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With Russia entering the fold, where is the Syrian crisis headed?

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Vladimir Putin

By Harshmeet Singh

The ongoing Syrian crisis is bringing together two of the most unexpected nations at a single stage, the USA and Russia. While the USA led alliance has been carrying out airstrikes in the IS (Islamic State) captured areas for quite a while, Russia’s entry into the Syrian crisis couldn’t have come any sooner.

Though the recent air strikes carried out by Russia in Syria surprised quite a few, it must be understood that Russia has always had a keen eye on Syria. To put things into perspective, Syria’s Tartus holds the only naval base of Russia outside the countries that formed the Soviet Union. Russia was one of the few countries that supported the Syrian President Bashar Al-Assad during the deadly civil war in the country. It even used all its force to shoot down a proposal in the UNSC which was seeking to remove Assad from the Presidency. Over the past few years of the Syrian unrest, Russia has been continuously offering financial and military help to the Syrian administration, without getting directly involved in the domestic upheaval.

Vladimir Putin
Vladimir Putin

But with Russia now sending its troops to Syria, the earlier dynamics seem to have changed. Experts are of the view that Mr. Putin is trying to increase the stature of Russia at the world stage and bring back its old glory. But with the Russian troops short of real war experience for many decades, this move can easily backfire. While at the outset it may seem that both the US and Russia are throwing their weight in Syria to bring back normalcy, the fact remains that US is as big a critic of the Assad regime as big a supporter Assad has in the form of Russia.

Russia’s increased participation in Syria has also invited sharp reactions from many other countries. The US led coalition, for instance, which also includes Turkey, has asked Russia to put an end to its air strikes, alleging that the Russian planes are targeting innocent civilians and that it would “only fuel more extremism”. Russia, on the other hand, says that it is exclusively targeting IS sites. These strikes were Russia’s first active military operation outside the states of former Soviet Union, ever since the cold war ended in 1991.

Several meetings were held between the Russia officials and the leaders of the US led coalition on the sidelines of the 70th United Nations General Assembly. Giving minimal attention to the concerns of the US led coalition, a senior official from the Russian ranks said that the air strikes would continue for another 3-4 months. There is another ongoing conspiracy theory behind the scenes, according to which the Russian planes are exclusively targeting the Syrian rebels who are being supported by the US led alliance to overthrow the Assad regime. Whatever the actual dynamics of the situation be, this habit of world powers of battling against each other at a battleground of the third country only brings destruction to innocent people.

 

The author is a Freelance writer. This piece was exclusively written for NewsGram.

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Russia’s Alternative to Western Credit Card Debuts in London

Russia will next year diversify its foreign currency holdings in its National Wealth Fund

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Employees demonstrating a payment card
Employees speak while demonstrating a payment card during a tour at a branch of VTB bank in Moscow, Russia. VOA

A Russian backed bank payment card, introduced after Western sanctions upended Russia’s financial system five years ago and prompted Visa and Master card to deny electronic services to some of the country’s leading banks, is set for its European debut on London Wednesday, when a pilot project will be launched in collaboration with the Dutch global payment company PayXpert.

Moscow authorities hoped to get the MIR card accepted eventually in foreign markets, but progress has been slow outside Russia for the MIR payment system,  which operates outside of Western-controlled international financial systems such as Swift, which banks use to transfer money.

The pilot project with PayXpert “will lay the foundation for new promising trends in the foreign expansion of Russian payment cards,”  according to Vladimir Komlev, the head of Russia’s National Card Payment System, which operates the MIR system.

De-dollarization efforts

The effort is seen by analysts as part of the  Kremlin bid to de-dollarize the Russian economy to lessen the sting of Western sanctions. A Russian Finance Ministry official this month told Reuters that Russia will next year diversify its foreign currency holdings  in its National Wealth Fund, which supports Russia’s public pension system, aiming to lower the share of dollars in the fund’s reserves.

Dmitry Dolgin of the Dutch banking group ING said in  a report this month that de-dollarization efforts are now obvious across most sectors, including local business loans and bank-held international assets, although he said the dollar’s role  has actually increased in company and household savings and cash assets, partly because dollar interest rates have been higher than those offered for euros.

Credit Cards offers unique features
American Express, Visa and Master Card is displayed in this image. Each Credit Card offers unique features and benefits, along with unmatched privileges. Pixabay

U.S. authorities have been able advance sanctions by targeting companies that use dollars, and the establishment of electronic payment systems not tied to the dollar or largely controlled by U.S. businesses is one way for the Kremlin to reduce the impact of the West’s serial punishment of Moscow. Washington and the European Union have imposed a wave of sanctions since 2014 to punish Russia for the 2014 annexation of Ukraine’s Crimean peninsula, alleged meddling in the 2016 U.S. elections, and the poisoning of a defected Russian spy in England.

Komlev told Reuters this year that “In the next three years we want MIR cards to be operational in countries where Russians are used to traveling.” He projected MIR cards would be operational at some banks in at least a dozen countries by the end of this year. Turkish banks started to conduct transactions this year with MIR, which means both “peace” and “world” in Russian.

MIR was launched initially as a national payment system, with the first cards issued in December 2015. Russia’s leading bank, state-owned Sberbank, started issuing them in October 2016, and by the end of last year more than 70 million MIR-based cards had been issued by 64 Russian banks. The Kremlin has mandated that state welfare and pension payments must be processed through the system by next year, along with salaries paid to civil servants.

The card has a long way to go before it rivals VISA our Mastercard internationally. It is not accepted by international shopping platforms or major online booking services for airlines and hotels, although APEXX Fintech, a British start-up global payment company, said Thursday it would now start working with the MIR system. Among smartphone applications only Samsung has concluded an agreement with the MIR system.

Meanwhile, de-dollarization has been moving quickly. Russia’s Central Bank has currency swap deals in place with Iran, China and Turkey, allowing direct trade to be conducted in local currencies instead of U.S. dollars. Russia reportedly lost $7.7 billion in its bid to reduce dollars held in its reserves. Some of the dollars were turned into gold, and since January the bank has purchased 96.4 metric tons of gold.

People stand in line as they wait to enter the bank with their card
People stand in line as they wait to enter a branch of Sberbank of Russia bank. VOA

Alexei Zabotkin, head of the Russian Central Bank’s monetary policy department, has conceded that it would be impossible to completely empty the country’s foreign exchange reserves of dollars, as this would be  “fraught with excessive risks.” According to central bank data the  National Wealth Fund has $45.5 billion, 39.17 billion euros and 7.67 billion British pounds.

In August, the state-controlled Rosneft oil giant announced it would stop using the U.S. dollar for its export contracts.

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Nonetheless, analysts say there are limits on how far Russia can de-dollarize – the ruble is highly volatile and remains unattractive for investors and de-dollarization brings additional and sometimes prohibitive trading costs.

European regulators will be watching the London project closely. EU officials have been sympathetic about Russia’s de-dollarization bid, suspecting that as a spin-off the euro will be boosted as an international currency. In June the European Commission concluded that “the euro clearly stands out as the only candidate that has all the necessary attributes of a global currency that market participants could use as an alternative to the U.S. dollar.” (VOA)