt in Egypt as they were behind the recent military coup.

 

[Frogman]

Trust me I am not in favour of aid, and as a pakistani well aware of its negative effects on our economy. 1.3 billion isn't meant to help Egyptian just like the money goes into pakistani generals account minus the commission paid to Americans ageancies distributing it. It's safe to assume Egyptian aid is also going to generals to buy their royalties. Past two years GCC is supporting military governemnt in Egypt as they were behind the recent military coup.

No, the military aid is redirected to the US defence industry in the form of contracts (FMF). Certain US companies however may secure contracts by 'bribing' officials involved, this is a thing practiced the world over.

The GCC provided aid in 2011, 2012, and 13. In Morsi's term over 8 billion dollars was donated to Egypt. The relationship between the gulf and Egypt is not an emotional one, but one based upon rational interests, that are mainly focused on security.

 

[Mahmoud_EGY]

Not arguing about the politics, just the economics, the Egyptian economy is not reliant on US civvy or military aid even in its current economic crisis. Gulf aid however from 2011 to now ensured the LE didn't collapse and that the nations foreign reserves weren't depleted, they have also helped in getting Egypt's credit rating out of the untrustworthy zone, plus other things. A lot of things would have certainly been tougher without said aid, whether complete collapse could have happened IDK, but Egypt is certainly a decade or more away from sorting out its financial woes under any leadership.

I have to say that Egypt needing economic aid is worrying i wish if there was a plan to fix this situation in the future i think el sisi has a good start but we need to go faster more projects and more economic reforms even if this will bring negative response from the poor class it is all for the greater good of all in the long run

Egypt as a nation should increase ties and trade with both Russia and China. So should all Arab nations. Better to have political, economic and military ties from at least more than one nation.

That being said, @Mahmoud_EGY , I don't believe this is a move motivated by Al-Sisi in order to hurt the US interests in region. Otherwise he would oppose Israel's interests in the region. If Egypt wants to have leading role in region at least for Arabs. It is better it fixes ties with with other Arab nations , movements and entities and adopt a mainstream approach in dealing with Palestinian struggle. This would rally Arabs under Egyptian lead and Arab nations will support it financially to help it play this role.

I don't believe Egyptian leaders have these vision though. Especially with the high rates of corruption. I also see it very unlikely that Egypt will drop US currency. Not sure why this would be mentioned unless Egypt and Russia are looking for strategic ties that might change the region. Which as I said earlier, is unlikely noting Egypt's strong ties under Al-Sisi with main US ally Israel.

it is not that easy first of all when you say arabs who do you mean ? syria libya yeman iraq are facing a lot of problems with terror GCC are looking at security at their borders and no one can blame them it is getting more and more dangerous sudan is 2 countries and could be more each country having a lot of problems i think we can talk about this after this nightmare is over

I believe Egypt needs more than a decade. But I don't know how it would get there with rising population.

if the people can withstand harsh economic reforms it would take less than 5 years and without the need of a lot of aid Egyptian economic problems has not started since 2011 it started way before when the state was to afraid to do the right thing we are either a free and open economy or a socialist republic sadat when faced with heavy opposition from the socialists he backed down he should not have maybe we would have been in a better position today

 

[Ceylal]

A nation with a gdp of 272 billion USD ‎(2013) does not rely on $1.3B in military aid and $250m in civillian aid (both of which were suspended for the past two years) even in the midst of an economic crisis, these are not figures even worth mentioning.

Bullshit! Egypt is heavily dependent on that aid, since it figures on her budget, and it depend too on the GCC help...You start sounding like the Al Hassani, where everything arab is beautiful...Have attended the same school?