Myanmar negotiating to de-dollarize economy, join Russia's alternative payment system

Myanmar on Saturday became the latest country mulling joining the financial messaging system of the Bank of Russia (SPFS), Moscow’s own proprietary payment network, to bypass the international payment platform - Swift interbank system. After the US, UK, Canada and their European allies banned Russian Federation from foreign payments platforms to “ensure that [Russian] banks are disconnected from the international financial system in order to harm their ability to operate globally,” Moscow launched its own alternative payment method. 

'De-dollarizing economies..'

Myanmar, a Southeast Asian nation presently ruled by the military Junta, has expressed willingness to de-dollarize its economy and come on board Russia's Financial Message Transfer System (SPFS) along with other nations that have integrated, such as Iran. Iran was also banned from Swift in 2012 by the West on grounds of violations of the 2015 JCPOA deal and expanding its ambitious nuclear programme. “We are making efforts in this direction (connecting Iranian banks to the SPFS) [for] the future,” Kazem Jalali, Iran's ambassador to Russia had told the Iranian state TV. 

Myanmar’s minister of investment and foreign economic relations, U Aung Naing Oo, on Saturday similarly informed the Russian state-affiliated news agency that negotiations with the Russian banks have already started for an alternative payment system. “In particular, our delegation includes an adviser to the head of the Central Bank of Myanmar, she held talks with representatives of the Russian Central Bank, where they discussed the use of alternative payment systems not involving SWIFT," Naing Oo told reporters in Moscow on sidelines of the St. Petersburg International Economic Forum. 

Naing Oo further stressed the urgent need of consultations on payment systems between Russia and Myanmar, as well as the Association of Southeast Asian Nations [ASEAN] countries. Myanmar’s official reiterated that it is essential that ASEAN allies examine emerging nondollar financial system initiatives, such as the use of the Rouble, Chinese Yuan or the local currency of Myanmar to transact over the risks of de-SWIFTing that could destroy economies.

The United States had also recently cautioned new Delhi about "consequences" for "circumventing or backfilling" Western sanctions against Moscow. "We would not like to see mechanisms that are designed to prop up the rouble or to undermine the dollar-based financial system or to circumvent our financial sanctions," US Deputy National Security Adviser Daleep Singh, who framed the sanction strategy against Russia, said during his visit in April.

Biden administration has long been considering applying or waving off the CAATSA law for India's purchase of the S-400 missile defence system from Russia. India, on multiple occasions, has made vocal its proactive neutrality and diplomatic approach, taking sides with neither in the conflict and pushing for dialogue as a way forward for the conflict resolution. 

West tried to destroy Russia's economy: Putin warns nations who may 'fall out of favour'

Western punitive sanctions on Moscow have also lately strengthened Russia and China's de-dollarization, as well as is being considered by many other nations in the east bloc. India, the fast emerging global economy, lacks its own domestic financial messaging system, but reports suggest that plans have been underway to link service with Russia’s SPFS (System for Transfer of Financial Messages, Russia’s equivalent of SWIFT) and China’s CIPS (Cross-Border Interbank Payment System, the Chinese version of SWIFT). Several nations that now deem themselves vulnerable to US sanctions and the dollar’s dominance have been exploring an alternative system. 

During his address at the economic forum earlier yesterday, Russia’s Putin stressed that the Western nations have attempted to “destroy” Moscow’s economy, but that there will be no Iron Curtain over the Russian economy despite sanctions. Moscow would not close itself off from the world like the Soviet Union, our economy will be open, he said. “A country like Russia cannot be fenced in," he also earlier warned, labelling the economic sanctions as a declaration of economic war on countries that might “fall out of favour” with the West.