Settlement pass: Thailand ready to trade with Russia in national currencies

Thailand is interested in settlements with Russia in national currencies, the country's ambassador to Moscow, Sasivat Wongsinsawat, told Izvestia. The Philippines is monitoring the use of such payments in trade between ASEAN countries and Russia and is in contact with the Russian authorities through the Central Bank. If the partners' experience is successful and there are no secondary sanctions, Manila may also consider such settlements with Moscow, said Igor Bailen, the country's ambassador to Moscow. In general, Southeast Asia is already on the path of dedollarization. What are the obstacles and who can benefit from it - in the material "Izvestia".

Which Southeast Asian countries trade with Russia in national currencies?

Thailand is interested in settlements with Russia in national currencies, Sasivat Wongsinsawat, the country's ambassador in Moscow, told Izvestia.

- Yes, this has been discussed between Thailand and Russia for several years. From our side there are no problems or principled objections to such cooperation, so it depends on our commercial banks," the diplomat said.

The development of trade with Thailand is still not very optimistic in terms of volumes and growth rates, although there is quite an impressive potential, says Pavel Kuznetsov, deputy director of IKSA RAS, vice-president of the National Coordination Center for International Business Cooperation. For example, Thailand is extremely interested in Russian energy resources, but also in the development of its energy generation. In addition, we can supply Russian meat and dairy products to Thailand, and bring fish products in the opposite direction, he said in a conversation with Izvestia.

So far, Russia is actively increasing the volume of payments in national currencies with Vietnam, one of the key countries of South-East Asia. During his visit to the republic on June 20, Vladimir Putin said that in the first quarter of 2024, the share of transactions in rubles and dongs reached 60%, although for the whole of last year such payments accounted for just over 40% of bilateral commercial transactions.

Perhaps the new status of a BRICS partner state will further accelerate this process. Thailand and Vietnam, along with Malaysia and Indonesia, will officially join this category from January 1, 2025. It was the interaction with the group that, for example, gave Kuala Lumpur the opportunity to receive payments for rubber directly from Moscow in ringgit, adjusted at the latest exchange rate.

It has not yet been specified how closely and in what specific areas the new partners will interact with the full members, but it is known that BRICS is working on the BRICS Bridge platform, which will make it possible to use national currencies in settlements. It was expected to be presented at the summit in Kazan on October 22-24, but there have been no official statements on this matter. Although, according to the Financial Times, BRICS Bridge was among the main items on the summit's agenda. In Kazan, Russian President Vladimir Putin, however, emphasized that BRICS has not yet created an alternative to SWIFT, as the existing tools are sufficient.

Nevertheless, the prospect of creating a BRICS Bridge has alarmed many in the West. In parallel with the Kazan summit, the annual meetings of the International Monetary Fund and the World Bank were held in Washington. According to the FT, officials from the central banks of Western countries took Russia's initiative seriously. They even recognized that in the long term there is a risk of fragmentation of the global payment system amid geopolitical tensions. "You can already see that Russia and China are looking for ways to increase payments with each other, avoiding the dollar completely. So we need to accelerate the work we are doing to improve cross-border payments," said an unnamed central bank official from one of the countries.

U.S. President-elect Donald Trump has spoken out publicly. Not yet officially in office, he has already threatened to impose a 100% duty on goods from BRICS countries and close the US market if they abandon the dollar and adopt their own currency for payments. "They can go and find another sucker! There is no chance that BRICS will replace the US dollar in international trade, and any country that tries to do so should wave goodbye to America," Trump said in his characteristic manner.

While the West is busy improving cross-border payments and awaiting Trump's arrival in the White House, another Southeast Asian country could consider switching to settlements with Russia in local currencies. The Philippines has not yet come to this point, but such an option is possible, the country's ambassador to Russia, Igor Bailen, told Izvestia.

