VTB Bank and Bank of China Sign an Agreement that Restricts U.S. Dollar Settlements

In May 2014, Bank of Chi­na and VTB Bank signed an agree­ment that per­mits them to pay each oth­er in the ruble and ren­min­bi (yuan) for all set­tle­ments, which is per­ceived to be a strat­e­gy to bypass use of the U.S. dol­lar in their bilat­er­al rela­tion­ship.  Oth­er parts of the agree­ment includ­ed invest­ment bank­ing, inter-bank lend­ing, trade finance and cap­i­tal mar­kets trans­ac­tions.  Both ...

Russia Provides $2 Billion Advance Payment to Venezuela for Oil Supplies

So-called “struc­tured com­mod­i­ty finance” is a trade mech­a­nism where pay­ment is received upfront for future deliv­er­ies.  It is often used strate­gi­cal­ly by coun­tries to receive urgent finan­cial sup­port dur­ing times of dif­fi­cul­ty from oth­er friend­ly states.  Iran has used this mech­a­nism to great effect in the past, as has Hugo Chavez, who received some $20 bil­lion in advance pay­ment from ...

Russia Forgives North Korean Debt to Pave Way for Gas Pipeline to South Korea

On April 19, 2014, the Russ­ian par­lia­ment approved a plan to for­give near­ly $10 bil­lion of North Kore­a’s Sovi­et-era debt, leav­ing some $1.09 bil­lion that will be paid over 20 years and man­aged by Vneshe­conom­bank.  These remain­ing pay­ments will report­ed­ly go toward mutu­al projects, includ­ing the con­struc­tion of a gas pipeline and rail­way stretch­ing across North Korea to South Korea.  Gazprom has ...