Not good news for the dollar? Russia and Turkey ditched US currency for S-400 missile system deal

Published time: 29 Nov, 2018 12:40

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Russian S-400 air defense missile systems during a parade in Moscow. 

© Sergei Karpukhin / Reuters

Both facing pressure from Washington, Moscow and Ankara ditched the US dollar when finalizing their landmark S-400 air defense missile systems deal and will do so in the future, Russian leader Vladimir Putin said.

“We understand that if we’ll make transactions in [US] dollars, they won’t come through,” Putin toldreporters on Wednesday, citing his recent talks with Turkey’s leader Recep Tayyip Erdogan. “So we thought up another option.”

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Speaking at a business forum in Moscow, the Russian president noted that the ‘dollar-less’ S-400s deal with Turkey is just one recent example of the approach the nations share. The same will apply to “other types of goods”as well, he stressed.

“We don’t have a goal of abandoning from the dollar, but we are forced to do so. And, I assure you, we will do it,” Putin said, adding that it will ultimately make global trade more secure and efficient.

Russia and Turkey have been in talks about switching from the US dollar to the ruble and lira in bilateral trade since both states experienced fallouts with Washington. Moscow’s economic ties are constantly targeted by the US sanctions, which began piling up after a political crisis erupted in Ukraine, and Crimea voted to rejoin Russia.

Ankara also faces the risk of violating US sanctions laws when buying arms from Russia or oil from Iran. Politicians in Washington further tried to pressure Turkey into scrapping the purchase of the Russian-made S-400s. The US Congress even used the deal as a pretext to delay the shipment of 100 F-35 fighter jets to Turkey.

This prompted President Erdogan to rail against the domination of the US currency in global trade. Ankara needs to “gradually end the monopoly of the dollar once and for all,” he said in September, while advocating for switching to alternative currencies in transactions.

Recep Tayyip Erdogan and Vladimir Putin. © Mikhael Klimentyev / Sputnik

Erdogan accused the US of waging “economic war” against the world and blamed Washington for mishaps concerning the Turkish lira, which plummeted to record lows this summer.

“America behaves like wild wolves,” the Turkish leader argued. “Using the dollar only damages us.”

Slapped with numerous sanctions by the West, Moscow chose a similar path.

“Considering what we encounter while dealing in dollars, more and more nations wish to do trade in national currencies,” Vladimir Putin remarked in the past.

“That is what we’ll gradually be heading to,” he said.

The first S-400 under the deal, meanwhile, will be delivered to Turkey in October 2019.