Russia pitches trading centers in a widening plan to move away from the US-dominated global financial order

Russia is pitching the set-up of centers for mutual trade in commodity resources.

Russia has released new details on how it could move away from the dollar, part of a long-running effort to buoy trade amid Western sanctions. Earlier this month, Russia's Finance Ministry, its central bank, and Moscow-based consultancy Yakov & Partners outlined the country's vision of what the country is aiming for in a report, ‘Business Insider’ reports.

Other than championing alternative payment systems based in non-dollar currencies, Russia is also pitching the set-up of centers for mutual trade in commodity resources.

Russia is a commodity giant and a major producer of oil, natural gas, gold, and grains. However, the country has been heavily sanctioned by the US following its full-scale invasion of Ukraine, which has impacted its oil and gas trade.

The report proposed setting up foundations for commodity trading centers but did not provide details. However, it explained why it was a good idea.

"This measure will ensure independent pricing and strengthen the sovereignty of the BRICS economies," the report said, referring to Brazil, Russia, India, China, and South Africa — the anchor members of the BRICS emerging markets group.

Such a measure would add to what Russia is already doing to keep trade humming amid sweeping sanctions, such as those that block banks from dealing with payment transactions involving Russian companies.

Another offbeat way Russia is beating sanctions is barter trade. One Russian company struck an agreement to trade chickpeas and lentils for tangerines, rice, and potatoes from Pakistan, according to TASS state news agency earlier this month.

Such alternative payment systems and bartering "are based on a notion that any involved institutions, even if faced with extraterritorial restrictions, will retain unchallenged access to their domestic market that will allow them to effectively facilitate domestic and cross-border transactions," the report said.

Moving BRICS trade to trading centers within the bloc would also involve the use of local currencies and facilitate a move away from using the dollar for trade, according to the document.

Russia's report on alternative payments and trading systems came weeks before the annual BRICS summit, which will be held in the Russian city of Kazan from October 22 to October 24.

The proposal also came months after Russia proposed a grain-trading exchange for BRICS members, as Interfax news agency reported in April.

BRICS member countries are major producers and exporters of grains in the world market, with Russia accounting for about one-quarter of the world's wheat exports. Meanwhile, Brazil accounts for about 60% of the world's soybean exports, and India accounts for about 40% of the world's rice shipments.

Most global grain prices are set on the Chicago Mercantile Exchange and are dominated by the US dollar.

"The BRICS countries, being key participants in the global grain market, cannot fully participate in the formation of prices for economically fundamental and food security-essential products as wheat, barley and corn, world prices for which are formed, and often manipulated, in third countries," Russia's Union of Grain Exporters wrote in a letter to the country's Agriculture Ministry in December when it proposed a BRICS grain exchange.

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