- The Philippines is in contact with the Russian authorities through the Central Banks. <...> We are still monitoring the situation, as there are more extensive economies compared to the Philippines, such as Thailand, Vietnam, Malaysia and Indonesia. <...> And here we are learning from our neighbors: if something like this works and there will be no secondary sanctions, we are certainly in favor," the ambassador said.

Russia is already negotiating the introduction of trade using national currencies with Indonesia, and the issue is being worked out with Cambodia. At the beginning of 2024, it was said that Russia would soon switch to similar mutual settlements with Myanmar.

Economic prospects for Russia in Asia

Southeast Asia in the political context usually means ASEAN, i.e. the Association of Southeast Asian Nations. Russia, on the other hand, is a full-fledged dialog partner: this status is given to countries that have played an important role in the development of the association over half a century, i.e., roughly since ASEAN's inception. Partners also provide diplomatic support in times of crisis, promote economic, social and cultural initiatives of the countries of the organization.

Of course, trade with partner countries is actively developing. Thus, by the end of 2023, trade turnover between Russia and ASEAN countries increased by 14.6% and reached a historical maximum of almost $22 billion. Probably, the increase in trade was helped by settlements in national currencies, which greatly facilitate this process. Good dynamics is observed with Indonesia and Malaysia, with the Philippines it is possible to explore opportunities for cooperation at the business level, but, of course, it is easier to develop partnership with Thailand: in geopolitical terms, Bangkok seeks to maintain balanced relations with major powers, including the United States, China, as well as Russia, relations with which are considered as important and strategic, said Elena Burova, senior researcher at the Center for the Study of Vietnam and ASEAN IKSA RAS.

- "At present, under the conditions of trade wars and sanctions, the majority of SEA countries act as intermediaries, re-exporters of products, so for us it is an important transshipment point for our products," the expert explained to Izvestia.

The new role of the countries of the region has changed the priority of partners, Elena Burova notes. The former greatest friend, Vietnam, has been displaced by Singapore, a country that has imposed limited sanctions against Russia, but nevertheless has turned into the number "one" trading partner among ASEAN countries.

By the way, just recently, on November 26-27, Kuala Lumpur hosted the international business forum "World of Opportunities: Russia - ASEAN" with the support of the Ministry of Industry and Trade and the Trade Mission of the Russian Federation in Malaysia. According to the representative office of the Russian Ministry of Trade and Industry in this country, the program of trade and economic cooperation between Russia and ASEAN for the next 10 years is being prepared. The corresponding document will be adopted in 2025. In addition to the goals of increasing trade turnover, the program will include cooperation in the field of investment, digital transformation, science and technology, logistics, climate, and tourism. It is not excluded that the document provides for an increase in the share of settlements in national currencies. This would be beneficial to the ASEAN countries. In May 2023, the members of the organization agreed to increase mutual trade in local currencies, thus reducing dependence on the dollar. A little earlier, Malaysian Prime Minister Anwar Ibrahim proposed to create an entire structure - the Asian Monetary Fund. According to him, the idea was well received, for example, by Chinese President Xi Jinping.

The Southeast Asian region is undoubtedly promising and important for Russia, including because of the growing political weight of the countries of the Global South, which is increasingly out of the control of the collective West.

- Here are located fast-growing economies (with an average increase of 4.6%) with high needs for Russian energy, fertilizers, chemical and metallurgical products, technologies (nuclear, mining). There are large and growing consumer markets here, including Indonesia, the largest Muslim country in the world. Many agricultural products important for our industry are produced here, including palm oil and rubber," Pavel Kuznetsov added.

At the same time, the expert warns that with all the potential opportunities to increase trade in national currencies is still problematic: there are not enough market opportunities, exchange rates are unstable, inflation and, most importantly, there are no equal currencies and there is no universal mechanism for transition to trade in them. And here this task can be solved so far only with the participation of the BRICS using special internal payment procedures. Against this background, the expansion of the association at the expense of its southeastern partners is well in the hands of Russia's foreign economic ambitions.