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RUSSIAN PETROLEUM GIANT GAZPROM SHUNS DOLLAR IN FAVOR OF DINAR "Recently, there’s been a quiet yet noticeable shift away from the Dollar as a preferred currency for oil transactions, and a move toward the Dinar and other currencies which are free of the Dollar’s shortcomings. In the latest example, Russian petroleum giant Gazprom has shunned payments using the Dollar, in favor of using the Dinar or Euro. In fact, the decline of the Dollar’s global supremacy has been speeded in recent years by a combination of U.S. foreign policy missteps as well as a sense that the long-time balance of power is finally shifting away from America and toward the rapidly growing economies of the Middle East and Asia. Russia is de-dollarizing its energy sales The latest evidence of this anti-Dollar movement is seen by Russia’s moves to abandon the use of the Dollar for Russian oil and gas transactions. Although de-dollarization has been politically desirable for President Putin and other Russian leaders for the past several years, today there is a much stronger impetus to drop the Dollar as a preferred currency for energy sales worldwide. Spurred by the U.S. reaction to developments on the ground in Crimea and Ukraine, Russia is now pushing its de-dollarization program into high gear on a much faster timetable. In fact, Russian companies’ exodus from the Dollar is nearly complete. Gazprom says goodbye to the Dollar It was recently reported that Gazprom, the world’s biggest natural gas producer, has now modified the agreements with some of their largest customers to change the payment denomination from USD to EUR. It’s important to consider the significance of this major rejection of the Dollar: Gazprom is one of the largest enterprises on Earth. It owns or controls around 20% of the world’s known gas reserves, and it’s also a large oil producer, too. By itself, Gazprom accounts for about 8% of Russia’s entire GDP. Gazprom is now refusing to do business in Dollars, which means the loss of a measurable portion of the Dollar’s underlying support worldwide. Sanctions have backfired When President Obama imposed economic sanctions on Russia because of the Ukrainian conflict, he may or may not have considered the possibility of a Russian response that would undermine the U.S. currency, yet that’s what seems to have happened. As a result, Russia has now decreed that, as an initial minimum, about one-fifth of the world’s natgas will henceforth be precluded from Dollar pricing. So, with a few strokes of the pen, Russia’s leaders have precluded the Dollar from receiving any support from the sales of a huge chunk of our planet’s natural resources. Instead, those oil and gas sales will be transacted in Euros and perhaps in Dinars, too. Beyond Russian Rubles, non-U.S. oil companies like Gazprom are also doing business in Chinese Yuan, since the Chinese are eager oil buyers yet they don’t suffer from America’s political baggage. At the same time, other Russian businesses and individuals largely removed their money from U.S. banks within the past couple of months, due to the spiraling tension between the U.S. and Russia. Russian investors are wary of currency losses due to political issues. Perhaps this sudden mass exodus out of the Dollar is understandable – Many Russians were recently burned when Russian deposits in Cyprus banks were devalued in order to solve Cyprus’ financial problems. Russian investors, like all investors, seek potentially high returns with moderate risks. The Dollar no longer meets their requirements, and the Dinar is attracting plenty of attention as a substitute currency investment. How the Dinar benefits from Gazprom’s rejection of the Dollar Iraq is a leading regional provider of oil and gas, and is the proud owner of about one-fifth of the world’s known oil reserves. So, the country is well positioned to benefit from other nations’ rejection of the Dollar as a preferred currency, especially regarding oil transactions. Gazprom is shunning the Dollar in order to avoid Obama’s sanctions. Yet, the real winner may be the Dinar, which is increasingly being chosen as the currency-of-choice for Iraqi oil sales. Gazprom has stopped buying Dollars and started buying Dinars Gazprom has apparently already migrated many of its transaction settlements from Dollars to Euro. And, since the Euro continues to weaken because of lingering economic issues in the Eurozone, it seems likely that the Dinar will increasingly be chosen for global oil sales. Gazprom has begun large-scale commercial production In Iraq Gazprom has recently begun full production operations in the Badra oilfield in Iraq, where it expects large flows. Now that the USD has been shunned, all local development expenses are being paid in IQD, so the company has an insatiable demand for buying Dinars. Since this Russian oil and gas giant has ditched the Dollar, it seems inevitable that the company will continue purchasing large quantities of Dinars with which to pay for on-the-ground development and operating costs. This steady buying pressure provides an additional foundation of value for the Dinar. The Dinar wins when the Dollar loses The price of a nation’s currency generally reflects the underlying assets and creditworthiness of that nation. When a government’s expenses are high and its fiscal and monetary policies unsound, the country’s currency value suffers the consequences. Such is the fate of today’s Dollar. As investors leave the Dollar they’re drawn to undervalued currencies such as the Dinar. Each time a major oil company like Gazprom declines to receive payments in Dollars and instead insists on being paid with Iraqi Dinars, it means increasing support for the value of the Dinar. And, with oil sales booming in Iraq, increasing numbers of Dinar-denominated transactions will place additional pressure on the Central Bank of Iraq to complete its move away from Dollar dependency, and finally revalue the Dinar upward to reflect its true value. I am connecting the dots