Russian firm’s euro move courts Europe

By Dong Yifan Source:Global Times Published: 2019/11/25 22:08:41

Nord Stream 2 project. Photo: IC

Last month, Russian energy firm PJSC Rosneft Oil Company (ROSNEFT) changed its transaction settlement currency from the US dollar to euro. This is seen as an olive branch from Russia to Europe. Meanwhile, as Europe is growing weary of the continuous confrontation between Western countries and Russia, it is eager to see the situation change. But many Western media outlets wonder how Europe will respond to the friendly signal from Russia. 

Since the Ukrainian crisis, the US and the EU have imposed several sanctions on Russia, including restricting financing for Russian institutions and companies, and barring technology exchange related to energy supply and equipment. Sanctions were stepped up after the alleged Russian interference in the 2016 US presidential election. 

Geopolitical and energy competition between US and Russia is also getting more intense as Moscow supports Tehran and Caracas financially and politically. The Nord Stream 2 project for transporting Russian gas to Europe is also one that pits Moscow against Washington. Because US currency and its transaction channels are regarded as the symbol of US monetary hegemony and its ability to launch economic sanctions, Russia has been in recent years trying to reduce the influence of US dollars.  

This time, Russia's olive branch is exactly what the EU wanted. In recent years, the EU has suffered a lot due to the hegemony of US dollars. Many big European companies had to pull their investment out of Iran after the US withdrew from the Iran nuclear deal and reimposed sanctions on the Gulf country. European companies action was driven by the fear of US financial sanctions and its long-arm jurisdiction. Therefore, Europe is quite active in expanding the influence of the euro, which will also contribute to the creation of a fairer international monetary system. In December 2018, the European Commission put forward several policies about enhancing the international status of the euro, which included increasing the transaction settlement proportion of euro in fields such as energy and aviation. In this case, Russia's action comes as great support for internationalization of the euro.

Since Trump took office, the US and the EU have clashed over many issues. EU resents US demand of unconditional support. The bloc does not want to be commanded and manipulated by the US, but instead would like to be seen as an independent super power of the world. ROSNEFT's change of its transaction settlement currency shows Moscow's accurate assessment of the conflict between US and Europe in terms of their policies toward Russia. 

Such being the case, Europe needs to be politically, economically, and militarily powerful and play its cards right in dealing with big powers. Europe has gradually realized that blindly confronting Russia will not benefit either side and doing the US bidding to contain Moscow does no good to the continent's peace, prosperity and autonomy. 

After hosting the G7 summit in August, French President Emmanuel Macron said, "Pushing Russia from Europe is a profound strategic error… The European continent will never be stable, will never be in security, if we don't pacify and clarify our relations with Russia." 

European countries have been trying to interact with Russia. Take France. Macron has proactively promoted a Normandy format summit to solve the Ukrainian issue. He held a meeting with Russian President Vladimir Putin before the G7 summit kicked off, and both countries have restored ministers' meeting in the 2+2 format, which was held for the first time since 2014. European countries and Russia are reaching a consensus in which they should try to end the confrontation incited by the US and seek a new model for cooperation. 

However, it is unclear to what extent will the EU acknowledge Russia's good intentions. The two sides lack trust, and the geopolitical contradictions are a stumbling block in the way of rebuilding ties. Moreover, the EU worries that Russia will control the bloc's energy market and that cooperation with Moscow will lead to Washington's retaliation. 

However, Russia's effort to promote fairness and rationality in international monetary and settlement system deserves applause. We hope the two sides can contribute more to peace and stability on the Eurasian continent.  

The author is a research fellow at the China Institutes of Contemporary International Relations. opinion@gloabltimes.com.cn

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