With the Ukraine conflict advancing to new and dangerous territory, Russia refuses to take Western sanctions lying down.
Led by autocrat Putin, the former Soviet nation is striking back, and as of mid-day Friday the blows remained primarily economic.
And that's where I want to focus today…
Each side continues upping the ante, with ever stronger retaliatory sanctions.
Economic skirmishes like this can quickly escalate into all-out trade wars, where even the victors lose.
But you don't have to be another victim. There are steps you can take to mitigate… and profit.
The Aim of the Latest Round of Western Sanctions
The latest round of Western sanctions were aimed at Russian financial, energy, and defense sectors.
It's a vicious tit-for-tat downward spiral with Russia responding with a ban on nearly all food from the West, including fresh produce, meat, and dairy products.
About 10% of the EU's agricultural exports, with a value of nearly $15 billion annually, end up in Russia. Both sides suffer, with Russians having grown used to quality meats and fresh fruits and vegetables and now left with limited alternatives.
Some of the hardest hit in the EU are smaller nations. Greece, for example, trades more with Russia than any other partner. Yet now fresh fruit is being turned back at Russia's border, relegated to rotting in refrigerated trucks.
And in a further nose-thumbing move to the United States, Edward Snowden was just granted a three-year extension to stay in Russia.
But it's what Putin's doing behind the scenes that shows just how serious he is about diversifying away from reliance on the West.
Russia Looking East Will Hit Western Currency
A few months back I told you about Iran's trend toward openness. Its new generation of oil contracts appears aimed at attracting foreign oil partners.
Yet despite the apparent olive branch extended west, Iran has kept its options open, and may instead be looking increasingly east.
On Aug. 5, Putin agreed to a $20 billion trade deal with Iran.
According to Russia's Energy Ministry, the 5-year agreement will have Russia facilitate Iranian oil sales and "cooperate in the oil-gas industry, construction of power plants, grids, supply of machinery, consumer goods and agriculture products."
The deal could lead to Russian purchases of half a million barrels of oil daily, representing 20% of Iranian production and fully half of its exports.
While details of this deal are still limited, I can't think of any reason Russia and Iran wouldn't seize the opportunity to further wean themselves off the petrodollar and settle all transactions in their own currencies.
If you've been following me recently, then this certainly won't surprise you.
In late May, I told you about two major deals signed at the end of a two-day trip Putin had made to China.
The 30-year deal by Gazprom to supply natural gas to China valued at $400 billion made the biggest splash. But perhaps more interesting, and certainly more subtle, was the deal between one of the largest Russian banks, VTB Bank, and Bank of China.
Sidestepping the U.S. dollar entirely, the two agreed to pay each other in domestic currencies for transactions in trade finance, inter-bank lending, and investment banking.
If there's any doubt left in your mind, consider this…
About the Author
Peter Krauth is the Resource Specialist for Money Map Press and has contributed some of the most popular and highly regarded investing articles on Money Morning. Peter is headquartered in resource-rich Canada, but he travels around the world to dig up the very best profit opportunity, whether it's in gold, silver, oil, coal, or even potash.